First News
Volume:7, Number:42
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THIS WEEK

Power Subsidy Hits BDT24.74 Billion in Eight Months

| Sharifunnaher |

Subsidies in the power sector soared to BDT24.74 billion 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 a loss of BDT16.7409 billion for selling electricity purchased from the private sector at subsidized rates, and BDT1.20 billion for paying higher rates for the 600MW power import from the Indian state of Tripura. Meanwhile, state minister for power, Nasrul Hamid, said on April 17 that power subsidies will be completely withdrawn from the year 2022-23 as electricity will become more affordable by the commissioning of base load power plants.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 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 1800MW of electricity from gas-fired public-sector plants during the period. Power tariff from the state-run power plants ranges between BDT2.0-3.5 per unit, but it costs between BDT13 and BDT23 per unit from the oil-fired rental plants. In January and February in the current year, the government incurred a loss of BDT4.294 billion for selling electricity at subsidized rates, largely due to costly power purchases from rental and quick rental plants, and importing power from India. PDB paid BDT329 million and BDT3.6507 billion in bills to the rental power plants and quick rental plants respectively, in November and December. The loss for selling electricity at subsidized rates stood at BDT10.0302 billion for July and August, and BDT7.1879 billion in September and October respectively, last year. Taking advantage of the government’s dependence on private power plants, owners of rental and quick rental power plants 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 USD12.90 per month.

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