Rental power plan burden that power sector fails to carry

Published: 00:00, Dec 26,2020


POWER generation overcapacity born out of a flawed projection of the power demand growth has caused losses of an estimated Tk 300 billion, paid in capacity charges to idle power plants in private hands, in the 2016–2020 duration of the seventh Five-Year Plan. The Five-Year Plan had a target to feed an additional 12,584MW of power into the national grid, but 10,061MW could so far be added, accounting for a failure by 20 per cent. The bane of failure in implementation has become a boon for the country as the losses would have been greater if the government had succeeded in fully meeting the target of additional power generation. The power generation capacity now stands at 44 per cent in excess of the demand. A situation like this has not only caused losses of such a huge amount of money, but also proved that the energy policy is not energy-efficient because the power distribution and transmission system, which has so far been left deplorably neglected, would not be able to handle the additional power even if the demand by any stretch of imagination started going up to the generation capacity. On June 30, the last day of the seventh Five-Year Plan, 51 plants, or 37 per cent, of the total of 137 power plants were idle.

The amount of capacity payment grew to Tk 89.29 billion in 2019 from Tk 50.03 billion in the 2015 financial year, when the sixth Five-Year Plan ended. And during the seventh Five-Year Plan, the Power Development Board borrowed Tk 289.8 billion from the government to finance its deficit, which is said to have largely stemmed from such a huge amount of money paid in capacity charges. The money that the board borrowed to meet its deficit accounts for more than a fifth of the total amount of subsidy allocated for other sectors. The situation also shows that power sector development has largely been lopsided, with generation far outweighing transmission and distribution, which is evident in frequent power cuts. Experts fear that such a weak transmission and distribution system, as it is now, may not handle the power from the under-construction nuclear power plant when it will go into operation. Although private rental power plants were meant to be retired on completion of their deadline keeping to the seventh Five-Year Plan, the government has later renewed contracts with some of the plants when the government should have kept off rental power. Experts, therefore, say that the government should immediately close at least oil-based power plants and put more money in plants in the public sector and try to switch to renewable energy for power generation.

Amidst fears that a growing presence of private companies in power generation may cripple the Power Development Board, the government must immediately make a course correction by working out a realistic power demand growth and keep away from the quick rental power that has hardly let the power sector stand straight. The government must also put more focus on improvement in the transmission and distribution system as any additional amount of power, from rental, public or nuclear plants, will be too heavy for the power sector to carry.

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