The amount of government subsidy given to private power producers since financial year 2007-08 would stand at around Tk 20,000 crore by the end of FY2012-13, said a Power Development Board official.
The government provided a total of Tk 15,702 crore in subsidy to private power producers till September 2012.
It will have to give the power board Tk 469 core in subsidy for purchase of electricity from rental power plants (RPPs) and quick rental power plants (QRPPs) for October 2012 and Tk 450 crore for November 2012. The finance ministry is yet to disburse the subsidy to the PDB for those months, the official said.
The Power Division has also estimated that the state-run power board will require more than Tk 3,000 crore for subsidising its power purchase from the RPPs and the QRPPs for the remaining seven months, December to June, of FY2012-13.
The power board is buying electricity from three rental and 17 quick rental plants at Tk 17 a kilowatt-hour (unit) from furnace oil-fired plants and Tk 22 a unit from diesel-fired plants. The PDB spends about Tk 4 a unit in buying electricity from five gas-fired RPPs and QRPPs.
In contrast, the PDB on average spends about Tk 1.70 for generating a unit of electricity in the public-sector power plants run on gas against its average sales price to the power distribution agencies set at Tk 4.70 a unit in September 2012.
‘In that case, the power board makes a profit of Tk 3 by selling each unit of power generated in such plants,’ a PDB official said.
Similarly, the power board is now making profit by purchasing electricity from the independent power producers (IPPs), he said.
‘But the RPPs and the QRPPs are set to eat up the entire profit of the PDB as well as the total government subsidy,’ the official added.
Power generation turned a losing concern in FY2006-07 due to increasing participation of the private sector in power generation on condition that the power board is bound to pay bills in US dollars, officials said.
‘The government had to give Tk 300 crore in subsidy in financial year 2006-07 due to a fall in price of taka against dollar. Thus the average cost of power generation started to rise,’ said power cell former director general BD Rahmatullah.
But, the amount of subsidy hit Tk 1,000 crore mark in FY2008-09 when the PDB started to buy electricity from the RPPs.
The situation deteriorated when the PDB became more dependent on both the RPPs and, particularly, the QRPPs by FY2010-11 as the government had to give the PDB Tk 4,000 crore in subsidy, of which Tk 3,028.77 crore was spent as subsidy for buying electricity from such plants.
Thus, in FY2010-11 to Sept 2012 the government gave a total of Tk 12,074.43 crore in subsidy to the power board – Tk 8,344 crore to buy electricity from the QRPPs and Tk 3,730.36 crore from the RPPs.
 Based on the Power Division’s estimate of buying electricity from such plants for the three financial years to 2012-13, the total amount of subsidy would amount to Tk 16,000 crore.
The policy implementation of power generation from the rental plants pushed the average electricity production cost by two and a half times from Tk 2.59 a unit in FY2009-10 to Tk 6.42 in FY2012-13.
The Bangladesh Energy Regulatory Commission, being pursued by the government, started increasing power prices to adjust with the growing generation cost since February 2011.
With the latest round of power price hike made in September 20 last, the commission since February 2011 has so far increased the bulk price by 98.31 per cent — from Tk 2.37 to Tk 4.70 a unit — on an average in six phases.
At the same time, the commission has also raised the retail prices by 50 per cent on an average in six phases — from Tk 4 to Tk 6 a unit — over the period.