The proverb 'It is better late than never' must have worked this time in the case of the Bangladesh Energy Regulatory Commission (BERC).
The energy regulator has asked the Bangladesh Power Development Board (BPDB) to check oil prices (furnace oil) in the international market before making payments to the private power plant owners.
The BERC directive came six years after it had allowed private imports of furnace oil to feed a good number of rental power plants against the backdrop of widespread allegations of price-fixing and money laundering.
The sponsors of furnace oil-based power plants, allegedly, have been reaping the pecuniary benefits, at least, in two ways. They do tamper with import documents to transfer funds abroad and sell furnace oil, imported duty-free, in the local market illegally at higher prices.
The decision to allow private import of furnace oil, in the face of strong opposition from the Bangladesh Petroleum Corporation (BPC), smacks of an ill motive to distribute undue favour among the owners of liquid fuel-based private power plants.
The state-owned power plants using furnace oil are deprived of the facility as they have to buy the fuel from the BPC at higher rates. The BPC has no option but fix the furnace oil price at higher level since it pays duty and taxes at a rate of about 31 per cent on account of its import.
What is more interesting is that the public sector plants sell power to the BPDB at rates, in some cases, less than one-fourth of that of the rental power plants. The latter, however, have been established through an opaque process.
Since 2010 a large number of private rental power plants have been allowed under a special law that makes way for unsolicited bidding and guarantees immunity to officials and others involved from prosecution.
The private power plants do enjoy some privilege in the form of capacity payment that does create opportunities to reap undue benefits by a section of unscrupulous officials and the owners of rental power plants.
Though belated the BERC has directed the power board to see to it that prices quoted in the import documents are genuine ones. However, one has reasons to be sceptical about the execution of the regulatory instruction. The benefits derived from the furnace oil import by the private power plant owners are surely shared with some people in the administration. So, it makes implementation of the order both difficult and uncertain.
There is no denying that rental plants have helped improve the power situation notably. But the government has been unduly dependent on this costly option of improving the power situation. It is none but the consumers are paying through the nose to support these plants.
The regulator, however, has been too indulgent to private power plant owners. It is often claimed that the power rates in Bangladesh is less than that of many other South Asian nations. That may be true for the public sector power plants. The tariffs in the case of private plants are very high. The BERC should take the tariff issue into cognizance and do the needful to reduce the burden on consumers.
