Bangladesh power plants have huge capacity. Then why no increase in power production?

'Financial crisis' is the key reason behind this, believes Power Cell Director General Mohammed Hossain

Power plants in Bangladesh can produce around 26,000MG of electricity but only 14,500MG is being produced. Hence, the country struggles to meet the demand ranging from 15,000MW to 17,000MW. There is an average deficit of 1,500MW.

Due to the flaws in the transmission line, the produced electricity is also not distributed in a balanced way.

As April brought unusually severe hot weather across the country, power demand skyrocketed, leading to 10-12-hour power outages in some regions.

Due to the financial crisis, the government subsidies have slowed in the sector, said Power Department officers. Hence, several arrears now exist at every level of financial management. Buying electricity at a higher price and then selling it to customers at a lower rate has turned out to be quite challenging. Now, they want to maintain the production-supply balance by rationing power.

Civil society members, however, believe the government adopted the strategy to raise the power prices and limit power production to ease the subsidy pressure in the sector. Therefore, more power outages happen in the summer when the demand is high.

Electricity imported from India costs Tk 7.83 per unit, as per last year’s account. The average cost of power produced locally stands at Tk 12 per unit while the Power Development Board (PDB) sells it to the companies at Tk 7.04 per unit.

This creates around Tk 400 billion deficit a year, which the finance ministry has to pay as subsidies. However, the government recently adopted an ‘austerity policy’ that limits the paying of subsidies.

PRODUCTION-SUPPLY SITUATION

On Apr 30, the power production in the country reached a milestone of 16,477MW. However, there was still 500MW of outage as the demand was 17,000MW.

Transmission company PGCB’s data from Apr 25 to Apr 30 showed that 14,388MW of electricity was produced on Apr 25, while the demand stood at 15,384MW. So the deficit was 1,000MW.

The next day Apr 26 saw 14,018MW of electricity produced against the demand of 14,730MW. The deficit was 712MW on that day. The figures of production, demand and deficit were 13,950MW, 14,865MW and 914MW on Apr 27.

Power outages are not happening ‘equally’ in all parts of the country. Hence, in some places, power outages are not very common while in other places, people are frustrated with frequent power outages. In some places, the electricity supply is disrupted only for an hour while some places face power outages for 10 to 12 hours.

The power outage situation in the districts of Jashore, Chuadanga, Joypurhat, and Nilphamari, which suffer from heatwaves more, has been better this year, consumers said.

On the other hand, power outages have become intolerable in some parts of the greater Mymensingh, Noakhali and Cumilla. In some cases, some areas in a district see no trouble in the power supply but power outages are a common phenomenon in other areas in the same district.

STAGNANT PRODUCTION

Currently, 83 power plants are running in the private sector with a capacity of 10,750MW.

At least 44 of them are run on diesel and furnace oil with a capacity to produce 4,694MW of electricity. As many as 28 plants in the private sector are gas-based and able to produce 4,019MW of power.

While the power demand is high, almost half of these plants are not using their entire production capacity.

Including both the government and private sector, oil-based power plants can produce 6,356MW of electricity, coal-based plants 5,028MW [without the Adani Jharkhand power Plant] and gas-based ones 11,114MW of electricity.

On May 6, the power demand was 14,400MW per hour at peak production hour at 9pm, and the production was 14,353MW, according to the PGCB. The deficit was only 45MW.

The gas-based plants produced 6,563MW, liquid fuel-based ones 3,525MW and coal-based power plants produced 3,169MW electricity at that time.

The rest of the demand was met with electricity imported from India and different renewable energy sources.

UNUSED ELECTRICITY

>> SS Power Plant owned by S Alam Group in Bashkhali can produce 1,224MW of electricity while Matarbari Coal Power Plant can produce 575MW. However, the two plants can supply an average of 700MW per day as the transmission line is not fully prepared yet. At least 1,100MW of electricity can’t be produced despite the capacity.

>> Payra Thermal Power plant in Patuakhali currently produces 1,244MW, its full capacity. Another thermal power plant in Bagerhat’s Rampal, however, now produces only 375MW per day when it can produce 1,234MW.

>> The gas-based power plants provide the cheapest electricity Tk 5-7 per unit. At present, 61 gas-based plants exist in Bangladesh including both government and private ones and can produce 11,880MW altogether. To tap out the capacities of all these plants, 2,316 million cubic feet of gas is needed per day. Petrobangla used to supply 700-800 million cubic feet per day to the gas-based plants. Considering the current situation, they increased the supply to 1,350 cubic feet daily. This enables the gas-based plants to produce a maximum of 7,000-8,000MW. The rest of the 4,000MW is never produced.

FINDING A SOLUTION

When asked about the inability to meet the increasing demand for electricity despite having the capacity, Mohammad Hossain, the director general of Power Cell, attributed it primarily to financial constraints.

"The primary issue lies in the fact that the selling price of electricity is significantly lower than the purchase price or production cost of the Power Development Board (PDB). Consequently, the gap between revenue and costs has been widening, resulting in a current financial deficit of Tk 410 billion. Previously, the government subsidised this deficit, but with the current global economic challenges affecting Bangladesh, the government is also implementing austerity measures."

Hossain explained that both public and private power plants receive funds from the PDB, but due to financial constraints, they are now operating under rationing measures, whether it be for oil or coal.

