About four and a half months before a student-led mass uprising overthrew prime minister Sheikh Hasina, the energy ministry in an order sealed the deal on making excessive profits by the United Power, a private power generation company.
Sheikh Hasina also held power, energy and mineral resources portfolio then.
Dated March 25, 2024, the order said that the United Power鈥檚 two power plants in the Dhaka and Chattogram export processing zones would receive gas at the independent power plant (IPP)聽 rate for electricity generation supplied to the national grid and Bangladesh Export Processing Zones Authority.
The order went against a February 8 Supreme Court order that settled that the two power plants would pay the IPP rate for gas used for producing electricity supplied to the national grid and the captive rate for gas used for generating electricity commercially sold.
The ministry order immediately guaranteed the United Power an additional profit of Tk 4.61 per kWh besides its regular margin from selling electricity produced at the plants, according to a Bangladesh Power Development Board analysis.
The tariff of per unit electricity, generated using gas at the IPP rate of Tk 15.50 a unit, is Tk 6.41, as per the notification issued by the Bangladesh Energy Regulatory Commission on May 14. The tariff is far less than what the United Power gets by supplying per unit of electricity under a contract signed with BEPZA, Tk 11.03.
The contract with BEPZA was signed in May 2007, allowing the power plants to sell electricity to clients in the export processing zones.
Commercial power producers are supposed to pay the captive rate for gas, which is Tk 30.75 a unit.
The IPP rate is meant for independent power plants who supply electricity to the national grid and are not allowed to privately sell electricity.
Electricity supplied through the national grid is all bought by the BPDB. The power sector is highly subsidised. A quarter of the supply of gas to the power sector comes via import as liquefied natural gas. A unit of LNG costs over Tk聽60.
The annual power sector subsidy has recently crossed Tk 30,000 crore.
The order of the energy ministry is reminiscent of the arbitrary use of power by the past government to benefit its cronies, according to experts.
Almost all power and energy deals that the Hasina government allowed over the 14 years since 2010 had come through without bidding, mostly through one-to-one negotiation, under an indemnity law that the interim government has recently cancelled, they said.
The past government also striped the Bangladesh Energy Regulatory Commission of its power to set tariffs in December 2022. The BERC got back the tariff-setting power after the interim government took office on August 8.
The white paper on Bangladesh鈥檚 economy submitted recently to the interim government cited the United Group as the past AL government favourite raking abnormal profits by running its power plants in the export processing zones.
Initially, the United Power鈥檚 two power generation units used gas at the captive rate, which the company stopped paying in 2009 after the AL government assumed power. The plants with a combined capacity installed generation capacity of 164MW started commercial operation in 2008 and 2009.
Authorities, however, did not raise any objection over the United Power switching to the IPP rate, until in 2018, demanding that the company pay separate prices for electricity sold to the BPDB and private industries.
A prolonged legal wrangle ensued when the United Power went to the High Court challenging authorities鈥� demand for separate rates. The legal battle ended with the review of the Appellate Division order in February 2024 that went against the United Power.
United Power鈥檚 dues to state-owned Titas Gas Transmission and Distribution Company Ltd rose to Tk聽486 crore by October 2024 as the company paid less than it should be for gas supplied by the Titas.
The company commercially producing power was not supposed to receive the gas in the first place, considering the 2008 policy, which spoke against supplying scarce national resources such as gas to commercial entities. The policy requires commercial power producers to arrange for their own energy.
The United Power that purchased gas for Tk 988 crore between 2017鈥�18 and 2023鈥�24, earned Tk 3,799 crore from electricity sales. The company enjoys monopoly at the export processing zone in its power business.
An analysis by the Bangladesh Working Group on Ecology and Development revealed that 23 per cent of the power produced between 2017鈥�18 and 2023鈥�24 was supplied to the national grid, while the rest went as a commercial supply to BEPZA.
In the past year, the plant factor at the CEPZ power plant was 76 per cent, following the DEPZ power plant running at 54 per cent capacity.
The United Power in the past year declared 20 per cent profit. Its profit stood at 74 per cent in 2018, followed by similar profits made in 2016 and 2017. In the other years, since 2013, the company has reported 50 per cent or more profit.
Since 2011, the United Power has set up seven more power plants 鈥� all IPPs 鈥� with installed generation capacity of 1,041MW.
