Govt must heed call for closure of expensive rental power plants

Published: 00:00, Jul 05,2020


THE power generation capacity of 20,000MW having exceeded the demand, which reaches up to 12,900MW in the summer and declines to 6,000MW in the winter, there has been a call around the corner for some time for an immediate closure of rental power plants to cut on the expenditure by way of capacity payment, which was Tk 90 billion in 2019, that the government makes to rental plants for the power that is not produced. A report of the US-based Institute for Energy Economics and Financial Analysis in May says that the Bangladesh government could use only 43 per cent of the power generation capacity. In view of this, the call for the closure of rental power plants has become stronger in recent times because of the economic fallout of the COVID-19 outbreak. The Centre for Policy Dialogue says that the government has paid Tk 511.57 billion in capacity charges to idle power plants in the past 10 years. But the government has so far showed indifference to the call. The minister of state for power, energy and mineral resources seeks to say, as New Age reported on Saturday, that the government has no plans to retire rental power plants before the contracts normally expire.

The minister for state further seeks to say that there has been the need for a generation capacity of 20,000MW as the demand for power reaches 12,000MW in the summer. Industries not willing to remain dependent on the national grid produce 2,800MW of power on their own. The Institute for Energy Economics and Financial Analysis report, however, says that an ideal generation capacity margin should range between 10 to 20 per cent but government in its power sector master plan has decided to keep the margin at 25 per cent, largely causing heavy losses to the state exchequer. The Awami League after assuming office in 2009 allowed rental power as an early emergency measure to increase power generation which then was limited to 4,942MW. The short-run means has unfortunately now been perpetuated as the government extended the tenure of most such plants and the validity of an indemnity law made in 2010 to keep actors and their action in the power and energy sector above the customary law on a number of occasions. While the government did not improve on power generation in the public sector that it was supposed to do to come out of the crisis, the government is now left with 51 per cent of the power generation capacity lying with private-sector plants that are overwhelmingly dependent on fossil fuel such as gas, furnace oil and diesel. A high amount of capacity payment and a heavy dependence on rental power, along with other irregularities and mismanagement, have, meanwhile, only burdened consumers with increased power price, which until the latest round of March 1 has been increased 10 times in 11 years, marking it up by 98 per cent since 2009.

The situation at hand suggests that the government must heed the call for the closure of expensive rental power plants and spend the money on the development of power plants in the public sector and in other areas where it is necessary.

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