Power purchase from costly rental plants has pushed up losses of the state-run Power Development Board (PDB) to a record high.
In the first 10 months of the current fiscal year, the lone power supplier of the country incurred the highest loss of Tk10,271 crore, in comparison to previous fiscals.
Since fiscal 2007-08, the state entity has incurred a total loss of Tk60,370 crore in power purchase and operation, according to the Bangladesh Economic Review 2019.
The government buys power from rental plants at a much higher price than state-run plants and sells it at a lower price, which inflates the loss figures.
The PDB purchases per unit for Tk 3.96 from public plants, while it pays private power plants - including rental, quick rental ones and independent power plants (IPPs) - Tk 7.36 for every unit on an average.
Rental and quick rental are privately-owned, oil-run plants set up without a regular tender process to meet the immediate demand of electricity, while IPPs are also private power producers, although they are set up through a competitive tender process.
Power is imported from India at Tk 5 per unit.
Meanwhile, the government charges Tk 4.82 per unit on average while selling power to the six state-run power distribution companies - Dhaka Power Distribution Company, Dhaka Electric Supply Company, Bangladesh Rural Electrification Board, Northern Electricity Supply Company, West Zone Power Distribution Company and PDB itself.
In the fiscal 2007-2008, the operating loss of PDB was Tk 993 crore, when it first started purchasing electricity from rental and quick rental power plants.
An operating loss occurs when a company's operating expenses exceed gross profits.
Over the last 12 years, power generation by private plants has increased gradually, and so did the amount of losses.
“We are incurring losses as a result of purchasing power at a high cost and distributing at comparatively lower prices,” PDB’s Chairman Engineer Khaled Mahmood told The Business Standard.
Experts meanwhile put the blame on PDB’s shrinking share in power generation.
Prof Mohammad Tamim, pro-vice chancellor at the BRAC University, said the increasing power generation cost at oil-based plants has been piling up the operational and production costs.
Earlier, only 8-10 percent of the power was generated from oil-based plants, which is now 42 per cent.
He suggested phasing out oil-based power generation to minimize the loss.