Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
Privately owned power producers are facing growing financial instability as payment delays by the state-run utility are followed by penalty deductions, raising concerns over fairness, contract compliance and energy security.
Industry representatives warn that the practice is undermining investor confidence and could disrupt electricity supply ahead of peak demand periods.
Independent power producers (IPPs) allege that despite chronic delays in bill payments by the Bangladesh Power Development Board (BPDB), the interim government has allowed penalties to be imposed selectively, in breach of power purchase agreements (PPAs).
Sources said the state-run Bangladesh Power Development Board (BPDB) deducted around Tk 2.49 billion in "liquidated damages" (LDs) from four power plants between 2021 and 2024, citing "excess outages".
Producers, however, argue that these outages resulted not from operational negligence but from fuel shortages caused by BPDB's own failure to make timely payments.
Outstanding dues to independent power producers (IPPs) nationwide now exceed Tk 44 billion, with settlements frequently delayed by six to seven months, according to industry estimates.
David Hasanat, president of Bangladesh Independent Power Producers' Association (BIPPA), described the deductions as arbitrary and unjustified.
"BPDB is unable to pay us on time. Payments are delayed by six to seven months, yet penalties are imposed for outages," he told The FE on Wednesday.
On January 8, the Bangladesh Energy Regulatory Commission (BERC) directed BPDB and power producers to resolve disputes through dialogue and ordered a status quo on LD calculations and payments. Earlier, in April 2025, BERC had imposed a temporary suspension on penalties until October 23.
Despite these regulatory directives, BPDB has continued deducting LDs, eroding trust and intensifying disputes, plant owners alleged. When contacted, BPDB officials declined to comment.
Industry insiders pointed to the case of Barisal Electric Power Company Ltd as an example of inconsistency. BPDB initially deducted LDs from the company's capacity payments but later reversed the decision following consultations with the relevant ministry.
Plant owners said the recent suspension of electricity supply by Adani Power due to non-payment highlights the seriousness of the situation.
In contrast, local IPPs continue to generate electricity despite financial stress, prioritising national supply, seasonal demand and industrial continuity.
Ironically, they added, this continued operation has made local producers more vulnerable to LD deductions and insolvency risks.
Such contradictory actions under identical contractual frameworks have raised questions about fairness and legal consistency, the IPPs claimed.
Under Section 13.2(j) of the PPAs, BPDB loses the right to impose outage charges if it fails to settle payments within 10 working days of the due date.
The clause also allows IPPs to suspend supply if bills remain unpaid beyond 40 days. Producers alleged that BPDB has rarely honoured these provisions, continuing to penalise plants even when its own payment defaults force outages.
According to BERC, at least 21 power plants have formally lodged complaints against BPDB, with dozens more potentially facing LD imposition.
Confidence Power Bogura, Confidence Power Rangpur and several Orion Power units are among those owed billions of taka, with some payments outstanding for years.
The payment delays have had cascading effects across the sector, power producers said. Without timely settlements, IPPs struggle to open letters of credit (LCs) for fuel imports, leaving suppliers unpaid and banks unwilling to extend further credit.
As a result, electricity production is disrupted and companies face growing risks in meeting debt repayment obligations, they alleged.
Industry executives warned that the situation has deepened financial distress, with banks tightening lending and producers struggling to cover operating costs.
Personal finance advice
Energy expert Prof M Tamim said timely payments are essential to keep power plants operational.
"If they do not receive payments, how will they keep their plants running?"
He stressed that disputes should be resolved quickly to ensure a stable power supply, particularly ahead of the upcoming summer season.
Azizjst@yahoo.com