The Financial Express

RPPs as modes of bagging undue profit

| Updated: October 19, 2017 19:26:08

RPPs as modes of bagging undue profit

The private rental power plants (RPPs), rightly or wrongly, are given much credit for the improvement in power situation in recent years. But the policymakers, it seems, are consciously avoiding any mention of the high cost these plants have been exacting from the power subscribers and the national exchequer. 
Introduced as part of a stop-gap arrangement in 2009-10 period the rental and quick-rental power plants have become almost a permanent feature of the country's power sector. Instead of being phased out through installation of medium and large power plants, the government has allowed the rental and quick-rental power plants to expand and thrive. At the moment, a little over 2,000 megawatt (MW) of power is generated by the cost-intensive rental and quick rental power plants.  
Many private sector people bagged power plant contracts, allegedly, through negotiations with the government high-ups bypassing tender procedure. And to provide legal protection to such non-transparent procedures, the energy ministry in 2010 got an act, titled, 'Speedy Supply of Power and Energy (special provisions) Act-2010', passed by parliament. The act extends indemnity to actions that are otherwise considered irregular. Initially the act was made effective for two years. Before its expiry, the government extended its life for another two years. But in 2014, the law got another extension for four years.   
The favours that these rental power plants have been receiving are considered hefty and out of proportion. The Bangladesh Power Development Board (BPDB) has been procuring power from those at rates abnormally higher than that charged by the public sector plants. However, almost all of the rental plants are liquid fuel-based while the state-owned ones are gas-fired. Yet the difference in prices is unreasonably wide. Another way of benefitting the private rental plants is the so-called capacity payment. The facility ensures payment of money to the power plants if the government failed to procure power from these plants. Suspicion is strong that there exists an unholy nexus between the plant owners and government officials concerned over capacity payment.
 Allegations have it that the rental power plants using furnace oil for power generation are now wanting to squeeze out some benefits from fuel oil they use. The government has allowed the plant owners to import furnace oil on their own, instead of being dependent on the Bangladesh Petroleum Corporation (BPC). These private sector importers are required to store the imported furnace oil in storage tanks, prior to taking the same to their respective plants, to facilitate monitoring by the BPC officials. 
The BPC officials say if the pre-storage obligation is waived, there are chances that the facility of importing furnace oil by the private sector people would be abused. The rental plants, reportedly, import around 1.5 million tonnes of furnace oil. The BPC officials concerned have alleged that the importers concerned are not making available necessary information on imports to the BPC. So, the relevant authorities do need to be cautious while considering the rental power plant owners' plea for exempting them from storing furnace oil in tankers before using the same for power generation. 
[email protected]

Share if you like

Filter By Topic