Power sector in money crunch

Aminur Rahman Rasel Jun 4 bdnews24.com

Fuel oil-run power plants are facing financial problems as prices of oil have been hiked, leading the authorities to shut some plants or reduce generation.

“The sector is facing financial crisis to run the oil-fired plants,” Power Development Board (PDB) Chairman A S M Alamgir Kabir told bdnews24.com on Monday.

According to him, it needs Tk350-400 million every day to run all the power plants run by oil, gas and coal. “The plants run by gas and coal need Tk 230-250 million,” he said.

“We’ve sought Tk 64 billion from the government as subsidies for the current fiscal year. The government gave Tk 43 billion until January,” Alamgir said.

“One month of the current fiscal year is left. If we don’t get the rest amount of money, the sector will face severe financial crisis,” he added.

According to Power Secretary Abul Kalam Azad, prices of furnace oil and diesel had been Tk 26 and Tk 44 a litre, respectively, when the deals to build the oil-fired plants had been signed two years back.

“Now furnace oil is sold at Tk 60 a litre and diesel at Tk 61 a litre,” he said.

“As a result, we have to shut some power plants or reduce generation,” he added.

According to PDB, eight of the 34 oil-run power plants have been shut and 10 others see reduced generation. The 18 active plants are generating 800 megawatts less power every day than that at normal time.

Power sector officials said if any new oil-run plant is launched in the present circumstances, it will have to be shut due to the financial crisis in the sector. But the government will have to pay ‘capacity charges’ regularly under the deals signed with private firms to set up the plants.

To reduce subsidies given to the fuel oil sector, the government hiked price of diesel oil four times and furnace oil six times last year. The last hike took place on Dec 29 last year.

According to the announcement made on the day, per litre diesels is sold at Tk 61, kerosene Tk 61, petrol Tk 91, octane Tk 94 and furnace oil Tk 60.

Consumers Association of Bangladesh (CAB) Advisor Prof Shamsul Alam blamed the government for ‘not having any plan to tackle the situation’.

“The power sector is experiencing financial crisis due to lack of proper plan of the government. So the power tariff has been hiked to reduce subsidies, which impacts the consumers negatively,” he told bdnews24.com.

The power plants of Bangladesh are generating 5,500 megawatts of electricity every day on average against a demand of 7,500 megawatts.