Govt won't be sole buyer of power from new IPPs: Fouzul 

The government will no longer serve as the sole buyer of electricity generated by Independent Power Producers (IPPs) in the future, Power, Energy and Mineral Resources Affairs Adviser Muhammad Fouzul Kabir has said.

He said the government has decided to formulate a new policy called "Merchant Power Policy," under which producers will be able to negotiate electricity prices with large buyers. "The IPPs will use the government's distribution lines by paying a fixed fee. The government might purchase 10% to 20% of the electricity produced by IPPs."

The energy adviser made the announcement while addressing a seminar, titled "Energy Transition to Renewables: Role of Domestic Financial Institutions," organised by the Economic Reporters' Forum at its auditorium in Dhaka today (30 November).

Criticising the existing model, Fouzul said, "The government's electricity purchasing model from the IPPs has caused significant damage. The model where the government buys all the electricity is outdated. A new policy is being introduced where electricity producers will determine their own customers or buyers for the electricity they generate."

New policy on renewables soon

The energy adviser said there is no alternative to advancing the country with renewable energy. The previous government talked about renewables but did not sincerely want its expansion, he said. 

"During their tenure, a solar panel was installed at the Prime Minister's Office at the cost of over Tk1 crore. From that panel, only one light and one fan could be powered. Observing this, the former prime minister would remark, 'Yes, you see what happens with renewable energy,'" Fouzul said.

He said, "To move the country forward, we must embrace renewable energy. To this end, a new policy is being developed for the renewable energy sector. The previous policy, from 2008, was not properly implemented."

Under the new policy, the government will provide land for projects and interconnection systems, allowing entrepreneurs to simply plug and play, said the adviser. 

"Efforts are underway to utilise unused lands belonging to government entities, such as railways and roads, for renewable energy projects. Additionally, individuals who produce surplus electricity through renewable means will be able to sell it to the national grid, and, if needed, purchase electricity from the grid as well," he said.

The adviser, however, said import duties on equipment for the renewable energy sector will not be reduced. He said the government will maintain duties in this sector to encourage the development of backward linkage industries locally. Items such as cables, inverters, and solar cells can all be manufactured within the country, he said.

He said that the notion of a lack of available land for setting up power plants for renewable energy generation is a misconception. "Thousands of acres of land have been acquired in the name of establishing economic zones, but nothing has been done on those lands, nor has it created any employment opportunities," Fouzul said.

 Banks approved loans for Beximco, S Alam despite empty balance sheets

The energy adviser said banks used to approve loans based on a company's balance sheet rather than evaluating its assets. "Decisions were often made informally over lunches and dinners. In the case of Beximco and S Alam, loans were approved by relying on their balance sheets without properly assessing their assets. As a result, their accounts now appear empty," he said.  

Fouzul added, "General entrepreneurs, such as those in the renewable energy sector, do not have access to such exclusive lunches or dinners, making it difficult for them to secure loans."

The energy adviser recommended that banks should evaluate assets more thoroughly before approving loans.

Padma Rail Bridge generates only Tk35cr revenue in 6 months  

Fouzul, who also serves as an adviser to the Ministry of Railways, highlighted irregularities in development expenditures during the previous regime.

"The Padma Rail Bridge was constructed at a cost of Tk46,000, with claims that it would generate Tk1,400 crore in annual revenue. However, in the last six months, it has earned only Tk35 crore," he pointed out.  

The adviser criticised the lack of investment in essential railway infrastructure, noting that there are insufficient locomotives and no wagons to ensure efficient rail operations. Instead of addressing these pressing needs, funds were allocated to build the Padma Rail Bridge and a tunnel, he said.

GDP to decrease

The energy adviser said the level of waste in the development sector is very high. The current government has put an end to this wasteful spending, he said. 

"No unnecessary expenses will be made going forward, which will likely lead to a decrease in GDP. Now, the public must decide whether they prefer development through wasteful spending or the cessation of such waste," said Fouzul.  

He further mentioned, "The main issue with the country's economy is the lack of competition in government procurement. To address this, we have decided to open up the process. Now, it will no longer be necessary to be related to or know ministers and secretaries to do business with the government."

At the event, CPD's Research Director Khondaker Golam Moazzem said financing in the renewable energy sector is still at an early stage. "Worldwide, 18 types of loan instruments are followed, but in Bangladesh, only non-concessional loans are provided."

He emphasised the need to increase financial instruments and make it easier for foreign investments to flow into the country.

While presenting the keynote paper, Gouranga Nandi, chairperson of the Centre for Environment and Participatory Research, said the government's plan to transition to renewable energy is not progressing as expected.

The government had planned to generate 10% of electricity from renewable energy by 2025, but currently, it is just slightly above 2%., he said, adding that there is insufficient financing in this sector.

Gouranga said achieving the 2025 and 2030 renewable energy targets would require investments of Tk24,303 crore and Tk87,657 crore, respectively.

"However, despite the country's banks talking about green financing, they are showing no interest in investing in renewable energy," he said.

Held with ERF President Mohammad Refayet Ullah Mirdha in the chair, the seminar was also addressed by City Bank's Chief Economist and Country Business Manager Ashanur Rahman, and Chief Executive Officer of CLEAN (Coastal Livelihood and Environmental Action Network) Hasan Mehedi. ERF General Secretary Abul Kashem conducted the event.