Record-breaking production cost eaten up power sector

Zarif Mahmud : In March last year, 100 percent electrification was announced in the country. The crisis started three months after that. Imports of fuel oil and liquefied natural gas (LNG) are disrupted due to the dollar crisis. It started official load shedding with announcement from July. Load shedding continued throughout the fiscal year 2022-23. At this time, electricity production increased slightly. But compared to that, the cost of production has increased much more. As a result, the Power Development Board (PDB) faced record losses.
According to the information of the organization, the net electricity production in the country (including import) in the financial year 2022-23 was 8,703.97 crore kilowatt hours.
A total of Tk 96,084.87 crore has been spent on this electricity production. That is, the cost per unit of electricity production is Tk 11.04. In the previous financial year (2021-22), the net electricity generation in the country (including imports) was 8,393.33 crore kilowatt hours. About Tk 71,704.36 crore was spent on electricity production that year. That is, the cost of producing electricity per unit is Tk 8.54. According to this, electricity production has increased by 3.70 percent in the last financial year.
However, the average cost increased by 29.27 percent. Although the average selling price of electricity per unit last financial year stood at Tk 5.94. In this, PDB has to calculate the loss of Tk 5.10 per unit of electricity. And in the financial year 2021-22, the average selling price of electricity per unit was Tk 5.09. In that fiscal year, PDB’s loss per unit of electricity was Tk 3.45. However, the cost and losses will increase by 30 paise per year if interest on budgetary assistance and accrual of power development fund is considered.
According to PDB’s data analysis, the cost of power generation in all types of energy-based centers has increased in the last financial year. Out of this, the average cost of hydro production has increased by 85 paise. The average cost of hydro power generation in the financial year 2021-22 was Tk 2.70. But last financial year the water level in Kaptai went down a lot. In this, the 230 MW plant runs an average of 70 MW, which is only 30 percent of the capacity. The average cost has increased to Tk 3.55. However, 18 percent less electricity was obtained from hydro last financial year.
Meanwhile, 50.76 percent of the total electricity generated came from gas-fired plants in the fiscal year 2022-23. At this time, 11,498 megawatt capacity centers are running at 44 percent. 4,417.76 crore kilowatt hours of electricity has been produced in it. About Tk 22,96.60 crore is spent for this. The average cost is Tk 5. In the previous financial year, the average cost of gas-fired power plants was Tk 3.47. That is, the average cost of gas stations has increased by Tk 1.53 or 44 percent.
About 21 percent of the total electricity generation came from furnace oil-fired plants last fiscal. At this time, 6,213 megawatt capacity centers are running at 34 percent. It has produced 1,897.73crore kilowatt hours of electricity. Tk 38,241.34 crore is spent for this. As a result, the average cost is Tk 20.90. In the previous financial year, the average expenditure in furnace oil-operated centers was Tk 16.96. That is, the average cost of furnace oil operated centers has increased by 23.23 percent.
Meanwhile, the average cost of diesel-powered power plants has increased by 17.58 percent in the last financial year. The average cost of the power plants in the fiscal year 2021-22 was Tk 34.36. Last financial year it increased to Tk 40.40. Only 2.67 percent of electricity is available from these centers. And 73.73 percent of electricity was obtained from renewable power plants (solar and wind) last financial year. However, the average cost of production in this sector has also increased to Tk 15.77. In the fiscal year 2021-22, the expenditure was Tk 12.85.
Among domestic power stations, coal-fired power accounted for slightly more than 12 percent last fiscal year. The average expenditure in this sector has increased to Tk 15.20. In the fiscal year 2021-22, the expenditure was Tk 12.68. And the electricity imported from India met 10.25 percent of the country’s demand last financial year. The average cost is Tk 7.83. In the fiscal year 2021-22, the expenditure was Tk 6.06. Besides, the price of Adani’s electricity imported from India fell by Tk 14.02. In four months, the company met 1.84 percent of the country’s demand.
Meanwhile, in addition to energy, the production cost of proprietary power plants has also increased significantly. In the financial year 2021-22, the average cost of power generation in PDB’s own centers was Tk 5.02. Last financial year it increased to Tk 7.43. The average cost of private sector independent power producers (IPPs) i.e. large power plants has increased to Tk 14.62. The average expenditure of IPP in FY 2021-22 was Tk 11.55.
Average cost of production in rental power plants in 2021-22 was Tk 9.80. Last financial year it increased to Tk 12.53. The average production cost of power plants of other public sector companies fell to Tk 6.85 last financial year. In the financial year 2021-22 it was Tk 4.75. And the average cost of electricity import from India (including import) has increased to Tk 8.77. The average import cost was Tk 6.11 due to lack of revenue in the previous financial year.
PDB Chairman Md. Mahbubur Rahman said that there were two main reasons behind the increase in the average cost of power generation last financial year. Firstly, the prices of fuel oil and coal in the international market were very high at the beginning of the financial year. Although it later decreased, the average cost was higher. Besides, the cost of importing furnace oil and coal has increased due to the increase in dollar exchange rate. Besides, the price of fuel oil and gas has been increased by the government. Because of this, the cost of fuel is very high.
He further said that the increase in capacity charges due to increase in dollar value was another reason behind the increase in the average cost of electricity. Expenditure in this sector has increased by more than 25 percent. Besides, electricity production has increased very less than other years. The average cost has also increased. Bulk power prices have been raised somewhat to cover the shortfall, though not enough. As a result, the power sector needed a record subsidy last financial year.