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Sikder, Maisha benefit from PDB inaction

Nov 10, 2023

| Emran Hossain

The Bangladesh Power Development Board is once again accused of lack of transparency as it has failed to take action against power plants owned by two of the most controversial business entities, despite producing no electricity in the past two to four years.

Energy and power experts said that the power plants could have been discarded and fined if standard practices were followed in the power sector. But the power plants continued to exist, with their names—Bosila 108MW and Jamalpur 95MW—continuously appearing in the electricity generation reports, released separately by the PDB and Power Grid Company Limited, every day. While the PDB categorised them as power plants under long-term maintenance, the PGCB features the power plants’ names without explaining anything about their current status.

The power plants were set up as independent power plants generally responsible for supplying uninterrupted electricity for 15 years, excluding a maximum of 17 per cent days in their lifetime for repair and maintenance. Private power plants are often built with a capacity charge, a payment given by the government to private investors regardless of whether they produce any power.

‘These two power plants do not get any capacity charge because they have no production,’ said SM Wazed Ali Sardar, who is in charge of electricity production at PDB. Asked why these power plants were inactive for so long and their contract still existed, Wazed Ali said that he did not have any information on the matter.

Bangladesh’s overall power capacity of 25,339MW is comprised of 152 power plants, including these two power plants that needed unusually long maintenance soon after rolling into operation. However, power purchase agreements generally stipulate conditions for getting rid of power plants that remain abandoned for about a month or fail to produce dependable power in a year.

‘PDB is giving recognition to these companies by not cancelling their contracts,’ said M Shamsul Alam, energy adviser, Consumers Association of Bangladesh. ‘By standard practice, the power plants should have been discarded and fined for failing to deliver,’ he said. Shamsul Alam accused the PDB of a lack of transparency and demanded that information be released describing the actual status of these two power plants.

Getting rid of such power plants is important for accounting for idle power plants, as productive ones misrepresent generation capacity. As power purchase agreements signed between private power producers and the PDB are not publicly disclosed, plant-specific PPAs are hard to get. But New Age analysed the PPAs of two other IPPs—Haripur 110MW and Meghnaghat 102MW—to find out what the PPAs, which follow a general pattern, said about unused or abandoned power plants.

Article 14.1.1/A of one of the PPAs stipulates conditions allowing cancellation of the contract for willful and unexcused abandonment of the plant for 30 consecutive days without PDB’s consent. The termination of the contract is also possible under Article 4 if a power plant fails to come back into operation after 30 days following repair and maintenance, posing a risk to the safety of people and property that also adversely affects PDB’s service to customers.

The PDB can also terminate a contract under Article 7 if a power plant fails to produce dependable electricity. ‘There is a strong chance that these power plants were established with old engines and are no longer operable,’ said Hasan Mehedi, member secretary, Bangladesh Working Group on External Debt.

The PDB can refuse to pay a capacity charge only if a power plant is out of order. Built by CLC Power Company, a sister concern of Maisha Group, owned by former ruling Awami League lawmaker Aslamul Haque, who died in 2021, the furnace oil-based Bosila power plant began commercial operation on February 22, 2017.

The power plant, supposed to retire on February 21, 2032, first suspended its operation on December 18, 2019. The power plant did not generate any electricity after March 17, 2020, official documents showed. In its overview posted on its LinkedIn account, CLC Power Company wrote, ‘CLC Power Company Ltd, a company that endeavours to reduce the national power crisis. Withstanding the adverse economic condition, CLC Power Co. Ltd. is trying its best to uphold the consistency of development in Power Sector.’

The phone number given in the LinkedIn account could not be reached. Built by PowerPac Holdings Limited, a sister concern of Sikder Group, a business group embroiled in controversies over shady loan deals, Jamalpur 95MW commenced its commercial operation on November 29, 2016.

The furnace oil-based power plant, supposed to retire on November 28, 2031, closed on November 10, 2021. In 2021–22, the power plant operated only 1.8 percent of its capacity. Sikder Group made news headlines frequently, often involving shady loan disbursements from the National Bank Limited, controlled by the influential Sikder family.

One of NBL’s top clients is Maisha Group’s CLC Power Company, which runs the Bosila power plant. Finance minister AHM Mustafa Kamal told the parliament in January that CLC Power Company was the number one loan defaulter in the country owing to banks of Tk 1,732 crore.

New Age called Parveen Haque Sikder, who has directorship in many concerns of Sikder Gorup, including the NBL, and is an incumbent ruling AL lawmaker, but she did not answer the call.‘These two idle power plants capture the story of Bangladesh caught in a mess,’ said Hasan Mehedi. ‘This is also the story of how power mammoths are born—taking billions in loans to establish power plants that remain idle, generating huge capacity charge. The loan, however, is never paid back,’ he said.

News Link: Sikder, Maisha benefit from PDB inaction

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