THIS is unfortunate that the capacity charge — the money that the Power Development Board pays power-sector investors even when the plants do not produce electricity, with an aim to cover the loans that the plants receive, along with interests, salaries of the employees and returns on the equity — continues even after the political changeover of August 5, 2024, with the interim government having promised to end such favours dished out quarters close to the Awami League government that was toppled in a mass uprising. But this does not make up the whole story. What is further unfortunate is that the capacity charges greatly vary depending on power companies with similar capacities. The power board calculates the capacity charge considering the use of 60 per cent capacity of the plants. Set up about the same time with the same technology, some plants receive way more capacity charge than the others do, 300 per cent or even more, as a power board analysis shows, for the production of a unit of electricity. Whilst the capacity charge remains a menace, varying capacity charges suggest that the power sector is plagued with too many ill practices, putting the economy in a tight spot.
Private-sector power producers have tried all every possible means — manipulating loans, bribing politicians, distorting information on equity or tampering with expenses — to inflate their capacity charge. An energy expert who was on the committee that prepared the white paper on the state of the Bangladesh economy, submitted to the government on December 1, 2024, says that the return on equity is usually 12 per cent. Joint ventures are found to be earning 16 per cent return on equity. The Rampal power plant is, however, entitled to an 18 per cent return on equity. In view of possible investments in power plants run on various types of fuel, energy experts say that an ideal capacity charge for plants based on gas is about Tk 1 a unit, for plants based on coal a maximum of Tk 4 a unit and for plants based on oil Tk 2 a unit. But the proposition remains far from ideal. The average capacity charge paid to gas-based independent power plants is Tk 3 a unit. The average capacity charge for gas-based independent power plants is Tk 7.17 a unit. The average capacity charge for independent oil-based plants is Tk 3.23 a unit.
With the overcapacity having already been about 50 per cent, this is pressing that the government should rethink the provision, or at least renegotiate, especially after the interim government in November 2024 repealed the Awami League-era Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act 2010 that brought in the menace in the energy policy.