Idle power plants paid Tk 8,000cr in F19

Idle power plants paid Tk 8,000cr in F19

In the last 10 years Bangladesh saw the establishment of a power plant almost every month, mostly private, with the country’s capacity to generate electricity becoming far greater than the demand by now.

A total of 120 power plants, at least 80 of them private, set up since 2009, have raised the country’s power generation capacity to 17,840 MW. Besides, the country imports 1,160 MW from India.

But except for peak hours between 7:00pm and 11:00pm, the daily demand for electricity remains around 9,000 MW during the summer. In the peak hours the power demand rises to around 12,000 MW, according to officials at the Power Development Board.

In the winter, the daily demand drops to 6,000 MW, they said.

A close look at the reports on daily power generation posted on its website by the state-owned PDB reveals that many power plants sit idle daily because of lower demand.

Although a comprehensive account of the power plants sitting idle is not available from the PDB, the state-owned company spends roughly 40 per cent of its expenditure in the sector as capacity payment.

In the 2018-19 fiscal year, over Tk 8,000 crore of PDB’s Tk 21,000 crore annual spending was spent as capacity payment, according to the PDB statistics.

Capacity payment is the amount of money that the government is to pay to the power plants sitting idle because of no electricity demand.

The cash-strapped PDB, running on an about Tk 8,000 crore deficit, has been paying substantial sums as capacity payment every year since 2012, PDB officials say.

‘The power sector is in a great distress,’ energy adviser to the Consumers Association of Bangladesh M Shamsul Alam told New Age on Monday .

Shamsul pointed out that though the country’s power generation capacity maintained an annual 12 per cent growth over the five years until last year, the growth of power generation over the period remained about 6 per cent a year.

‘Half the increased capacity remains unused inflating the public expenditure for the power sector,’ he noted.

‘The country is on a wrong path to develop its power sector,’ he observed.

Over the last 10 years, the private sector power generation capacity grew faster than the public sector’s with 7,853MW produced by the private plants against 6,536MW produced by the public ones.

Still, another 32 private and 16 public power plants are under implementation at the moment, according to the PDB.

The PDB is also processing contracts and biddings for 21 more private and two more public power plants.

A total of 17 big power plants planned by the government through public financing are all in the planning stage and some of them are scheduled to begin their operations as late as 2030, or even later.

Shamsul Alam said that 60 per cent of the power plants installed in the country were peakers, small power plants operating only in peak hours to meet high electricity demand.

Bangladesh University of Engineering and Technology electrical and electronic engineering professor Abdul Hasib Chowdhury said that peakers were generally used to support base load power plants, power stations operating long hours to supply continuous power demand without any interruption.

An understanding of the power generation technology together with efficient and balanced management of peakers and base load power plants is necessary for building a sustainable power sector, he said, adding, ‘too many peakers can be bad for the power sector.’

A high number could mean bad plant performances and eventually high power cost, he observed.

Amidst such a generation over-capacity, power interruptions are still very common across Bangladesh, including in the capital, and consumers often complain about voltage fluctuations.

Dhaka University’s Institute of Energy director Saiful Huque noted that primary fuel crisis made power production expensive in Bangladesh compared to many other countries.

‘And power gets even costlier at the hand of businessmen,’ he said.

He suggested that use of an energy mix could keep the power price relatively low but private power plants avoided using such fuels for maximising their profit.

‘Private power plants need strict government regulation which apparently is absent in the country,’ he pointed out.

About 50 of the 80 private power plants built since 2009 are either completely dependent on oil or diesel as fuel. The rest are powered by gas.

Most of these power plants were contracted out without bidding in complete violation of government policies and plans.

Liquid fuel-based power plants were prohibited in the participatory perspective plan (2010-2021), power division’s master plan and the 5th and 6th five-year plans.

They also spoke against increasing the number of gas-based power plants.

While entailing higher costs, liquid fuel-based power plants pose disastrous environmental consequences.

On the other hand, gas-fired power plants are not considered viable for Bangladesh on account of saving gas reserves.

Coal-based power plants, too, have their drawbacks but policymakers found them viable compared to other options available.

Anu Muhammad, economist and member-secretary of the National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports, told New Age on Monday that the way the power sector was expanding had nothing to do with meeting people’s demand for power.

‘The government is awarding power plant contracts either for financial gains or political benefits,’ he said.

He said that the government often invoking the indemnity law while contracting out power plants without bidding aptly proved his allegation.

‘The government is either creating the opportunity for businessmen in exchange of money or trying to please countries like India, Russia and China to gain political favour,’ he said.

the first day of September, the PDB finalised yet another deal to purchase 718 MW electricity for 22 years without bidding from the Reliance Bangladesh LNG and Power Limited, a sister concern of India’s Reliance Group.

Experts warned that the government would have to pay the Reliance Bangladesh a staggering $1.76 billion extra because of awarding the deal without bidding.

PDB chairman Khaled Mahmood, however, offered that many power plants needed to be established to stir confidence in businessmen about the government’s intention to boost industrialisation.

‘We have been successful in sending through the message,’ said Khaled on Monday.

He, however, admitted that their actions had garnered little response from industries who continued to rely largely on captive power.

Regarding capacity payment, he said that they stopped renewing contracts with small power plants demanding capacity payment.

‘And no new contract demanding capacity payment would be entertained,’ said Khaled.

At present 94 per cent of the country’s 160 million population are under electricity coverage as per government statistics while many complained of power cuts mainly due to inadequate distribution and transmission capacities.

Experts rather recommended increasing investments in order to improve the distribution and transmission capacities for an uninterrupted supply of power to the consumers.-New Age