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Govt disburses Tk 14.17b as subsidy for power purchase


The government has disbursed about Tk 14.17 billion as subsidy for purchasing electricity from private power plants during June-August 2011, putting pressure on the national exchequer.

The said amount of subsidy is required as the Bangladesh Power Development Board (BPDB) has to buy per unit of electricity at a rate which is Tk 5 more than its selling price.

“The government wants to reduce its dependency on power sector as huge power subsidies are going to private plants for adding little power to the national grid,” said a senior official of the finance ministry.

The official also said that the finance minister AMA Muhith earlier approved the power division proposal on subsidy before he left Dhaka for Washington.

As per the finance ministry approval, Tk 14.17 billion was disbursed on Wednesday for three category power plants –Independent Power Plants (IPPs), quick rental power plants and rental power plants.

Earlier, Muhith said the government will increase energy price, which will have no impact on people’s economic lives.

Meanwhile, Bangladesh Energy Regulatory Commission (BERC) in July approved a proposal to increase power tariff by 15 percent and it will come into effect in next winter.

At present, the total loss projected by BPDB is Tk 80 billion.

The government has earmarked an amount of Tk 48 billion for payment of subsidy for both the power and gas sectors during the current fiscal year, while it was Tk 40 billion in the last fiscal.

The fuel oil-fired power plants sell a unit of electricity between Tk 7.5 and Tk 14 while gas-fired plants sell between Tk 2.1 and Tk 2.5.

As per the proposal, the fund requirement for the rental and quick power plants stood at about Tk 12.37 billion during July and August, 2011, the sources said.

A total of 12 rental power plants demanded Tk 2.73 billion, 13 quick rentals Tk 9.63 billion and six IPPs Tk 1.79 billion.

The IPPs include Haripur CCPP, Horipur NEPC GT, KPCL Khulna Engine, Meghnaghat CCPP, RPCL CCPP and Westmont GT.

Power Development Board planned to set up several public power plants at a cost of $4.5 billion targeting to generate 3,865MW of electricity by 2015, but the government is yet to start any project during its last two-year tenure, PDB sources said.

Due to rise in power generation cost, the BERC increased the bulk price of electricity in two slabs, one by 11 percent with effect from February 1 and the other by 6.66 percent from August 1. The commission also increased the retail price by 5 percent with effect from February 1, 2011.

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