A drop in subsidy disbursements to purchase power from quick rental power plants over the last seven months has eased the pressure on the public exchequer, Finance Division officials said.
Disbursements to quick rental plants decreased to below 60% of total credit, from a seven-year average of 80-92% of total Bangladesh Power Development Board (PDB) credit, because of increased power purchases from lower cost public and independent power plants.
The government has saved money on subsidies by buying less from quick rental producers and sourcing power from more cost-effective plants.
Public and independent power plants use natural gas and hydro-energy and produce cheaper power requiring far less in subsidies compared with fuel-run quick rental power plants.
The bills for quick rental plants in the last seven months stood at Tk2,228.56 crore or 58.4% of total disbursement, which officials at the Finance Division said relieved pressure on the exchequer.
Official said the power subsidy had been raised by 28.57% in last fiscal year’s revised budget from the initial budget allocation of Tk7,000 crore.
Last week, the Finance Division disbursed Tk3,876.91 crore in credits for the last seven months – December 2014 to June 2015 – to PDB for purchases of electricity from independent, rental and quick rental power plants.
The Finance Division issued a letter to Power Division Secretary Monowar Islam last week, disbursing the loan to the PDB with a 3% interest rate.
According to the letter, the Finance Division disbursed Tk348.89 crore for the December 2014 bill of which Tk309.01 crore was for quick rental plants.
For January 2015, it paid out Tk531.67 crore with Tk392.19 crore for the quick rentals, in February it disbursed Tk556.24 of which Tk388.38 went to quick rentals, in March 2015 Tk560.81 was paid out of which Tk388.38 crore was for quick rentals, in April it disbursed Tk460.28 of which Tk348.20 crore was for quick rentals, in May the total was Tk709.51 of which Tk395.39 crore went to quick rentals and in June Tk709.51 was disbursed of which Tk395.39 crore was for quick rentals.
In the FY2014-15 revised budget, the PDB power subsidy increased to Tk9,000 crore from Tk7,000 crore.
PDB purchases electricity from rental and quick rental plants at prices ranging between Tk13 and Tk23 per unit and sells the electricity to consumers at an average of Tk6.5 per unit, according to the PDB.
In the current fiscal year budget announcement, the government has allocated Tk8,000 crore for power subsidies to purchase electricity from quick rental, rental and Independent Power Producer plants.
MA Mannan, the state minister for finance, told the Dhaka Tribune yesterday: “It is good news that subsidies given to offset the high purchase price of electricity from quick rental power plants has decreased these last seven months.”
