The government has extended power purchasing deals with three plants of Summit Power but on “no electricity no payment” basis. Hence, it will no longer have to pay capacity charge to them. The Bangladesh Rural Electrification Board (BREB) made the agreements with Madhabdi Power Plant Unit-2 for power supply between February 7, 2022 and February 6, 2027, with Chandina Power Plant Unit-2 for the five years through February 6, 2027, and with Ashulia Power Plant Unit-2 for five years until December 3, 2027. Summit Power, a major player among private power generators, has a total of 15 power plants. Their aggregate electricity generation capacity is 976 megawatts.The three plants under the new deals have a combined capacity of 72 megawatts, more than 7 percent of Summit’s total capacity. According to last year’s financial statements, 3 percent of Summit Power’s revenue came from the three plants. In FY22, total revenue of Summit Power was Tk 53 billion, in which contribution of the three power suppliers was worth Tk 1.6 billion. Capacity charge is payment made by the Bangladesh Power Development Board (PDB) to power plants in return for the right to utilize their electricity generation capacity. With the provision of capacity charge in agreements, the PDB is bound to pay power plant owners whether or not it uses their electricity. The Implementation, Monitoring and Evaluation Division (IMED), a planning ministry body, in a report referred to the capacity charge as a “model for looting” and recommended steps to do away with that. The recommendations include ending capacity charges, closing down energy-unfriendly captive power plants and scrapping the Speedy Supply of Power and Energy (Special Provisions) Act 2010.
A staggering Tk 90,000 crore was paid as capacity charge to private power plants over the past 14 years, all of which had to be paid in dollars, according to the report. IMED said hefty amounts in capacity charge made the sector unsustainable. Summit Power last month sought more time to disclose its earnings for FY23 on the ground that it was awaiting adjustment of the electricity price by the government to overcome loss of profit rendered by currency devaluation. The plea has already been granted by the Bangladesh Securities and Exchange Commission, extending the deadline from October 28 to December 31. Summit said its financial data would give a grim picture if earnings were calculated at the current selling price of electricity. Bangladesh is largely dependent on the private sector for electricity, which supplies more than 50 per cent of the total power generated. Of the nine private electricity producers listed in the stock market, Doreen Power has already disclosed its earnings data. Doreen reported the lowest profit in seven years and it blamed the weakening of the taka against the dollar for that. For the nine months through March of FY23, Summit Power has shown a profit of Tk 2.1 billion, unaudited, which is 39 per cent lower than the same period of the previous year.