Money to be obtained from maintenance and development fund
The Bangladesh Power Development Board (PDB) will finance the 341-MW Bibiyana Unit-1 power plant with cash from the ‘maintenance and development fund’. The maintenance and development fund was created following a directive from the Bangladesh Energy Regulatory Commission (BERC) in 2011. PDB chairman Muhammad Abduhu Ruhullah informed BERC officials recently the board has picked up the gas-fired power project, which had been crawling at a snail’s pace for the past five years, and was suffering badly because of a funds crunch.
The National Board of Revenue (NBR) and the finance ministry have endorsed the BERC initiative. They have asked the Power Division to complete the process for smooth disbursement of this fund.
The government had earlier cancelled the deal for the Bibiyana Unit-1 power plant with the Summit Group, the country’s single largest power producer in the private sector, as it had failed to mobilise funds.
Summit had agreed to surrender the Bibiyana Unit-1 power plant, backtracking from its previous wish to retain the plant’s ownership.
According to the BERC, the state-run power generation company, the PDB, has failed to utilise a Tk 1,500-crore fund as there was no initiative or guideline to spend the money despite having an acute fund crunch.
The BERC had imposed the condition that additional revenue generated by the power price hike would be used to set up the electricity development fund. The fund was created, but allocation from the fund was halted as there was no policy.
“Now, we have a Tk 1,500-crore fund. Yet we cannot make arrangements for its utilisation as we have not appointed anyone or any authority to allocate money from here to complete any project,” a PDB senior official observed.
The fund was formed in accordance with an order by the BERC, issued in 2011, to boost power generation by the state-owned company.
According to this policy, a certain portion of the amount that comes in from the tariff hike would be channelled into the ‘maintenance and development fund’.
The BERC imposed the condition following the application for a power tariff hike by the PDB. It observed that the PDB pays independent power producers (IPPs) and rental power producers Tk. 400 crore per month towards electricity bills.
It also observed that the contribution of the private sector to electricity generation would reach 62 per cent by 2016 and the government would have to support them by increasing the tariff time and again. That is why it issued the order to the PDB.
“We did not like to see a bankrupt BPDB that gives all its resources to the IPPs, small power producers (SPPs) and rental power plants. We wanted to see it take measures to strengthen the state-owned enterprises. That is why the BERC imposed the condition on them when they wanted to hike the power price,” BERC member Delwar Hossain told The Independent.
“The BERC sent a letter to the BPDB in this regard,” a senior BERC official told The Independent.
This is a separate fund for the power sector, which is different from the regular budgetary allocation. The BERC, in its order, said the fund must be utilised exclusively for the development of the power sector, which includes generation, transmission and distribution, the official added.
-With The Independent input
