Subsidies in the power sector soared to Tk 2,474 crore in the first eight months of the current 2016-17 fiscal due to gradually rising electricity purchase from costly rental and quick rental power plants.
Besides, the electricity import from India has also been increased as power consumption will go up in the coming months due to the heat wave sweeping across the country.
During the July-October period of the current fiscal, the government has incurred losses of Tk 1674.09 crore for selling electricity purchased from the private sector at subsidised rates, and Tk 120 crore for paying higher rates for the 600MW power import from the Indian state of Tripura.
Meanwhile, State Minister for Power Nasrul Hamid on Monday said power subsidy will be completely withdrawn from the year 2022-23 as electricity will become more affordable by the commissioning of base load power plants.
Bangladesh Power Development Board (PDB) purchased around 2195MW of electricity from 20 rental and quick rental power plants only in January and February, which was 542 MW higher compared to the same period a year ago.
Power purchase from the private sector reached around 6,021MW in the first two months of the current calendar year owing to a fall in electricity generation from low-cost state-run plants. PDB produced around 1800 MW of electricity from gas-fired public-sector plants during the period.
Power tariff from the state-run power plants ranges between Tk 2.0-3.5 per unit, but it costs between Tk 13 and Tk 23 per unit from the oil-fired rental plants.
In January and February in the current year, the government incurred losses of Tk 429.40 crore for selling electricity at subsidised rates largely due to costly power purchase from the rental, quick rental plants and power import from India.PDB paid Tk 32.90 crore and Tk 365.07 in bills to the rental power plants and quick rental plants respectively in November and December.
The losses for selling electricity at subsidised rates stood at Tk 1003.02 crore in July and August and Tk 718.79 crore in September and October year.
Taking the advantage of the government’s dependence on private power plants, the owners of the rental and quick rental power have been pushing for extending the tenure of the costly plants by 5 years.
The power division has increased the tariff of four rental power projects considering capacity payment at $12.90 per month.
PDB secretary Mina Masud Uzzaman earlier sought Tk 429.40 crore as subsidy to help the state-owned power distribution company cope with the losses for costly electricity purchase. PDB received Tk 1674.09 crore as subsidies in July and October last year while another chunk of Tk 370.51 crore was in the pipeline.