Amendment of Bank Company Act on the cards to allow loans for rental power plants

In order to meet a power generation gap of 3,000MW, a Finance Ministry-backed body has asked the Bangladesh Bank to submit a report by July 19 on the specifics of sections of the Bank Company Act that need to be relaxed in order to raise Tk20,000 crore to establish a number of small rental power plants. A committee, which was formed on July 4 and has been working on finding ways to meet the power generation gap within a year, made the official request on Thursday. The body's primary task is to raise Tk20,000 crore from public and private banks to set up the power plants by March 2018. The government's plan includes installation of 17-18 quick rental power plants that will generate 3,000MW. Currently, there are 15 rental plants which have the capacity of producing 931MW of electricity. Officials from the Finance Division told the Dhaka Tribune that the ministry thinks entrepreneurs looking to set up the rental power plants may not be interested to take loans more than Tk100 crore from banks or syndicated loans from several banks considering the complex legal barriers. Simultaneously, the Power Division will also have to relax its regulations in order for the entrepreneurs to collect funds from local sources. According to the existing regulations, entrepreneurs must bring in foreign funds in order to set up the power plants, said the officials. At a meeting on June 21, State Minister of Power, Energy and Mineral Resources ‎Nasrul Hamid‎ requested private banks and the Bangladesh Bank to provide sufficient capital to private companies that would be awarded the contracts for installing the power plants in nine months.

Possibility of another power price?

Some officials at the Finance Ministry, seeking anonymity, opined that the price of electricity would increase again if private power generators began to monopolise the market since the existing generators have significantly contributed to the increase in retail power prices, which has risen by 69% since 2010. In 2012, the government decided to raise electricity prices after the Bangladesh Power Development Board paid 20 rental power plants Tk6,000 crore that had the capacity to produce to 1,653MW. This prompted the Bangladesh Energy Regulatory Commission to increase the electricity prices by 69.25%, citing the costs incurred by expensive short-term measures. The prices shot up from Tk3.76 per unit to Tk6.33 — in eight phases between March 2010 and September 2015. The Dhaka Tribune has learned that another plan to raise electricity prices is now being considered by the energy regulators.