Gas, power cos in trouble as consumer dues pile up

In a complex financial web, state-owned gas distribution companies, power plants and fertiliser factories in Bangladesh find themselves entangled in a payment conundrum.

State-owned power and fertiliser companies have Tk23,279 crore outstanding dues to Petrobangla, which, in turn, owes both local and foreign gas suppliers $400 million each month.

The power plants and fertiliser factories blame their inability to settle the dues with Petrobangla on the delayed disbursement of government subsidies.

The Energy and Mineral Resources Division reports that private and public institutions and individuals owe six distribution companies under Petrobangla Tk23,279 crore as of November last year.

Of the dues, a staggering 45% remains unpaid by various government entities, including the Bangladesh Power Development Board (BPDB) and the Bangladesh Chemical Industries Corporation (BCIC). The remaining 55% is due from the private sector, specifically private power producers and industries.

Power distributors also mirror the same struggle, with Tk8,600 crore outstanding bills from both public and private customers of six electricity distribution companies as of October 2023, as disclosed by the Power Division's data.

Petrobangla's financial woes are compounded by a consistent outstanding debt of over $400 million each month for gas purchases from both local and international suppliers over the past year.

Chairman Zanendra Nath Sarker, acknowledged the issue and assured that concerted efforts are underway to realise the dues.

"We are sending letters to defaulting institutions and discussing the issue in inter-ministerial meetings," he added.

Among the government institutions, the BPDB owes around Tk8,000 crore and the BCIC owes around Tk2,000 crore to Petrobangla, as revealed in a recent meeting.

The minutes of the meeting revealed that the BPDB, which procures gas from companies under Petrobangla for government power plants, paid Tk283 crore to Petrobangla in December last year.

On the unpaid bills of the BCIC, its chairman Md Saidur Rahman told at the meeting that requests for allocation to pay the bills have been made to the Ministry of Finance through the Ministry of Industry and Ministry of Agriculture. The finance ministry was positive about the allocation.

Furthermore, two private power plants are grappling with substantial unpaid gas bills, as they have not settled any outstanding payments since March last year.

Zanendra Nath Sarker said, "There is not much concern regarding outstanding bills from the private sector. The amount is relatively low, and a month's dues are considered normal due to billing timelines."

He added that by the end of December, the total unpaid bills owed to the six gas distribution companies came down by Tk2,000-Tk3,000 crore.

Outstanding bills of 6 distributors

According to sources from the energy division, the Titas Gas Transmission and Distribution Company, a subsidiary of Petrobangla, is due to receive the highest outstanding bills from its customers amounting to Tk12,409 crore. 

The Jalalabad Gas Transmission and Distribution System Limited is due to receive Tk4,068 crore, Karnaphuli Gas Distribution Company Limited Tk1,919 crore, Pashchimanchal Gas Company Limited Tk1,162 crore, Bakhrabad Gas Distribution Company Limited Tk2,899 crore, and Sundarban Gas Company Ltd is due to receive Tk822 crore.

The six gas distribution companies under Petrobangla are responsible for supplying gas to both government and private institutions, as well as individual consumers. 

Their services include providing gas to 71 power companies, 5 fertiliser factories, all industrial and commercial establishments across the country, CNG stations, tea plantations, residential connections, and captive power plants. Notably, not all power plants and fertiliser facilities operate simultaneously.

As per Petrobangla, on 17 January, these six companies supplied 823 mmscfd (million standard cubic feet per day) to the power sector (including grid and non-grid power), 213 mmscfd to fertiliser plants, and 1,486 mmscfd to other sectors.

Attempts were made to reach out to Md Harunur Rashid Mollah, managing director of the Titas Gas Transmission and Distribution Company, regarding the initiative to collect outstanding dues, but he did not respond. 

Similarly, Rukhsana Najma Ishak, managing director of Pashchimanchal Gas Company Limited, declined to comment on the issue.

Situation at the power sector

As of October 2023, the BPDB's receivable from its customers reached Tk1,383 crore, and the Bangladesh Rural Electrification Board (BREB) is due to receive an outstanding bill of Tk4,164 crore.

Besides, Dhaka Power Distribution Company Limited (DPDC) is expected to receive Tk1,239 crore, Dhaka Electric Supply Company Limited (Desco) Tk722 crore, West Zone Power Distribution Company Limited Tk422 crore, and Northern Electricity Supply Company Limited Tk671 crore.

Meanwhile, the BPDB has an outstanding bill of Tk22,000 crore until December 2023 owed to Independent Power Producers (IPPs) for the electricity purchased from them.

The BPDB spends around Tk5,500 crore each month to procure electricity from IPPs to fulfil the country's power demand.

Generally, the state-owned organisation used to experience a payment backlog for two months, amounting to Tk11,000 crore.

However, over the last two years, the backlog payment has escalated to four and five months.

Payment disruptions on the BPDB side have placed private power producers in a challenging situation, leading to a shortage of funds to maintain uninterrupted oil and coal imports for electricity production, say independent power producers.

Mohammed Faisal Karim Khan, president of the Bangladesh Independent Power Producers' Association, said, "Today (24 January), the Bangladesh Bank and the Ministry of Finance issued bonds to local commercial banks, where IPPs had working capital loans against receivables from BPDB. With these bonds, our undisputed receivables from BPDB are cleared until 30 September 2023.

"Although the receivables are cleared, IPPs still need to take working capital loans from banks as payments for 3-4 months are still pending from the BPDB. We are grateful to the Ministry of Power and Energy, the Finance Ministry, and the Central Bank for providing a solution to the long-overdue payments."

He mentioned that the BPDB will regularise the monthly bills and start clearing bills within 30 days, following the contracts, enabling IPPs to generate electricity as per demand.