"While some financial issues have been alleviated through bonds, these payments sometimes hinder the optimal operation of units. Additionally, certain facilities are experiencing shortages of oil due to round-the-clock operation, and coal rationing further limits the utilisation of full capacity."

When asked why gas-based power plants are not operating at full capacity, Mohammad Hossain explained, "During the Eid holidays, we utilised the maximum amount of gas available, resulting in a record generation of over 8,000 MW from gas. However, another 8,000 MW of electricity could have been generated if sufficient gas supply had been available."

Regarding transmission line limitations, he noted, "Some areas, such as Mymensingh and the Cumilla zone, still face issues."

BPDB Member (Production) Khandakar Mokammel Hossain echoed similar sentiments, stating, "Our production capacity is not being fully utilised due to payment issues. Although some outstanding payments until last November were settled through bonds, both public and private companies often struggle to procure fuel for plant operations. Government-owned power plants also face closures at times due to delayed fuel deliveries, attributed to transportation issues."

"Furthermore," he continued, "coal-based plants are not consuming their entire coal supply simultaneously. Due to slow coal deliveries, efforts are made to sustain production by slightly reducing fuel consumption. Additionally, every effort is made to maximise gas usage, with priority given to more efficient plants. However, this prioritisation leads to periodic shutdowns of many gas-based plants, affecting overall power generation."

However, Prof Shamsul Alam, the energy advisor of the Consumers Association of Bangladesh, an organisation known for its advocacy against irregularities and corruption in the power sector, expressed concerns to bdnews24.com, saying, "They are cutting subsidies through load shedding, repeatedly hiking prices, and reducing production. These are the two strategies they have adopted."

"The current electricity distribution policy is dictated by the government, but the public remains unaware of the amount of subsidy being saved through these measures," he continued.

"This lack of transparency is exemplified by the Bangladesh Energy Regulatory Commission's cessation of public hearings, preventing the public from being informed.

Despite our efforts, including a press conference outlining ways to cut unnecessary expenses and reduce subsidies, the government continues to raise prices without consultation and production has been reduced."

Alam criticised the International Monetary Fund for advocating the reduction of government subsidies in the power sector.

"It is unacceptable for the IMF to insist on unilateral increases in electricity prices without considering the underlying reasons for cost hikes," he remarked.

"To prevent legal challenges, the new Quick Enhancement of Electricity and Energy Supply (Special Provision) Act was passed, but this has led to further injustice. The IMF's endorsement of inflationary measures without proper understanding exacerbates the situation."

"Both donor agencies and ourselves have been advocating for an audit of the power and energy sector, a task that falls under the purview of the Comptroller and Auditor General (CAG). If the government is unwilling to conduct such an audit, then who will take responsibility for this crucial oversight?" he questioned.

POWER SECTOR ARREARS

According to BPDB's estimate as of Apr 29, power generation companies owe them Tk 331.09 billion until February. Among these, approximately Tk 150 billion is owed by 99 private sector companies.

Additionally, Indian companies are owed Tk 50.30 billion by BPDB for power exports.

The Payra and Rampal thermal power plants, constructed under Government-to-Government (G2G) agreements, are due Tk 24 billion from the PDB. Various government-owned companies are owed more than Tk 100 billion.

To ease the burden of long-standing arrears, the finance ministry recently issued bonds worth Tk 106 billion.

In the second phase, bonds worth Tk 175.53 billion have been issued by the government, including around Tk 70billion.

CAUSES OF POWER CUT

Several officials from the Power Division have highlighted that the production process has slowed down significantly due to the substantial amount owed to the BPDB, the primary entity responsible for electricity buying and selling.

With significant arrears accumulating, both public and private manufacturing companies have resorted to rationing strategies regarding energy consumption.

Furthermore, the inadequacy of the transmission lines has exacerbated power management issues, leading to increased instances of load shedding.

The country's existing transmission lines, divided into eastern and western regions, also exhibit capacity deficits.

Despite surplus electricity in the western region, limitations in transmission prevent the efficient transfer of power to meet the demands of the eastern region.

According to ABM Badruddoza Khan, the spokesperson for Power Grid Company of Bangladesh or PGCB, power generation in the eastern region falls short of demand, necessitating the reliance on electricity produced in the western region to meet the demand.

Currently, the Aminbazar grid substation transmits 700 to 900 MW of electricity daily to the eastern region.

He believes that enhancing the capacity of the transmission line could facilitate the transmission of more electricity to the east.

Power Cell DG Hossain suggests several strategies to address the crisis.

Firstly, arranging fuel according to demand can mitigate the crisis.

Implementing demand-side management measures, such as reducing demand through different means, can offer temporary relief. Last year, approximately 500 MW was managed through such strategies.

For instance, enforcing the closure of shops after 8pm as per labour laws and scheduling separate holidays in industrial zones can help manage demand.

Encouraging customers to adopt energy-efficient practices, like maintaining AC temperatures above 25 degrees Celsius, can significantly save electricity.

Furthermore, addressing excessive energy consumption practices, such as maintaining excessively low temperatures in five-star hotels and running ACs in vacant government offices, is essential.

Hossain emphasises the importance of educating the public through media campaigns and engaging with community leaders like Imams in the mosques to promote energy conservation.