Summit Group Chairman Muhammad Aziz Khan, notorious for his influence over Bangladesh's power sector and often referred to as a "mafia" figure, has been accused of employing a wide range of fraudulent tactics and deceptive schemes to exploit the country's power sector.
Through threats and manipulation, Aziz Khan reportedly held the Power Division hostage, siphoning off money that elevated him to the position of Singapore’s wealthiest individual.
Aziz Khan is alleged to have subtly engaged in fraudulent activities even under the "no electricity, no payment" system, using a deceptive strategy to siphon more funds.
Even though his initial investments were recouped, he continued to demand substantial rental payments for his rental power plants when the contracts were extended.
Reports indicate that the same power plants were sold multiple times through various agreements.
Amidst fierce criticism over contract extensions for these plants, Khan, with close ties to the Awami League, reportedly devised new fraudulent methods.
The contract terms stipulated a "no electricity, no payment" arrangement, meaning no payment if no power was provided. The outdated and inefficient power plants should have naturally remained idle, but in collusion with Mahbubur Rahman, the former chairman of the Bangladesh Power Development Board (BPDB), Summit power plants often remained operational.
As a result, Khan continued receiving capacity payments, amounting to large sums in dollars. It has been reported that at times, government-run power plants were intentionally idled to favour Summit Group.
Even though the investments were made in Bangladeshi currency, Aziz Khan demanded payments in dollars.
Despite the country’s acute dollar crisis, a new dollar-denominated contract was signed with Summit Group in 2022.
According to statistics from the Power Division, due to the depreciation of the Bangladeshi currency over the past three years, an additional Tk2,163 crore had to be paid.
Several companies, including Khan’s Summit Group, turned into financial juggernauts by exploiting the struggling power sector.
Sources at the Bangladesh Energy Regulatory Commission (BERC) revealed that despite the surplus in electricity generation capacity, Summit, Orion, United, and Confidence groups had their power plant contracts extended multiple times by the BPDB.
On one occasion, a proposal to renew the contracts for five plants was rejected due to a lack of necessity.
However, the contracts were renewed unlawfully, bypassing the BERC.
Speaking to Bangladesh First, Makbul E-Elahi Chowdhury, a former BERC member, commented on the rejected renewal proposal, stating, “These power plants were on three to five-year contracts, and all the capital investments had been returned during the initial term. Once the contract expires, the plants are effectively worthless. How could those contracts be renewed? That’s why they were initially rejected.”
In August 2022, the terms for six power plants, including four from Summit, were extended. These included Summit Narayanganj Power Limited's 102 MW furnace oil-based plant in Madanganj, the 11 MW gas-based plant in Madhabdi, the jointly owned Summit and United Group 40 MW furnace oil-based plant in Jessore, and the 115 MW furnace oil-based plant in Goalpara.
The contracts were renewed despite objections from the Energy Regulatory Commission.
Khulna Power Company Limited (KPCL) Unit-2, jointly owned by Summit and United Group, was listed on the Dhaka Stock Exchange in 2009.
Initially, the contract was for five years, but the company recovered its investment with profits during the first contract period.
Agreement for the 115 MW furnace oil-based Goalpara plant was extended several times, with the latest two-year renewal occurring on 22 August 2022. A key clause in the renewed contract was "no electricity, no payment."
On 27 July, it was observed that while government-run power plants remained idle, Summit's plants provided 48 MW of day-peak electricity and 60 MW of evening-peak power.
The same phenomenon occurred with the 40 MW Jashore plant. While Summit’s Jessore plant was operational, the state-owned Northwest Power Generation Company’s 100 MW Madhumati plant, located in the same zone, remained shut down.
Simultaneously, the 102 MW Madanganj plant’s contract was also extended for two years.
On 27 July, the plant was operational while the Narayanganj zone’s government power plant was idled to benefit Summit. Such occurrences have reportedly become routine.
There exists a list determining which plants should be operated first, referred to as the merit order list by BPDB. The list is based on the principle that power plants with the lowest operating costs should be used first, with hydroelectric plants at the top, followed by gas, coal, and furnace oil plants.
Summit Group's plants should have been at the bottom.
However, defying the merit order, Summit’s plants frequently occupied top positions. This is where Aziz Khan’s manoeuvring became evident.
Summit strategically understated its Variable Operation and Maintenance Price (VOMP) by a few paisa, pushing other plants aside and securing the capacity charge payments, which significantly harmed BPDB.
With even a few paisa less, Summit's electricity was prioritised. Both Summit and Northwest were entitled to capacity charges, leaving BPDB to pay for idle capacity while Summit pocketed the earnings.
On 22 August 2022, contracts for four Summit plants and one Orion plant were extended.
A BPDB official, requesting anonymity, commented, “After the interim government took office, these plants were supposed to shut down. But they’re still operational, aren’t they? There were many alternatives, but BPDB was often forced to comply with directives from above.”
The production statistics support this. When the contracts were extended in 2022, only 40% of the power generation capacity was utilised that year.
In FY 2022-23, with a capacity of 24,911 MW, the actual average production was 10,097 MW, just 40.53% of the total. Even though 60% of power plants remained idle, Summit, Orion, and United’s plants had their contracts extended.
The concern lies in the substantial payments for idle plants. In FY 2021-22, Tk18,977 crore was paid in capacity charges. According to BPDB data, the average cost of electricity production was BDT 2.13 per kWh in FY 2019-20, Tk3.16 in FY 2020-21, and Tk8.50 in 2022. The current average exceeds Tk10 per kWh.
In a summary sent to the Prime Minister by the Power Division regarding the renewal of these six power plants, it was stated that their terms were extended on a "no electricity, no payment" basis to maintain system frequency, increase reliability, and because their tariffs were comparatively low.
So far, the terms for nine expired furnace oil-based plants with a combined capacity of 757 MW and five expired gas-based plants with a combined capacity of 558 MW have been extended.
CAB Energy Adviser Professor M Shamsul Alam said, “Those who claim the furnace oil-based plants were extended for frequency reasons are either misleading the public or ignorant. In reality, the terms were extended to benefit government-aligned businessmen. These extensions were previously granted under special laws.”
A prominent business leader remarked, "Summit Group has pushed the power sector to the brink. Aziz Khan amassed a fortune in Singapore by looting Bangladesh’s wealth. Summit, a local company, became a Singaporean entity overnight. Previously, we sent dollars to the country, now we send them to Singapore. In his quest for riches, he has jeopardised Bangladesh's power sector. Many believe that Aziz Khan, now one of Singapore’s richest man, is one of the most notorious fraudsters in Bangladesh, with unparalleled skill in plundering wealth."
