The government is finally addressing the long-standing issue of ‘capacity payment’ by phasing out underutilized diesel-powered plants, known for burdening public finances. This move follows the closure of several private and state-run diesel plants, which were largely inactive and incurred capacity payments. Despite growing demand, many of these plants were active only around 5% of the time, significantly below their expected 80% operational factor. While the government aims to curtail such costly plants, the country’s electricity generation mainly relies on gas-fired (51%) and furnace oil-based (27%) plants, with minimal contribution from solar, hydropower, and imports. The cost implications of these closures are raising concerns about the financial state of the Bangladesh Power Development Board (BPDB).
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