IPPs sucked Tk 17,156 cr as capacity charge without works

Mahfuz Emran: Private sector power plant rental and IPP (Independent Power Producer) capacity charges continue to rise. However, the expenditure in this sector increased by more than 25 percent in the last financial year. But at this time the production capacity utilization of IPP and rental centers has decreased. Normally, private power plants are given licenses on the condition of producing 80 to 85 percent of capacity. However, the 2022-23 financial year saw only 38 percent capacity utilization, the lowest in the history of the Power Development Board (PDB).
According to PDB data, the capacity of rental-quick rental and IPP sector power plants increased to 12,942 MW last fiscal year. However, 819 MW of this includes NENP (No Electricity No Payment) and 456 MW of solar power plants. There is no capacity charge for these centres. However, last financial year capacity charges have to be paid Tk 17,155.85 crore. Although 62 percent of the production capacity was sitting last fiscal year.
Meanwhile, the power generation capacity of rental and IPPs in fiscal year 2021-22 was 10,760 MW. In that fiscal year, 47 percent of the capacity was utilized. And the capacity charge was paid Tk 13,700.74 crore. In other words, last financial year, the utilization of power generation capacity has decreased by 9 percentage points. However, the capacity charge payment has increased by Tk 3,455.11 crore or 25.22 percent.
Apart from private sector rental and IPP, last financial year Adani had to pay Tk 632.57 crore capacity charge for power plants. However, this charge is for half of Adani’s power plant capacity and only for three months (April-June). Because a unit of Adani’s Jharkhand power plant started commercial production from last April. As a result of the full operation of Adani’s entire center (two units) in the current financial year, the capacity charge will be around Tk 5000 crore.
According to sources, more than 100 power plants have been licensed to the private sector in the last 15 years. Out of this, only one power plant was approved for construction through tender. However, there was no competition as only one company submitted the tender. As a result, the license to build the power plant was given at a higher rate than the estimate. The rest of the power plants were licensed through unsolicited proposals. As a result, their construction cost is very high. As a result, capacity charges are much higher.
On the other hand, new power plants are coming into production every year. The capacity of the national grid is increasing. However, even half of them are not used. But the capacity charge must be paid properly. Analyzing the figure of capacity charge for 15 years from 2008-09 to 2022-23 financial year, it was found that the amount of capacity charge payment in 10 years from 2008-09 to 2017-18 financial year was Tk 43.333.83 crore. Whereas the capacity charge has been paid in five years from 2018-19 financial year to 2022-23 financial year Tk 63,452.67 crore.
According to PDB data analysis, the capacity of private sector was 5,741 MW in 2018-19 financial year. In that financial year, 54 percent of the capacity of the centers was utilized. That year the capacity charge was Tk 8,722.27 crore. In the fiscal year 2019-20, the power generation capacity in the private sector stands at 8411 megawatts. However, due to the general holidays due to Corona, the demand for electricity decreased a lot in the second half of that financial year. For this reason, only 39 percent of the capacity is utilized. However, the capacity charge has increased to Tk 10,852,780,000.
In the fiscal year 2020-21, the power generation capacity in the private sector increased to 9,734 MW. Although 46 percent of it was used, the capacity charge was Tk 13,021.03 crore that year. And for the financial years 2021-22 and 2022-23, the capacity charge was paid at Tk 13,700.74 crore and Tk 17,155.85 crore respectively. In other words, capacity charges have almost doubled in five years.
PDB Chairman Md. Mahbubur Rahman said that new power plants are being added to the grid. Increasing capacity increases the payment of capacity charges. Besides, the capacity charge has to be paid in rupees based on the dollar exchange rate. In this, the capacity charge payment in local currency has increased despite the devaluation of the taka.
According to the data of PDB, the capacity of power plants installed in the private sector in the financial year 2008-09 was 1,720 MW. That year the capacity utilization was 68 percent and the capacity charge was Tk 1,506.74 crore. In the financial year 2009-10, the capacity of the power plants installed in the private sector increased slightly to 1,878 MW. That year the capacity utilization was 69 percent and the capacity charge was Tk 1,790.20 crore.
In the financial year 2010-11, the capacity of the power plants installed in the private sector increased to 3,162 MW. At that time 54 percent of the capacity was utilized and the capacity charge was Tk 2,783.56 crore. In the next fiscal year (2011-12), the capacity of private power plants increased to 3,583 MW, of which 58 percent was utilized. In that financial year, the expenditure on capacity charges was Tk 5,001.23 crore.
In the financial year 2012-13, the capacity increased slightly to 3,685 MW. That year too, 58 percent of capacity was utilized. And the capacity charge is Tk 5,490.45 crore. In the financial year 2013-14, the capacity of the power plants installed in the private sector exceeded 4000 MW. However, 52 percent is used. In that financial year the capacity charge was Tk 4,714.34 crore.
In the fiscal year 2014-15, the capacity of the power plants installed in the private sector increased to 4,448 MW, of which 50 percent is used. In that fiscal year, the capacity charge was Tk 4,664,700,000. 2015-16 fiscal year capacity release 5000 MW. Its capacity charge was Tk 5,376.39 crore. However, 53 percent of the capacity is utilized.
In the financial year 2016-17, the capacity of private centers increased to five thousand 459 MW. Tk 5,764.97 crore was paid for the capacity charge. However, the capacity utilization is 51 percent. And due to the expiry of the contract period of some rental centers in the financial year 2017-18, the power generation capacity of the private sector has decreased to 5,213 MW. Against this, the capacity charge is Tk 6,241.25 crore. But 55 percent of capacity is being utilized, the highest in a decade.