Over Tk 50,000cr due in gas and power sector

Mahfuz Emran: Bangladesh Power Development Board (BPDB) is unable to pay a large part of the dues of domestic and foreign power companies. Private Power Plants (IPPs) are not able to pay the price of fuel purchased from Petrobangla gas companies without receiving the bill of electricity sold. Again, due to huge amount of money stuck with these IPPs, Petrobangla is also not able to pay the dues of LNG sellers and local gas supplying foreign companies (IOCs).
All in all, the electricity and gas sector of the country is now stuck in a vicious circle of arrears, the size of which has already exceeded Tk 50,000 crores, according to the information of the Electricity and Energy Department.
BPDB buys electricity from public and private generation companies as a single buyer. It is also importing from the neighboring country India. Again, the purchase price of this electricity is fixed with dollars. As a result, along with the devaluation of the taka, the amount of money payable by BPDB for electricity prices is also increasing.
The electricity purchased at a high price is being supplied to the customers at a low price. The resulting deficit is supposed to be received by BPDB as subsidy from the government, but the finance department is not releasing it on time.
BPDB has not been able to pay the full electricity bill to the IPPs for one and a half years due to financial and dollar crisis. The amount of debt is also increasing gradually. According to the information given by the IPPs, the dues of the institutions to the organization till last September was about Tk 18,000 crore.
Entrepreneurs claim that many IPPs have been closed due to huge arrears with BPDB. It is alleged that many are becoming bank defaulters.
When asked about this, the president of Bangladesh Independent Power Producers Association (BIPPA) Faisal Karim Khan said, “There is no progress regarding the arrears. Same as before. If money is not available, the IPPs are unable to maintain their production activities. On the other hand, the IPPs are not able to pay the suppliers from whom they are buying fuel.
Besides the IPPs, the joint venture Payra Coal-based Power Plant will also get a huge amount from BPDB. BPDB’s outstanding debt to the 1,320 MW power plant was over Tk 6,000 crore in August this year. The power plant is now supplying electricity at full capacity within the country. According to related sources, the power plant’s managing company Bangladesh China Power Company Limited (BCPCL) has increased its debt to BPDB in the last two months.
On the condition of anonymity, a top official of BCPCL said, ‘BPDB owes Tk 6,000 crore till August. BPDB is taking more or less Tk 1000 crore electricity supply every month. There is no talk from BPDB regarding the payment of this arrears. However, the amount of electricity supplied every month, if the bill is paid properly, the coal import can be paid with this.
BPDB is also buying electricity from India on GTU basis and privately to keep the power supply management of the country in order. The arrears of electricity purchased under JTUJ from India is not less than Tk 4,000 crore.
Besides, BPDB is importing electricity from private company Adani Power. BPDB’s total arrears to the 1,600 MW coal-fired power plant are $300 million as of this October. According to the current exchange rate of the dollar, its amount in Bangladeshi currency is more than Tk 3,300 crores.
Gas-based IPPs are now unable to pay the price of gas supplied by Petrobangla gas distribution companies without receiving electricity bills on time. The situation is the same for gas-based government power plants. Along with this, the fertilizer factories are also unable to pay the amount due to Petrobangla for gas supply.
According to a reliable source of the company, as of October 15, Petrobangla’s dues to gas-based IPPs and government power plants and fertilizer factories have exceeded Tk 11,000 crore. Of this, the fertilizer factories owe Tk 1,800 crore. The remaining Tk 9,200 crore are stuck with the power generating companies.
According to a reliable source of BPDB, Petrobangla’s total debt to the power plants under the organization was Tk 2,071 crores. Of this, BPDB has recently paid Tk 871 crore to gas distribution companies. The process of payment of remaining Tk 1,200 crores is going on.
Due to non-payment of dues, Petrobangla is now unable to pay the accumulated debt to LNG suppliers and IOCs. Currently, the company owes these suppliers $40.5 million, which is more than Tk 4,455 crore in local currency. A major part of this will be given to Chevron, the US gas extraction company within the country.
Officials of the company believe that outstanding dues to IPPs and government power plants and fertilizer factories are the most financially crippling of Petrobangla. According to them, the debtor institutions have paid some amount but it is very little and in a slow process.
In this situation, if the bill is paid, the import process of LNG may be interrupted. At the moment, the huge amount owed to power and fertilizer factories has become a bigger concern than the dollar crunch. If this money is available, Petrobangla will be able to pay the bills of suppliers regularly. But this money is not available on time.
When asked about this, Chairman of PetrobanglaJanendra Nath Sarkar told the media, “Financially, Petrobangla has been weakened the most by power generation companies and fertilizer factories. Petrobangla’s arrears to them have exceeded Tk 11,000 crore till this month. This money needs to come to Petrobangla quickly.
The officials of Petrobangla are blaming the price situation of energy products in the world market, price inflation, dollar crisis and the unilateral price determination of Bangladesh Energy Regulatory Commission (BERC) as the reasons for creating a vicious circle in the power and energy sector. A top official of the organization claims that only because of BERC, Petrobangla companies have suffered a loss of Tk 32 to 35 thousand crore in the last two and a half years.
Observers of the power and energy sector believe that the shortage of cash in the hands of the government and the devaluation of taka against the dollar have played a major role in creating this situation. If you want to know about this matter, energy expert Prof. Tamim told the media, “Though BPDB’s revenue is good, the arrears are increasing and prolonging due to the delay in the release of subsidy money.”
Power sector subsidy is paid by the government from the income of other sectors. But the target of income is not coming even from those sectors. As a result, there is a shortage of cash in the hands of the government. In order to get out of the cycle of arrears in gas and electricity, it is necessary to ensure timely release of BPDB subsidy. At the same time, BPDB’s dollar rate-related complications with IPPs should also be removed. Otherwise, there is no chance to get out of this cycle soon.