THE capacity charge, which the government pays independent and rental power plants when they sit idle as a guarantee of returns on investment coupled with profits, is set to reach Tk 380 billion in the 2025 financial year.聽 This is a 46 per cent, or Tk 120 billion, increase on the capacity charge of Tk 260 billion that the government paid the power producers in the 2024 financial year, which was also Tk 90 billion more than what was paid in capacity charge the preceding financial year. The increase by Tk 88.93 billion in the capacity charge that the government is estimated to be paying this financial year is because of the addition of five power plants 鈥� two gas-based and three coal-based systems 鈥� in the 2024 financial year. The plants were not paid the charge in the past year as they had a dry run then. The addition of three other plants, with a combined capacity of 1.98GW, in the 2025 financial year would put an additional burden of Tk 24.84 billion every year. The continued increase in capacity payment remains a burden on the struggling economy where the government is trying to shore up revenue with regressive, discriminatory, indirect taxes, which is also burdensome for the people.
Whist the amount of payment to producers increases with an increase in the installed generation capacity for the power that the government does not use, the demand for power, however, remains static. The Awami League government, toppled on August 5, 2024, allowed more than a hundred power projects after its assumption of office in 2009 which scaled up the installed power generation capacity to close to 28GW, excluding 2.8GW of captive power, this January from about 5GW in 2009 whilst the peak summer demand is roughly 17GW 鈥� the demand this winter was estimated largely at 10GW 鈥� and the generation is hardly 13GW. The power overcapacity, thus, exceeded by 50 per cent by 2024. In the 40 years after the Awami League鈥檚 assumption of office in 2009, the government paid Tk 1,000 billion to 82 independent power producers and 32 rental power plants in capacity charge. The situation has left the government in a dilemma as it cannot increase the demand to use at least a portion of the overcapacity but it is forced to pay the capacity charge. Experts believe that the government should work out plans for an early expansion of renewable energy, which accounts for only 4 per cent of the installed power generation capacity, to do away with the capacity charge as far as it can.
The government is, therefore, left with two tasks to carry out simultaneously. It should try to increase the demand for power, geared for an optimal use of power in industrialisation, so as to lessen the overcapacity as far as it can. It should also renegotiate all the independent and rental power deals to minimise the burden of the capacity charge on the economy. It should, yet then, retire the old plants that have served out their useful economic life, step up efforts on renewable sources and not take up fresh independent and rental power projects.