Total excess capacity payments are projected to exceed Tk 36,000 crore over the past 15 years, assuming the underutilisation of power plants (gas, coal), per the White Paper on the State of Bangladesh Economy unveiled on December 1
Amid growing criticism over the capacity payment power plants received in Bangladesh despite sitting idle, experts have emphasised initiating the ‘No Electricity, No Pay’ policy for all power plants.
Once in effect, they think, the policy will greatly help reduce the economic losses of the country incur from the power sector in the pretext of capacity charges.
They demanded the reduction of all types of import duties for the renewable energy accessories necessary for both utility-scale and household solar power plants until the renewable energy industry operates at a full pace in the country.
They were addressing closing session of the last day of the three-day long Bangladesh Energy Prosperity 2050 conference at the BIAM Foundation in Dhaka on Friday.
Capacity payments for the idle power plants are one of the main reasons for high electricity costs in Bangladesh. It also increased the expenditure of the power sector exponentially over the past few years.
According to the Centre for Policy Dialogue (CPD), about 41% of the power plants’ capacity was unused last year. In FY23, the government paid over Tk26,000 crore as capacity charges.
Total excess capacity payments are projected to exceed Tk 36,000 crore over the past 15 years, assuming the underutilisation of power plants (gas, coal), per the White Paper on the State of Bangladesh Economy unveiled on December 1.
Addressing the concluding session, energy expert and BUET Professor Ijaz Hossain questioned why there is no net-zero target for Bangladesh yet, under the current interim government.
“The environment ministry hasn’t declared a net-zero target for Bangladesh yet. This is the reason why renewable energy is not being promoted in the country”, he said.
Answering to this point, Environment, Forest and Climate Change Adviser Syeda Rizwana Hasan said, “Even the promises to reduce carbon emission in our Nationally Determined Contribution (NDC) are highly challenging to achieve.
“We need support from other ministries to come up with an achievable net-zero targets”, she said.
“We are still trying to control the damage done by the previous government. We have got a chance to make a change”, Rizwana added.
Iftekharuzzaman, executive director of Transparency International Bangladesh, said that the Integrated Energy Master Plan (IEPMP) should be cancelled.
“A new power and energy masterplan should be developed and adopted which will be based on the principle of reducing fossil fuel use and increasing renewable energy in the mix,” he said.
He stressed upon bringing transparency and accountability in the power and energy sector, which was absent during the ousted Awami League government.
Zahidul Alam, vice president of the Bangladesh Solar and Renewable Energy Association said, “if the import duties for renewable energy accessories are not reduced, the country would never be able to reach the target of 30% renewable by 2030. “
Hasan Mehedi, member secretary of Bangladesh Working Group on Ecology and Development (BWGED) read out the conference declaration on behalf of almost 400 representatives that attended from different sectors of the society; including policymakers, academics, researchers, think tanks, energy companies, financial institutions, climate and human rights activists, indigenous communities, youths, students, and other affected community members.
The declaration highlighted the urgent need for thematic areas such as policy coherence, institutional and operational reform, effective financing mechanisms, increased regional and global cooperation, and enhanced social and environmental governance.
The conference was jointly organised by the BWGED, the CPD, the TIB, Media Resources Development Initiative, Bangladesh Environmental Lawyers Association, well-known as BELA, and Manusher Jonno Foundation and ActionAid Banglad