Govt relies on off the cuff solution to power crisis

Short-term suppliers get long-term deals

by Manjurul Ahsan
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Barapukuria thermal power plant

The government’s dependence on expensive rental power has been growing since 2007-08 financial year when it started purchasing electricity from such plants on short-term basis.
The rental power companies raised power supply to 1,024.41 crore units or kilowatt-hours in fiscal 2013, which was 84.17 per cent of the increased generation over the period, according to the monthly reports prepared by the state-run Power Development Board.
The total power generation grew by 1,207.04 crore units in the past six years, up from 2,431.18 crore units in fiscal 2008 to 3,648.22 crore units in fiscal 2013.
The short-term measure to increase the supply of electricity has raised the average cost of power generation by 122 per cent since fiscal 2007-08 as the state-run Power Development Board has to bear the cost of expensive fuel oils for payment of rental charge to the short-term suppliers, officials said.
The ‘rent’ of a short-term power plant includes the capital investment of the private electricity supplier, profit received by them and the operation and maintenance costs of the plant excluding fuel cost.
The average power generation cost was Tk 2.77 per unit or kilowatt-hour in fiscal 2006-07 which rose to about Tk 6.15 per unit in fiscal 2013-14, adding to the cost of living of the common people, they said.
The burden of additional cost of power generation was shifted to the consumers as the Bangladesh Energy Regulatory Commission raised the average retail power price by 71.79 per cent to Tk 6.15 per unit, up from Tk 3.58 per unit before March 2007, according to data available with the power division and the energy commission.
6_2State minister for power, energy and mineral resources, Nasrul Hamid Bipu, recently hinted that the authorities concerned would be increasing power prices again in phases over the next five years as low-cost plants were taking time to start operations and feed electricity to the national grid.
The share of rental power in the total electricity generated has increased to 28.08 per cent in 2012-13 financial year from 0.18 per cent in FY 2007-08, when the government began buying electricity from rental power plants, according to the data available with the state-run Power Development Board.
The data also showed that the power board, on behalf of the government, also bought 649.26 crore units of power from rental plants until February 2014, which is around 26 per cent of the country’s total power supply.
Officials said the quantity of electricity supplied by the rental plants would exceed the quantity supplied in fiscal 2012-13 as the power board started buying electricity more aggressively since March this year to meet the growing demand for electricity in the summer.
Power generation by the public sector plants has increased by 272.29 crore units between fiscal 2007-08 and fiscal 2012-13, while the rental power companies have increased supply by 1,024.41 crore units in fiscal 2012-13.
The power board paid Tk 4,300 crore in rent to the power suppliers in the last fiscal year for buying 1,024.41 crore units of electricity.
The power board paid over Tk 4 in rent for buying each unit of electricity from the rental plants in the last fiscal year, the power board data showed.
It spent Tk 10.99 per unit to buy 1,024.41 units of electricity from 33 rental plants with 2,196MW capacity while the rate was Tk 3.24 per unit to buy 1,788.63 crore units of electricity from the public sector plants during the same fiscal year.
The power board purchased electricity at about Tk 20 per unit from 18 diesel or furnace oil-fired plants with a total capacity of 1,352MW and at about Tk 4 a unit from 15 gas-fired plants with a total capacity of 844MW.
The government and a few of its campaigners initially tried to justify the power purchase from rental plants saying that it was a short-term solution to make up the shortage of power supply and the plants would be replaced by the long-term ones in three to five years.
But finally in 2013, at the end of the Awami League-led government’s five-year rule, the government decided to extend the power purchase contracts with the rental power suppliers until 2020 to make up the shortage of power supply.
The government has already extended nine contracts with rental power suppliers for five years under which the power board would buy electricity from those plants with a combined generation capacity of 663MW.
Rights activists and a section of experts and political organisations have blamed the government for its negligence in implementing the low-cost and long-term power projects, particularly those which will run on coal. They said that the delay was increasing the dependence of the government on the rental power suppliers.

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