Govt to slash tariffs of 6 state power plants

Power tariffs of half a dozen of the state-owned power plants are set to be cut years after initiation of their commercial operations, said sources.

The proposed new tariffs are expected to get approved by the Advisors Council Committee on Economic Affairs as state-run Bangladesh Power Development Board (BPDB), the lone buyer of electricity from these plants, has already negotiated down the tariff rates of these power plants, they said.

The power-purchase agreements (PPAs) between the BPDB and the relevant power plants will also be amended accordingly.

The return on investments (ROEs) of those power plants might be fixed at 6.0 per cent from existing 12 per cent and the tariff rates would also be reduced proportionately, a senior BPDB official said.

Of the six power plants -- four are owned by state-run Rural Power Company Ltd (RPCL) and two are owned by another state-owned BR PowerGen Ltd.

The RPCL-owned units are: 210MW Mymensingh Power Plant, 52.194MW Kodda Power Plant, 25.50MW Rowzan Power Plant and 105MW Gazipur Power Plant.

And two other plants --163MW Mirsharai Power Plant and Kodda 150MW Power Plant - are owned by BR PowerGen Ltd.

All those power plants, having a combined electricity generation capacity of 705 megawatts (MW), were implemented during the previous Awami League government.

Despite supplying power to the national grid, their tariffs had never been formally endorsed by the Cabinet Committee on Government Purchase -- a mandatory requirement for such deals, according to official sources.

Instead, the state-run BPDB has been buying electricity from these plants solely on the basis of separate PPAs signed with the respective operators.

Such deals were reportedly approved either by the Power Division or the Energy Division and Mineral Resources Division at that time, bypassing the required cabinet committee clearance, sources familiar with the matter said.

The alleged irregularities came to light during an internal audit conducted by the interim administration, which has now asked the Power Division and the BPDB to clarify how such contracts remained valid without having proper authorisation.

All the six power plants began operations between 2012 and 2023.

Tariff rates of those power plants, which are run on high sulfur fuel oil (HSFO) are Tk 20-22 per unit (1 kilowatt-hour) and that of coal-fired ones Tk 11-13 per unit and gas-run ones at Tk 5.0-6.0 per unit.

Due to the lack of formal approval, the Ministry of Finance (MoF) has recently withheld payment of subsidies to these plants for the period from October 2024 to June 2025.

The Finance Division has instructed the Power Division to obtain approval from the Advisory Council on Public Purchase for the future disbursements of subsidies.

"These are gross violations of the country's existing regulations," said Professor M Shamsul Alam, energy adviser to the Consumers Association of Bangladesh (CAB).

He also called for the formation of an independent commission, to be headed by a retired judge, to investigate the alleged corruption and irregularities in the power and energy sector.

"Energy stakeholders must be included in such a commission," Mr Alam added, stressing the need for ensuring transparency and accountability in a sector he described as plagued by 'energy crimes'.

azizjst@yahoo.com