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Bank law change to prompt new power generation

  • Published at 11:53 pm July 14th, 2017
Bank law change to prompt new power generation
A Finance Ministry-backed body has asked Bangladesh Bank to examine how Tk20,000 crore can be raised to establish a number of small rental power plants capable of meeting a 3,000MW energy shortfall over the next year. Officials from the Finance Division told the Dhaka Tribune that the ministry thinks entrepreneurs looking to set up the rental plants may be deterred from taking loans worth more than Tk100 crore from banks by complex legal barriers. As such the central bank is to submit a report to the government by July 19 on the specific sections of the Bank Company Act that need to be relaxed to raise sufficient capital for 17 or 18 quick rental power plants by March 2018. 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 to set up the power plants, said the officials. Currently, there are 15 such facilities with a combined capacity to produce 931MW of electricity. A government committee formed on July 4 is working on finding ways to meet the power generation gap within a year, and made the official request to Bangladesh Bank on Thursday. At a meeting on June 21, State Minister of Power, Energy and Mineral Resources Nasrul Hamid asked private banks and BB 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, said 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 Tk6,000 crore to 20 rental power plants that had the capacity to produce to 1,653MW. This prompted the Bangladesh Energy Regulatory Commission to increase electricity prices by 69.25%, citing the costs incurred by expensive short-term measures. In eight phases between March 2010 and September 2015, the prices shot up from Tk3.76 to Tk6.33 per unit. The Dhaka Tribune has learned that another plan to raise electricity prices is now being considered by the energy regulators.