Private power plant owners are not standing by clients during crisis
Graphics: Agamir Somoy
Private Independent Power Producers (IPPs) have received significant government benefits, including non-competitive contract awards, custom electricity pricing, tax exemptions, subsidized fuel, high capacity charges, project land, and loan assistance. Despite these advantages, they fail to support the country during electricity crises. Instead, they are accused of leveraging grid instability to demand overdue bills and additional concessions.
During severe heatwaves and liquefied natural gas (LNG) supply disruptions, grid load-shedding spiked. When the government attempted to increase output from oil-based power plants to mitigate the deficit, private operators demanded immediate debt settlement as a precondition for ramping up generation. Consequently, the Finance Division released Tk 6,000 crore to settle these private power producer debts and alleviate economic pressure on commerce and industry.
Power Development Board Plans and Financial Impact
According to the Bangladesh Power Development Board (BPDB), total outstanding dues stand at approximately Tk 45,000 crore with around Tk 5,000 crore owed specifically to private oil-based plant owners. The government plans to double oil-based power generation from 2,500 megawatts to 5,000 megawatts. However, producing electricity from oil-based plants costs around Tk25 per unit, resulting in a loss of nearly 16 taka per unit for the BPDB.
BPDB highups noted that while oil and coal-based production is being scaled up to offset gas shortages, oil-based generation remains a temporary emergency measure rather than a sustainable long-term solution.
Expert Analysis and Industry Critique
Energy experts and consumer rights advocates point out that private power producers historically utilize supply crises to maximize corporate profits. Energy Advisor to CAB, Professor M. Shamsul Alam, said that powerful energy sector businesses exercise excessive influence over both policy and politics. Unjustified price hikes and government subsidies have allowed these operators to secure high short-term returns. He put emphasize on ineffective regulatory oversight allows market players to dictate terms to the state while consumer interests remain neglected.
Dominance of Private Entities and Policy Exploitation
Nearly half of the total power plants are currently under private ownership, a trend driven by the deposed Awami League administration. Utilizing special exemption laws—often referred to as immunity legislation—the government awarded power plant construction contracts without competitive bidding. Operators were permitted to set electricity prices independently, driving up generation costs, compounding losses for the Bangladesh Power Development Board (BPDB), and escalating state subsidies. To cushion the resulting financial strain, consumer electricity tariffs were repeatedly hiked. A significant portion of these plant owners maintained close political ties to the former ruling party.
Capacity Charges and Inexperienced Operators
The previous government repeatedly extended contracts for expensive short-term (three-to-five-year) rental power plants. Consequently, individuals lacking industry experience—including garment exporters and furniture manufacturers—entered the sector, facing allegations of importing secondhand machinery. These plants frequently operated at just 25 to 30 percent of their capacity, or even less. Despite minimal operational activity, owners continued to collect substantial capacity charges, rendering non-operation more lucrative than active power generation. Subsequently, long-term Independent Power Producer (IPP) contracts were repeatedly awarded to a select group of influential business figures.
Fiscal Pressures Under the Interim Government
While outstanding dues accrued over six to seven months during the Awami League administration, private owners exercised leverage to extract additional government concessions rather than causing operational standoffs. Following the transition to the interim government, pressure to clear unpaid bills intensified. To stabilize the situation, the government issued 5,000 crore BDT in bonds alongside regular bill payments, preventing widespread load-shedding during the previous summer. In anticipation of current shortages, the present administration sought to scale up oil-based power generation early on. However, plant owners insisted that production could only be increased by an additional 2,500 megawatts from furnace oil-based facilities once outstanding debts were cleared.
Penalty Exemptions and Expert Assessment
Standard Power Purchase Agreements (PPAs) stipulate financial penalties for private plants that fail to supply electricity according to demand. Although the BPDB assesses these penalties, collection remains poor as owners routinely secure postponements during supply shortages. Former Director General of Power Cell, BD Rahmatullah, said that early warnings regarding private sector dominance were ignored by authorities. He stated that private operators continue to exert leverage over the state for financial gain while failing to support the grid during national energy emergencies.
