Pandemic fallout: Power sector stares at big loss

The Power Division of the Ministry of Power Energy and Mineral Resources predicts that the coronavirus pandemic will lead to a Tk35,407 crore financial damage to the power sector in the March-December period of this year.

Power Cell, a research and policy promoting unit of the ministry, has made the estimation taking into account four affected areas.

Of the total monetary losses, Tk17, 666 crore is estimated in the distribution level, Tk5,598 crore in the generation sector, Tk3,322 crore in transmission, and Tk8,821 crore in tariff deficit.

The projections of losses will be submitted to the prime minister seeking financial assistance to recover the damage. Then the report will be submitted to the finance ministry, according to a source at the power and energy ministry.

Secretary to the Power Division Sultan Ahmed says, "We have made an initial estimation. Now, we are checking the figure to finalise the amount."

He also says the division will sit with the finance ministry soon to discuss this issue.

The projections have been made against the backdrop that all the six power distribution companies and the lone state-owned electricity buyer – Bangladesh Power Development Board (BDPD) are facing fund mobilisation crisis due to low sales of energy.

During this time of the previous year, the daily electricity consumption in the country was between 12,000 megawatts and 12,500 megawatts. The BPDB had projected that the demand would cross 14,000 megawatts this year.

However, the demand for electricity has reportedly dropped to 8,500-9,000 megawatts which is around 35 percent lower than the projection amid the nationwide coronavirus shutdown.

Major consumers of the electricity – industries and commercial users – have been mostly kept closed to curb the spread of the plague.

This shutdown and low demand have caused the BPDB to incur huge losses because it has no respite from paying the private power plant owners.

Normally, the BPDB spends Tk2,700 crore each month for purchasing electricity from public and private plants, which it gets back by selling electricity to consumers through distribution companies.

Of the amount, Tk1,500-1,600 crore is spent for buying electricity from 69 independent power producers (IPPs) or private power plants, and 19 rental plants.

"A dearth of finance is looming over the BPDB as it has to pay capacity charges to these plants while most of them remain closed due to low demand," said Engineer Md Belayet Hossain, chairman of BPDB.

"Fund mobilisation would be normal if we could produce and sell electricity from these plants," he added.

Like the BPDB, distribution companies are also facing financial crises amid the pandemic.

They could not collect 65-70 percent of the electricity bills for March as the customers had to stay indoors due to social distancing restrictions and could not pay their bills on time.

The distribution companies are also going to lose a large amount of money as the government has directed them not to impose any late fees on residential electricity bills for the February-April period.

Due to the financial crisis, these companies have failed to deposit the bulk electricity purchase bill to the BPDB.

In this circumstance, they have requested the power division for interest-free loans which they will pay back after the situation becomes normal, said a top official of a distribution company.

Currently, Bangladesh has a capacity to generate 19,633 megawatts (excluding captive power) of electricity from 136 plants. More than 50 percent of this comes from IPPs and rental plants.