Friday, November 8, 2024
HomeUncategorizedPower sector’s foreign expenditures of $25bn spark corruption concerns

Power sector’s foreign expenditures of $25bn spark corruption concerns

The Chart visualises the foreign currency expenditures by the BPDB from 2014-2024 across the several categories. it highlights the overall increase in total expenditure, with significant rises in the fuel imports (coal and HFO) and power imports from India. Capacity and Rental payments have remained relatively stable in comparison.

The interim government has raised concerns over potential corruption involving $25 billion spent on foreign power expenditures and capacity payments over the past decade, including power imports from India.

A high-powered investigative team has been tasked with reviewing these expenditures, which cover coal and high-speed diesel imports for power plants, capacity and rental payments to independent power producers (IPPs), and machinery and spare parts imports not covered by project aid.

This scrutiny comes as Bangladesh Bank revealed that $16.7 billion may have been siphoned out of Bangladesh through state-supported mechanisms.

The Bangladesh Power Development Board (BPDB) has submitted audited expenditure data from the last ten years to the Ministry of Power, Energy, and Mineral Resources, an official confirmed to Just Energy News.

Power sector insiders report that Bangladesh faced significant losses as a group of dishonest businesspeople allegedly siphoned funds under the pretense of importing fuel, including coal and furnace oil, for power plants between FY 2017-18 and FY 2023-24.

In FY 2017-18, BPDB’s expenditures amounted to $1.59 billion, a figure that surged to $3.03 billion by FY 2021-22 due to a rise in international fuel prices. The COVID-19 pandemic later caused a decline in electricity consumption, although foreign expenditures remained high, according to official data.

Unprecedented Foreign Expenditure

In fiscal years 2022-24, Bangladesh recorded unprecedented foreign expenditures of $3.76 billion and $5.08 billion, largely due to rising coal imports for newly commissioned coal-based public, private, and joint venture power plants.

To examine the agreements made under the Speedy Increase of Power and Energy Supply (Special Provisions) Act, 2010, a five-member National Committee, chaired by retired High Court Division Justice Moinul Islam Chowdhury, was formed last September.

The Ministry of Power, Energy, and Mineral Resources has directed all related documents for key power plants—including Meghnaghat, Baghabari, Patuakhali, Mongla, Ashuganj, and the coal-based Godda plant—to be submitted to the committee for review.

Committee member and former World Bank economist Dr. Zahed Hossain stated, “We are seeking financial records of foreign expenditures for these power plants over the years but have yet to receive complete data.”

In a recent interview with the Financial Times, Bangladesh Bank Governor Ahsan Mansur disclosed that approximately Tk2 trillion ($16.7 billion) had been siphoned out of Bangladesh via methods such as loans to new shareholders and inflated import invoices following bank takeovers.

He described this as “the largest bank fraud by any international standards,” implicating Mohammed Saiful Alam of S Alam Group in allegedly siphoning off at least $10 billion.

The Bangladesh Power Development Board (BPDB) reported spending $5.83 billion on power imports, including the controversial Adani 1600 MW Jharkhand power plant deal.

The cost of power imports rose from $243.9 million in FY 2014-15 to $1.77 billion in FY 2023-24.

Additionally, coal and furnace oil costs for power generation increased significantly, rising from $570 million in 2014-15 to $1.27 billion, driven by expanded coal-fired power generation.

Capacity payments to private power producers surged to $9.8 billion last fiscal year from $470 million in 2014-15, as private sector power purchases rose to over 55% of total capacity, now reaching 27,015 MW.

Energy Adviser Concerned

The interim government’s Power and Energy Adviser Muhammad Fouzul Kabir Khan is concerned about expenditures in the power sector, particularly the installation of the 800 MW Rupsha combined cycle power plant, which lacks a guaranteed gas supply.

Data from the Bangladesh Power Development Board (BPDB) indicates a monthly revenue of Tk 53.70 billion against expenses of Tk 88.91 billion, resulting in a deficit of Tk 35.21 billion.

A recent report also accuses Indian energy giant Adani Power Ltd of charging additional coal costs, violating a side letter agreement made in April 2023 with BPDB.

Bangladesh’s agreement with Adani Power, involving the import of electricity from its 1600 MW Jharkhand power plant, costs $1.14 billion annually, with around $912 million designated for energy expenses.

On the alleged breach, Adviser Khan confirmed that a government probe is underway to examine irregularities in Adani’s cost structure. He added that the Power Division will take appropriate action based on the investigation’s findings regarding the additional charges.

National Committee demands prosecution of corrupt officials

Recently, the National Committee for Protecting Oil, Gas, Mineral Resources, Power, and Ports has called for the prosecution of ministers, state ministers, secretaries, and advisers responsible for corruption and anti-national agreements in Bangladesh’s power and energy sectors.

The demand was made at a seminar titled “Outline of the Energy and Power Sector: Current Situation and Necessary Steps,” last Saturday.

Former member-secretary of the National Committee, Professor Anu Muhammad, reiterated that the committee’s mission began with opposition to gas exports, asserting that nuclear power was unnecessary for Bangladesh and should be replaced by sustainable alternatives. He also stressed the need to cancel projects like Rampal and Rooppur, citing environmental and economic risks.

Speakers underscored the urgency of delivering uninterrupted, affordable, and transparent power, fuel, and renewable energy services to the public.

They emphasised that transparency, fairness, accountability, and equity must be assured in the supply chain. There was a collective call for action to address irregularities from previous governments and bring offenders to justice.

The committee called for a comprehensive review of energy contracts signed under past administrations, especially large-scale projects like Rooppur, Rampal, Matarbari, and Payra, which involve significant investments in liquid fuel, gas, coal, and renewable energy sectors.

Contracts deemed unsuitable for public interest should be revised or annulled. The environmental impact of projects like Rampal should be evaluated by independent experts and disclosed to the public.

Most Popular

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Similar News