Home Power & Energy Unpaid electricity bill stood at Tk 60,000cr
Power & Energy - April 22, 2024

Unpaid electricity bill stood at Tk 60,000cr

Syed Nasir Hossain: At the end of last January, the amount of unpaid bills for electricity imports from India including government and private power generation companies, Adani, stood at around Tk 60 thousand crores.
In this situation, with the aim of uninterrupted power supply during irrigation and summer season, the electricity department requested the finance ministry to pay about Tk 18 thousand crore of the remaining subsidy of the current financial year in the next four months from last March. There was a request to release at least Tk 3000 crore of subsidy on an urgent basis by March itself.
But since there is not enough money in the treasury of the government, the Ministry of Finance released Tk 1 thousand crore on March 28. After that no more money could be given in this sector. According to the sources of the Power Development Board, apart from the issuance of special bonds of Tk 10,599 crore against the local loans of private power generation companies, Tk 6,700 crore has been released for subsidy. That is, Tk 17,701 crore are still left for subsidy allocation in the current financial year.
Tk 35 thousand crore have been allocated in the budget for this sector.
It is known that till last January, the total amount of unpaid bills for electricity purchase from India including government and private power generation companies, Adani, stood at more than Tk 42 thousand 700 crore. Apart from this, at the same time, the amount of unpaid bills of government power generation companies and domestic import-dependent coal-based power generation companies isTk16,800 crores. In all, the unpaid bills till last January are about Tk60 thousand crores.
Officials of the Ministry of Finance said that the prices were increased several times to reduce the subsidy on electricity and fertilizer. Due to this, it was expected that the subsidy demand will decrease in the current financial year. But on the contrary demand for electricity subsidy has increased gradually. At the end of last June, the arrears of the government due to electricity and fertilizer subsidies stood at around Tk 42 thousand crores.
Fertilizer is sold in the market at a much lower price than the price at which it is purchased from importers and producers. Same goes for electricity. The difference in between is subsidized by the government. But the government could not pay all the dues of the fertilizer and power sectors due to the increase in subsidy demand in the last financial year and the arrears of the previous financial year.
As it became difficult to pay in cash, special bonds were taken to pay off liabilities. As part of this, so far special bonds of Tk 10,599 crore have been issued against bank loans of private sector power entrepreneurs. By the end of the current financial year, there is a decision to issue bonds worth about 15 thousand crore rupees for electricity subsidy.
No official statement was received from any responsible official of the Ministry of Finance regarding the next plan to pay the electricity subsidy liability. However, requesting anonymity, a senior official said that the government’s aim was to pay all subsidies including arrears within the current financial year. But due to lack of sufficient funds, even after 9 months of the fiscal year, a total of Tk17,299 crores has been given for electricity cash subsidy including special bonds. Even the situation is at such a level that in order to meet the liabilities of the current financial year, additional allocation has to be made in this sector in the next budget.
In this regard, the Consumers Association of Bangladesh (CAB) formed to protect the interests of consumers, energy advisor Professor Dr. M. Shamsul Alam told that the power sector has been developed mainly through non-competitive investments based on the private sector after passing the Rapid Supply of Electricity and Energy (Special Provisions) Act-2010. By this, the unfair and unreasonable cost of electricity has been increased by giving the investors the opportunity to increase the cost as desired. Due to this reason, even if the electricity price is increased almost every year at the consumer level, the subsidy cannot be reined in. Now the average cost of power generation per unit in the country has exceeded Tk12. But Tk7 is being imported at 83 paise. This industry cannot survive if the price of self-produced electricity is higher than imported. This is the fate of our power industry.
When asked to know the way out of this, he said that the development of this sector should be under the ownership of the government in order to reduce the cost of electricity production. This sector should be treated as a service sector and the policy should be changed. The Fast Supply Act should be repealed. BRC should be empowered to set prices more effectively on the basis of public hearings.
Meanwhile, Bangladesh has promised the International Monetary Fund (IMF) to bring down the subsidy in the budget to a reasonable level. In this case, the global organization has been suggesting to reduce the subsidy and spend that money in the social security sector. But the government is increasing the subsidy on the contrary in the budget of the next financial year 2024-25. For subsidy in power sector, at least Tk5000 crore are being increased from the current budget and Tk40 thousand crore are being kept in the next budget. Officials of the Ministry of Finance say that electricity prices have already been increased several times at the consumer level to reduce the subsidy pressure. Despite that, the demand for subsidies in this sector has not decreased that way. Therefore, it will not be possible to meet this demand with the current allocation.
In January last year, before the approval of the IMF’s $4.7 billion loan proposal for Bangladesh, the finance minister and the Governor of Bangladesh Bank jointly informed the organization that the prices of oil, gas and electricity have been increased. Subsidy will also be reduced in the power sector. IMF welcomes the government for this.
Research organization Policy Research Institute (PRI) executive director Ahsan H. Mansoor told that steps should be taken to get out of subsidies in food and agriculture. Especially electricity subsidy should be reduced. Sri Lanka raised electricity prices by 66 percent to get IMF loan. Bangladesh will not be an exception in this case. To complete this loan program, Bangladesh will also have to raise prices. However, he suggested increasing the price step by step.

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