Rejoinder for article published in Bangladesh Pratidin (English)

Clarifying Capacity Payments and Summit's Role in Bangladesh’s Energy Security

(Dhaka) 14th May 2025, Wednesday: The article in Bangladesh Pratidin on May 13, 2025, (https://en.bd-pratidin.com/special/2025/05/13/36933) questioned capacity payments in Bangladesh's power sector and the role of private power producers like Summit. These payments are essential for attracting energy investments that drive economic growth. Capacity payments enable Independent Power Producers (IPPs) to recover fixed costs, including significant capital investments, and are not subsidies. This model is crucial in Bangladesh, where developers face upfront risks and rely on international lenders.

Capacity payments assure international financiers of a predictable revenue stream, facilitating cost-competitive long-term loans. Summit uses these payments to meet debt service requirements of these international loans. These payments are standard in global power purchase agreements (PPAs), especially in development countries. Without them, Bangladesh would struggle to finance its capital-intensive power infrastructure.

The article also overlooks the critical role of foreign Operations & Maintenance (O&M) contractors. Summit employs international O&M firms to ensure optimal plant efficiency, reliability, and safety. This is essential for meeting Bangladesh’s energy demand with minimal downtime.

Summit is a key player in Bangladesh’s power sector, contributing to increased generation capacity and reduced load shedding. It has done so through strict compliance with regulatory oversight, and partnerships with globally reputed institutions. Capacity payments have facilitated private capital, technology transfer, and secured the energy base needed for industrialization.

Bangladesh's energy sector must balance affordability and reliability. Effective capacity payment models bridge the gap between private capital and public infrastructure goals. Summit is committed to transparent collaboration with stakeholders and open dialogue to improve the sector for all Bangladeshis.