Pvt power plants seek redress


Exchange rate fluctuations

Exchange rate fluctuations

| Updated:
Aug 28, 2022 10:48:40 a.m.

Private owners of oil-fired power plants have demanded compensation for fluctuations in exchange rates. They now claim to have suffered losses due to the import of fuel oil used to run the power stations.

The owners are seeking “relief payments” from the Bangladesh Power Development Board (BPDB) and are considering a “side agreement” with the Bangladesh Power Development Board (BPDB) in addition to existing agreements to secure the payments.

Adjusting payment is to reconcile or match the balance of two or more items.

Bangladesh has about five dozen oil-fired power stations with an estimated power generation capacity of 5,500 megawatts (MW).

The BPDB agreed to pay compensation to private owners of oil-fired power plants and sent a letter to the electricity division authorizing the adjustment payment to power plant sponsors, a senior BPDB official acknowledges.

The already loss-making BPDB, which now operates with a government subsidy to buy electricity from private power plants, however, did not mention the additional loss to be incurred if the adjustment payment is made to them.

Most oil-fired power stations were awarded to the private sector through unsolicited bids under the Rapid Electricity and Power Supply (Special Provision) Act 2010.

The law provides immunity for those involved in quick fixes.

They buy their own fuel oil on a “free on board” (FOB) basis, organize ships and bring in their own fuel oil for a freight charge.

Then they recover all costs plus a 9.0% service fee from the BPDB.

Rights groups and energy experts, however, oppose such compensation payments, saying it will be another window to make money by “cheating people”.

“We are incurring losses as we pay about Tk 110 per US dollar when importing fuel oil, but we receive payment from BPDB according to bank rates, which is now Tk 95.05 per US dollar,” Bangladesh said. Independent.

Power Producers Association (BIPPA) President Imran Karim told FE on Saturday. Independent Power Producer (IPP) companies have over $1.5-1.7 billion outstanding with the BPDB as of July 5, 2022.

But according to a decision of a tripartite meeting between Bangladesh Bank (BB), Bangladesh Foreign Exchange Dealers Association (BAFEDA) and Association of Bankers, Bangladesh (ABB), banks cannot make profit above Tk 1.0 by selling a dollar of their weighted average. cost of purchase. The meeting set a Tk 1.0 spread between buying and selling prices of the greenback for banks to stabilize the currency market.

“I think only the BPC should have the responsibility to import all kinds of petroleum products from the international market to ensure transparency and accountability of fuel import costs,” says energy expert Professor Ijaz Hossain.

“I have heard that the private sector is importing fuel oil that is below approved specifications,” he adds.

Mr Hossain, who teaches chemical engineering at the Bangladesh University of Engineering and Technology, suggests the government provide proper oversight to check for irregularities. There is a discrepancy in the importation of petroleum products by the public and private sectors, Dr Shamsul Alam, energy adviser of the Bangladesh Consumers Association, told FE.

The BPC has a long history of maintaining a weak accounting system, which helps invested groups waste public money, he notes. Mr Alam says there are also allegations that the private sector imports home heating oil at a discounted rate from different oil suppliers but charges BPDB payments at international market rates with premium.

Private factory owners should bear the loss of dollar fluctuations, if any, on the 9.0% they receive from BPDB, he concludes.

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