IPPs to get Tk 28,000 cr as capacity charge

In FY 2023-24

Zarif Mahmud: Capacity charges for power plants installed in the private sector including rental-quick rental and IPPs (Independent Power Producers) are increasing every year. Expenditure in this sector will increase by more than 57 percent in the upcoming financial year. Although at that time more than half of the production capacity was sitting in IPP and rental centers. However, as several large power plants, including Adani, have started production at full speed, the cost of capacity charges has increased a lot in the last financial year.
According to the data of Power Development Board (PDB), the production capacity of IPP and rental-quick rental increased to 13,811 MW in the financial year 2023-24. Against this, the capacity charge has to be paid more than Tk 28 thousand crore. Although the expenditure in this sector in the financial year 2022-23 was less than Tk 18 thousand crore. In that financial year, the production capacity of IPP and Rental-Quick Rental was 12,138 MW. Against this, the capacity charge paid was 17,789 MW.
In the outgoing fiscal year, PDB has to pay capacity charges of around Tk 5,600 crores for Adani’s 1,496 MW capacity plant alone. A unit of Adani started production the previous year. In just three months, the unit had to pay about Tk 633 crore in capacity charges for the fiscal year 2022-23. In other words, the cost of paying the capacity charge of Adani’s center has increased by about five thousand crores in the financial year 2023-24.
Apart from this, several big power plants including Rampal, SS Power, Unique Meghnaghat have started production in the last financial year. Due to the combined effect of these, the payment of capacity charges has increased by Tk 10 thousand crore. Their comment is that the expenditure in this sector will increase in the future.
According to the data of PDB, the power generation capacity of rental and IPPs was 10,760 MW in the financial year 2021-22. In that financial year, the capacity charge was paid to the tune of Tk 13,701 crores. 2020-21 financial year against capacity of 9,734 megawatt capacity charge is paid Tk 13,021 crore. And the production capacity of 2019-20 financial year was Tk 8,411 crores. Tk 10,853 crores of capacity charge was paid in that financial year. The previous years capacity charge payment was less than Tk 9,000 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 participated in the tender. As a result, Summit got the license to build the power plant at a higher cost than the estimate. The rest of the power plants were licensed through unsolicited proposals. As a result, their capacity charges are much higher.
According to PDB’s data analysis, the capacity of power plants installed in the private sector in the financial year 2008-09 was 1,720 MW. That year 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 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 the capacity charge was Tk 2,783.56 crore.
In the next fiscal year (2011-12), the capacity of rental power plants increased to 3,583 MW. 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 the capacity charge was 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. In that financial year the capacity charge was Tk 4,714.34 crore. IPPs started production that fiscal year. Being large power plants, their contract duration was on average 15 years. As a result, the average capacity charge started to decrease from that financial year onwards.
In the financial year 2014-15, the capacity of the power plants installed in the private sector increased to 4,448 MW. For this, the capacity charge is Tk 4,664.70 crore. 2015-16 fiscal year capacity release 5000 MW. Its capacity charge was Tk 5,376.39 crore. And in the fiscal year 2016-17, the capacity of private centers increased to 5,459 MW. Tk 5,764.97 crore was paid for the capacity charge.
In 2017-18 financial year, due to the expiry of the contract period of some rental centers, the power generation capacity of the private sector has decreased to 5,213 MW. For this, the capacity charge is Tk 6,241.25 crore. In the next fiscal year (2018-19), the capacity of the private sector increased again to 5,741 MW. That is why the capacity charge was Tk 8,722.27 crore that year. The addition of six new diesel-powered short-run IPPs increased the production capacity marginally, but the capacity charge increased significantly.