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The Financial Express

Patronising profit-hungry rental power plants 


- Representational image - Representational image

No amount of criticism /opposition can deter the government from patronising the private rental power plants. The extension of power-purchase contracts for two more years with four such plants at the meeting of the cabinet committee on government purchase would only strengthen such an allegation.  

The power plants that are located at four different places in the country have been in operation for long 10 years, enjoying a windfall profit in the name of capacity payment. This time, the extension has been granted under the 'no electricity, no pay' arrangement, meaning that there will be no capacity payment. The contracts with 10 more power plants had been extended earlier following the same arrangement.  

The owners of the power plants would not mind such an approach by the government, for the plants proved to be golden goose during the past decade, courtesy of the Power Division. Most rental power plants have reaped a windfall profit by exploiting the facilities like capacity payments and incentivised fuel import.  

To cut its cost on account of rental power plants, the government has already sent 13 power plants having a total generation capacity of 1,018 megawatts on retirement. It has also stopped extending the contracts with the diesel-run rental power plants because of their high cost of power generation.  

The existing rental power plants owners, allegedly, are lobbying hard to remain in service, even without capacity payment. They have reasons to do so. Most plants have minted a profit worth many times more than their investment. For instance, a power plant that got its contract extended at Wednesday's cabinet committee meeting had received capacity payments worth Tk1.18 billion between July 2019 and May 2022. Another plant got Tk 2.39 billion during the same period.  

Not just capacity payment, there are other benefits, including hidden ones. A sizeable number of the rental power plants belong to people who are otherwise politically influential.  

Experts and rights organisations have time and again demanded of the government to make the entire rental power plant issues transparent and allow the Bangladesh Energy Regulatory Commission (BERC) to deal with those.  

But, for reasons best known to it, the government has preferred to ignore such demands and keep the developments surrounding the rental power plants secret, taking advantage of an act adopted in 2010  to grant the relevant persons immunity from prosecution. The effectiveness of the law was for two years. But parliament extended its life several times since then.  

The government has been providing a huge volume of subsidy to the power sector every year and, following the recent rise in fuel oil prices, the amount has only ballooned. The rental power plants eat up a big chunk of the subsidy amount. The government, however, passes the burden of subsidy on to the taxpayers.  

There is no denying that rental power plants emerged as saviours in the days of severe power crises. But they did not operate for free. Rather, they have got all the opportunities to earn a hefty profit. Since the country has beefed up its generation capacity using conventional large and medium-scale power plants, it can well discard gradually the rental power plants within a timeframe. It should also repeal the act that protects the wrongdoers in the power and energy sector from prosecution, for this encourages others to indulge in irregularities.   

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