The Power Division faces a new challenge in controlling electricity generation costs after the Mongla Port Authority imposed a levy of US$ 7.71 per metric tonne on Captive Cargo dredging charges without consulting major power generation companies.
“Our electricity generation cost has increased by Tk 0.51 per kilowatt-hour, reaching Tk 6.50 per kilowatt-hour. After adjusting for the new levy, this will rise to Tk 7.01 per kilowatt-hour,” said Engr AM Khurshedul Alam, Managing Director of Bangladesh-China Power Company Ltd.
He estimated the company would incur an additional $ 30.84 million annually to import 4 million tonnes of coal under the revised levy.
Impact on Power Sector
The levy also affects the 1,320MW Payra coal-fired plant and other similar power plants, further driving up electricity production costs. Together, these plants, with a combined capacity of 2,640MW, are integral to Bangladesh’s power generation.
The Bangladesh Power Development Board (BPDB), already grappling with Tk 30,000 crore in unpaid bills, has expressed concerns that the levy will exacerbate financial pressures.
An official highlighted that the levy undermines recent assurances to the International Monetary Fund (IMF) about reducing power sector subsidies through cost-cutting measures.
Dispute Over Levy Calculation
The Bangladesh-China Power Company had earlier hired Belgian dredging firm Jan De Nul to estimate an appropriate levy, which was proposed at USD 3.46 per metric tonne. This estimate accounted for a 7-metre port draft, but the Payra Port Authority set the levy at more than double this rate.
Payra Port’s draft has reportedly declined to 6.5 metres due to siltation, with further reductions threatening coal supply logistics. “If the draft falls below 6.5 metres, mother vessels cannot dock, forcing 100% lighterage operations and further increasing coal handling costs,” Alam warned.
The Payra Port Authority has demanded payment of Tk 839.65 crore in unpaid port levies from January 2021 to November 2023. Bangladesh-China Power Company has already invested USD 68 million between 2019 and 2020 to dredge the channel, ensuring a 6.3-metre draft necessary for coal shipments.
However, despite their investment, rapid siltation has reduced navigability, impacting coal supply efficiency. The port plans to purchase two dredgers to maintain the channel at Rabnabad Point, according to senior shipping secretary Mohammed Yusuf.
Call for Levy Review
BPDB and power plant officials have urged the Shipping Ministry to reconsider the levy. Additional Power Division Secretary KM Ali noted that frequent demurrage charges and increased transportation costs due to draft reductions are already inflating electricity generation costs.
Energy experts fear the levy will significantly raise power tariffs, undermining efforts to control consumer electricity costs. BPDB Chief Engineer AKM Ziaul Hasan warned that without a review, the tariff increase would disproportionately affect consumers.
To address these issues, stakeholders recommend ensuring proper navigability through coordinated dredging efforts and revisiting the port levy to maintain affordable and reliable coal supplies for power generation.
