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Overcapacity in power generation proves inefficiency in policy making

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26th-Jun-2020       
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EXPERTS asked for deferring future coal-fired power plants to cope with overcapacity in the country's overall electricity generation. For trimming down dependency on expensive oil-fired power plants, they also advised to send such power plants retirement to reduce overall electricity generation costs and boost up the national economy. The government should renegotiate with independent power producers (IPPs) about the terms and conditions for different types of payment, including capacity payment, given the changing power demand, particularly at the time of Covid-19 and post-Covid-19 period. Bangladesh has 40 per cent overcapacity in power generation, for which the government has to spend Tk 94 billion as capacity payment to the private power producers.
Generally, any country keeps 25 per cent reserve capacity for stable power supply, while it is 10 per cent in the developing countries. It was 63 per cent in April in Bangladesh. The overcapacity in generation will go up further, if the planned coal-fired power plant projects are implemented. The growing overcapacity and inefficiency in power sector are creating fiscal pressure on the government. Such pressure has increased during the Covid-19 period, and will increase further in the post-Covid period. The Covid-19 has provided an opportunity to review existing approaches, operations, management, cost and return of ongoing power generation, distribution, transmission and other related activities.
Experts recommended annulling the Speedy Supply of Power and Energy (Special) Act as it was the root cause of inefficiency in power sector. The government should go for introducing merchant power plant policy now to replace the existing IPP policy. Despite incurring colossal pressure on national exchequer, Minister Nasrul Hamid said the three under-construction coal-fired power plants at Payra, Matarbari and Rampal will be implemented as per the initial plan. Of the three plants, the first unit, having 660-MW capacity, has already come online, whereas oil-fired rental power plants have started retiring since last year. The Minister said that the power system master plan will be reviewed to lay priority on developing LNG-based power plants instead of coal-fired plants under the new reality that arose after the coronavirus situation.
The government is the trustee of the people and can spend from the national exchequer, impose tax on citizens for their benefit only. Wasting is not acceptable for profiteering any vested quarters.

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