No more IPP with govt guarantee to buy electricity: Fouzul
Under a forthcoming new policy, private producers will have to sell electricity to their buyers through the government grid system by paying a wheeling charge, says the adviser
The government will not allow any more independent power producer (IPP) plants to be set up in the private sector as the private sector will have to set up power plants under a forthcoming merchant power plant policy (MPPP) from which the government will purchase a maximum of 10-20% electricity.
Power, Energy and Mineral Resources Affairs Adviser Muhammad Fouzul Kabir Khan made the announcement while addressing a seminar, titled "Rapid Transition to Renewables: Role of Domestic Financial Institution", organised by the Economic Reporters' Forum (ERF) at its auditorium in Dhaka today (30 November).
Currently, the government provides a guarantee to buy the total electricity of an IPP power plant, set up under the private power generation policy.
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Under the new policy, the adviser said, the private producer will have to sell electricity to its own buyer through the government grid system by paying a wheeling charge.
"The government will not be the only customer anymore and the producers will be able to use the government's distribution and transmission lines by paying the fee," he said.
Fouzul further said the government will buy only 10% to 20% of electricity from the new power plants that are in the pipeline, and it will reduce pressure on the government to pay power bills.
"The lack of competition during the government's procurement is a major problem for the country's economy. That is why we have decided to make everything public so that no one needs to know any relatives of any minister or secretary to do business with the government," he said.
Saying a new policy for the renewable energy sector is also being formulated, the energy adviser said the interim government will provide land and interconnected facilities for the projects of this sector.
"Entrepreneurs will only plug and play. Efforts are on to utilise the unused land of railway, road and other government institutions for the renewable energy sector," he said.
However, the import duty on the equipment used in this sector would not be reduced in order to create a backward linkage industry at the local level, Fouzul added.
He also opposed the demand for reconsidering the cancelled 37 solar power plants which were selected on the basis of the Speed Increase of Power and Energy Supply (Special Provision) Act 2010 and issued a letter of intent (ILO) by the previous regime. "There is no scope for reconsidering those projects as the High Court has already scrapped the Law."
The adviser urged the businesspeople to invest in different sectors including power and energy on the basis of business competition. "The government has opened up all businesses for all businessmen to get work through competition. Now the days of obtaining business through favour and faces have gone."
Held with ERF President Mohammad Refayet Ullah Mirdha in the chair, the seminar was also addressed by Centre for Policy Dialogue Research Director Khondaker Golam Moazzem, City Bank's Chief Economist and Country Business Manager Ashanur Rahman, and Chief Executive Officer of CLEAN Hasan Mehedi.
Centre for Environment and Participatory Research Chairperson Gouranga Nandy made a presentation on the topic of the seminar, which was moderated by ERF General Secretary Abul Kashem.
Moazzem said that the local banks often are not interested in financing the RE projects as those are long-term ones and banks collect deposits on a short-term basis. So, there is a risk in financing the long-term projects and the central bank takes initiative to cover the risk, he added.
Gouranga said that though the banks are doing green financing to implement renewable energy projects, there is no upward trend in the investment in solar energy as there is no specific guideline for the banks to invest in the sector.
