B Mirror Report : Privately owned power producers in Bangladesh are facing growing financial instability as payment delays by the state-run Bangladesh Power Development Board (BPDB) are followed by penalty deductions, raising concerns over fairness, contract compliance, and energy security.

Independent power producers (IPPs) allege that chronic late payments often six to seven months overdue have been compounded by arbitrary “liquidated damages” (LDs) imposed for outages, despite the outages resulting from BPDB’s own failure to make timely payments. Between 2021 and 2024, around Tk 2.49 billion in LDs were deducted from four power plants, according to industry sources. Outstanding dues to IPPs nationwide now exceed Tk 44 billion.

David Hasanat, president of the Bangladesh Independent Power Producers’ Association (BIPPA), called the deductions “arbitrary and unjustified.” He said, “BPDB is unable to pay us on time, yet penalties are imposed for outages caused by their payment delays.”

The Bangladesh Energy Regulatory Commission (BERC) has intervened, directing BPDB and producers to resolve disputes through dialogue and ordering a status quo on LD calculations. However, IPPs claim BPDB continues deducting penalties despite regulatory directives, eroding trust and intensifying conflicts.

Cases such as Barisal Electric Power Company Ltd highlight inconsistencies, with LDs initially imposed and later reversed after consultations. Some plants, like Adani Power, have suspended electricity supply due to non-payment, while local IPPs continue to generate electricity under financial strain to maintain national supply and industrial continuity leaving them more vulnerable to LD deductions and insolvency risks.

Section 13.2(j) of the PPAs states that BPDB loses the right to impose outage charges if payments are delayed beyond 10 working days, and IPPs may suspend supply after 40 days. Producers say these provisions are rarely honored, allowing BPDB to penalize plants even when its own payment defaults cause outages.

The delays are disrupting operations, as IPPs struggle to open letters of credit for fuel imports and meet debt obligations. Banks are tightening lending, intensifying financial pressure on producers.

Energy expert Prof M Tamim warned that timely payments are critical to keeping power plants operational, particularly ahead of peak summer demand. “If they do not receive payments, how will they keep their plants running?” he said, emphasizing the need for quick dispute resolution to ensure stable electricity supply.