The Bangladesh Independent Power Producers’ Association (BIPPA) has alleged that controversial decisions regarding private power generation have been taken with the intention of putting the upcoming elected government in trouble.
The allegations were made at a press conference held on Monday at Hotel Sonargaon in the capital.
BIPPA claimed that ahead of the election, the Bangladesh Power Development Board (BPDB) artificially inflated electricity demand and increased the amount of penalties imposed on private power producers. As a result, both the current interim government and the forthcoming elected government may face an unstable situation in the power and energy sector.
BIPPA also warned that it would go to court if the decision to increase penalties is not withdrawn.
The situation titled “Discriminatory Treatment in the Power Sector, Contract Violations, and Crisis of Investor Confidence” was presented by former BIPPA president Imran Karim. BIPPA President K M Rezaul Hasanat responded to questions from journalists.
It was stated that domestic private power producers were owed Tk 9,000 crore by BPDB earlier. After the interim government took office, arrears increased by another Tk 5,000 crore, bringing the total outstanding dues to Tk 14,000 crore. Depending on the company, bills have remained unpaid for eight to ten months. Unless at least 60 percent of these dues are cleared, power generation will be disrupted during the upcoming Ramadan and the summer season.
In response to journalists’ questions, BIPPA President said that without payment of outstanding dues, it would be impossible to import fuel oil, and power plants would not be able to operate. He alleged that the interim government is not leaving the power sector in a stable condition for the next elected government. Penalties have been imposed on private power producers before the election, which will put pressure on the future elected government.
Imran Karim said that domestic entrepreneurs are being subjected to discriminatory treatment, as facilities provided to foreign companies are not being extended to local firms. According to the Power Purchase Agreements (PPAs), if BPDB fails to pay bills within the stipulated time, power plants have the legal right to suspend electricity supply. Under Clause 13.2(j) of the contract, BPDB’s right to receive electricity may also be suspended in such cases. However, considering national interest, domestic power producers have never fully stopped electricity supply. Despite huge arrears, they have continued supplying electricity to the national grid by borrowing from banks to the best of their ability.
He further alleged that when power plants were forced to limit production due to financial constraints arising from unpaid bills, the National Load Dispatch Centre showed demand inconsistent with actual requirements and increased compensatory penalties. These penalties were imposed by citing inadequate supply in a manner that allows BPDB’s outstanding dues to appear lower on paper. In some cases, the penalty amounts have already been deducted from outstanding bills, while the deduction process is ongoing for several other companies.
According to power producers, the root cause of these so-called penalties is BPDB’s prolonged failure to pay bills, the responsibility for which is being unfairly shifted onto them.
BIPPA expressed concern that if the outstanding dues crisis persists, it could create severe instability in the power and energy sector. This may seriously hamper electricity generation, fuel imports, and future investment.
In seeking redress, applications were submitted to the Energy Regulatory Commission, but these were rejected on procedural grounds. Subsequently, power generation companies have filed review petitions, which are currently under consideration.