Cenbank to provide dollars for power dues from March onwards

Highlights

• Outstanding bill for two Indian companies stands $1.1 billion
• Adani set a deadline to settle outstanding bill by June
• Four-month dues to IPPs amounts to Tk16,000 crore

The government has decided to provide dollars from the foreign exchange reserves to pay off outstanding bills in order to ensure a normal supply of electricity ahead of the upcoming Ramadan, summer and irrigation seasons.

The Bangladesh Bank has agreed to release dollars from March onwards for settling outstanding payments for electricity imported from India, in addition to the independent power producers (IPPs).

The decision to limit subsidies in the electricity sector and address the increased demand for power during the upcoming summer and irrigation season was made at a meeting held at the Ministry of Finance in the capital yesterday, officials concerned told TBS.

The meeting, chaired by Finance Adviser Salehuddin Ahmed, was focused on measures related to the recommendations of the International Monetary Fund.

The meeting was attended by key officials from relevant ministries, including Energy Adviser Muhammad Fauzul Kabir Khan and Shipping Adviser Brigadier General (retd) M Sakhawat Hossain.

An official present at the meeting, requesting anonymity, said, "Talks were held regarding the payment of arrears to India's Adani Group and the state-owned NTPC Vidyut Vyapar Nigam Ltd to continue importing electricity from Tripura. The meeting also emphasised the payment of subsidies owed to private electricity companies."

He added, "Bangladesh Bank has informed that dollars will be released this February to settle outstanding bills for fertiliser imports, and from March onwards, dollars will be released to clear arrears for electricity payments."

The meeting emphasised limiting subsidies in the power sector and ensuring uninterrupted operation of coal-based power plants to meet the increased demand. To this end, it was decided to keep the 2,600MW-capacity Bangladesh-China Power Company Limited and RPCEL-Norinco International Power Limited operational. Each of these two power plants has a production capacity of 1,300MW.

At the meeting, emphasis was also placed on ensuring the uninterrupted operation of coal-carrying vessels for the continuous running of these power plants located near the Payra port in Patuakhali.

Fauzul, contacted by phone, told TBS, "A press conference will be held soon to present the government's plans regarding power supply during Ramadan, the summer and irrigation season."

Mounting outstanding bills

The power sector has outstanding bills of approximately Tk38,000 crore over the past six months, according to finance ministry data.

Imran Karim, former president of the Bangladesh Independent Power Producers Association, said the government owes IPPs Tk16,000 crore in arrears for the past four months. Of this, over Tk10,000 crore is owed to liquid fuel-based power plants, he said.

The private power plants have already warned that if at least Tk5,000 crore is not paid, it will not be possible to open letters of credit (LC) for oil imports.

As of the end of December, the outstanding bill for Adani and NTPC Vidyut Vyapar Nigam Ltd amounted to nearly $1.1 billion. After Adani threatened to halt electricity exports due to non-payment of the outstanding bill, the government has been paying the monthly bills. However, the old arrears have not yet been settled.

An official from the finance ministry said the outstanding amount owed to Adani Group has reached approximately Tk10,300 crore. The company held a meeting with PDB (Power Development Board) about this issue last January. 

In a recent letter sent to PDB, the Indian company set a deadline to settle the outstanding bill by June, stating that if the bill is paid within the specified time, the late fee will be waived.

The outstanding amount for the Payra Power Plant, a joint venture between China and Bangladesh, is nearly Tk6,000 crore. Bangladesh-China Power Company Limited has repeatedly warned the government that if the arrears are not paid, it will disrupt coal imports.

During the current winter season, electricity demand is between 11,000 and 12,000 MW. However, it is expected to rise to 18,000 MW during the summer and irrigation season. 

Due to the dollar and financial crisis, disruptions in the import of coal, furnace oil, and gas led to the closure of several power plants, including Payra and Rampal, during last year's summer season, causing an increase in load shedding.