ELECTRICITY: Pvt sector eats up public sector profit

The government is burdened with buying electricity from private sector as they are eating up entire subsidy and profit made in power generation in public sector.
The state-run Power Development Board needs about Tk 5,400 crore in subsidy for 2014-15 financial year even after the bulk rate of electricity had doubled between 2011 and 2012, officials concerned said.
The board made an overall profit of about Tk 700 crore in generating power at its own plants and in buying electricity from other public sector generators, according to the power board data prepared for the 2014-15 financial year.
The board, however, incurred a net loss of Tk 5,400 crore during the same period, because of a total loss of Tk 6,100 crore in buying electricity from the private sector, rental and quick rental plants in particular.
The PDB incurred the loss as the prices of power it purchased from the private sector was much higher than the price at which it sold power to the distribution utilities.
The board made a profit of Tk 0.32 in buying each unit of electricity from the public sector for Tk 4.35 against the average selling price, Tk 4.67 per unit, according to the PDB estimate.
The board spent about Tk 9,000 crore in buying 2,124 crore units of power from the public sector and earned about Tk 9,700 crore selling the power.
It, however, incurred a loss of Tk 2.57 in buying a unit of electricity from the private companies for Tk 7.27, the data showed.
The board spent about Tk 16,300 crore to buy 2,200 crore units of power from private sector and earned Tk 10,200 crore from the sale of the electricity.
Immediate past board chairman Md Shahinul Islam Khan told New Age in the past month that the power board was not incurring losses for power generation in the public sector.
Denying calling it a loss, he said that it was the expensive sources of electricity in the private sector which required financial supports from the government.
Officials said that the government decision to allow wholesale power generation by the private companies had completely destroyed financial equilibrium of the power board which could not be stabilised even by doubling the bulk price of electricity.
The Bangladesh Energy Regulatory Commission, on government appeals, had increased the bulk price of electricity by 98.31 per cent – up from Tk 2.37 to Tk 4.70 a unit – on an average in six phases between February 2011 and September 2012.
The commission, following the bulk price hike, had increased the retail power prices by 63.56 per cent – up from Tk 3.76 to Tk 6.15 a unit – on an average in seven phases between March 2010 and March 2014.
A power board proposal is also pending with the energy commission to increase the bulk price of electricity by 18.12 per cent and to allocate Tk 4,000 crore in subsidy for 2014-15 financial year to break even.
The energy commission is also considering proposals made by five power distribution utilities to adjust the hike in bulk price to the retail one.

- See more at: http://newagebd.net/140206/electricity-pvt-sector-eats-up-public-sector-profit/#sthash.6EOAwl8I.dpuf