Governor assures power producers of addressing foreign exchange losses

Bangladesh Bank Governor Ahsan H Mansur has assured independent power producers of effective measures to address their mounting foreign exchange losses.

"We have met the central bank governor to discuss the gigantic — over Tk8,500 crore — foreign exchange losses accumulated by power producers. We sought his support for no more repetition of the nightmare," David Hasanat, president of the Bangladesh Independent Power Producers' Association, told TBS after the meeting today.

The governor said the central bank will closely monitor the dollar rate the commercial banks charge for fuel importers so that multiple rates do not hurt them like before, according to the association president.

According to him, power producers also informed the governor about their present inability to open letters of credit to import heavy fuel oil (HFO) for electricity generation and supply in Ramadan in March as more than Tk5,000 crore of their receivables still remained unpaid by the Bangladesh Power Development Board (BPDB).

"We expressed our concerns in the recent meetings with the BPDB and the government. The central bank governor assured us that he would convey our message to the government high-ups," Hasanat said.

HFO-based independent power producers with an installed generation capacity of over 3,600 MW faced significant financial strains in the past two and half years as they were buying dollars at market rates for fuel imports and the BPDB was paying them based on a much lower official exchange rate.

The difference between the official exchange rates and market rates narrowed down gradually, offering the fuel importers some breathing space.  

However, the gap again started to widen recently, bringing back the old concern.

"The LCs already opened at Tk119 per dollar will take Tk122. If it surges further, companies will go broke," said David Hasanat.

The BPDB owes around Tk12,000 crore to the local independent power producers as its payment cycle has been stretched to over six months, from the 45 days mentioned in the contracts.

The independent power producers' association in its recent meetings with the BPDB and the Power Division feared that without immediate payment of the HFO-based producers' more than Tk5,000 crore overdue, the country might face a significant electricity shortage in the first half of March.

Ramadan and irrigation will raise the grid electricity demand by a third to around 15,000 MW in March, estimates the BPDB.

The association, on the other hand, fears some 2,500 MW HFO capacity might be forced to go off-grid amid fuel shortage.

HFO will take one and a half months to arrive after the LCs are opened, Hasanat said.