Power outages during Ramadan appear unavoidable: IPPs

Highlights

• IPPs face uncertainty about continuing power supply in March as BPDB fails to ensure partial payment of Tk12,000 crore arrears

•  Electricity demand is expected to rise by 50% in Ramadan, risking outages due to non-payment

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• IPPs request Tk5,000 crore to import heavy fuel oil (HFO) but have yet to receive funds, risking 2,500MW capacity going idle

• HFO plants have incurred Tk8,500 crore in forex losses since 2022 due to currency depreciation

• BPDB is penalising 12 power plants for outages despite delayed government payments causing the issue

• Ramadan electricity demand projected at 15,000MW, up from 10,422MW recorded on Wednesday

• A committee is working to resolve disputes over fines and payment delays

Independent power producers (IPPs) ended the week without the hope of continuing power supply in March when electricity demand is expected to surge by a third due to upcoming Ramadan, the month of fasting, and irrigation needs.

IPPs told TBS that the Bangladesh Power Development Board (BPDB), in its meeting with them today (16 January), was unable to ensure even partial payment against their accumulated receivables of Tk12,000 crore.

"We have been requesting the government to clear at least Tk5,000 crore of its overdue to companies, especially those that operate heavy fuel oil (HFO)-based plants by now so that they can open letters of credit to import the fuel in the next six-seven weeks," said David Hasanat, president of the Bangladesh Independent Power Producers' Association (Bippa).

"The non-payment would force over 2,500MW HFO-based capacity to go idle. So, please do not blame companies for an upcoming power outage, when the demand will peak," he told TBS after the meeting with top BPDB officials in the capital.

According to IPPs, the 45-day payment cycle stretched to over six months, HFO plants have accumulated around Tk8,500 crore in foreign exchange losses since the taka began depreciating against the dollar in 2022 and companies ran out of money long ago to continue fuel imports.

BPDB Chairman Md Rezaul Karim told TBS, "We are actively trying to secure some funds from the government to settle partial payments to IPPs."

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Load shedding in Ramadan is the last thing the BPDB, the ministries and the industry would want, he said, expressing hope for some payments soon.

"It is a crucial time and we urged the government to pay the fuel import bills at least," said Bippa President Hasanat.

BIPPA representatives met the Power Division Secretary on 8 January to discuss the issues. They also urged the BPDB not to penalise the companies for their failure to cater to the electricity demand.

According to the association, the BPDB is asking for fines from 12 power plants for the outage while the government's non-payment was responsible for the problem in the first place.

BPDB asks for a double sum of the price of unsupplied electricity if companies fail to supply despite a demand.  

A committee has been formed to resolve the dispute, said the BPDB chairman.

If the essential payment takes 10 days more, the first half of March will see an electricity shortage, said the Bippa president.

The BPDB estimates an over 15,000MW electricity demand in Ramadan, up from 10,422MW on Wednesday, according to Rezaul Karim.