BIDS favours renewal of contract with quick rental power suppliers

Staff Correspondent

Bangladesh Institute of Development Studies on Saturday said that the government could renew its power purchase contracts with a select group of the privately run quick rental plants that were running on ‘good’ operational conditions.
BIDS made the recommendation in a research paper in the back drop of setbacks in setting up low-cost conventional power plants for meeting the acute shortage of power supply on long term basis.
In the research paper BIDS sought to make ‘An Economic Appraisal of Quick Rental Power Plants in Bangladesh.
The government drew widespread criticism for its decision to buy electricity at high prices from the poorly managed privately owned quick-rental plants.
BIDS economist Tahreen Tahrima Chowdhury read out the research paper at a roundtable.
BIDS director general, who co-authored the paper, Mustafa K Mujeri said, the government could renew the contracts with the electricity suppliers from the QRPPs which are in good operational condition.
The BIDS findings tallied with recent government estimates and both say that the electricity generated by the QRPPs contributed between Tk 52,093 crore and Tk 121,168 crore to the national GDP in last three years.
The government’s findings on the contribution of QRPPs to the GDP is mentioned in its publication, Towards Revamping Power and Energy Sector: Progress Trend, presented in Parliament on June 6 with the budget proposals for fiscal 2013-14.
In the 2011-12FY, the quick-rental plants supplied 558.7 crore kilowatt-hours of electricity to the national grid making up 15.91 per cent of the country’s total generation.
Private entrepreneurs installed 20 quick rental power plants till 2012, the BIDS study said.
The BIDS research also shows that the quick-rental plants caused a significant rise in annual subsidy spending and electricity price hike.
The government had to subsidize imported fuel oil for the privately owned quick rental power plants.
Speaking at the roundtable, economist MM Akash said that the government put extra financial burdens on the people by introducing the quick-rental plants for meeting emergency needs for electricity for the short-term.
Now, he said, the government was eager to renew the contracts for buying electricity at higher prices from the quick rental power plant owners citing excuses like delays in setting up the plants for meeting the long term requirements, unavailability of cheaper fuel, particularly gas and coal, and so on.
He said, ‘We the consumers will not accept the burden of rental plants any more.’
Anisul Huq, the owner of a 94MW QRPP at Narayanganj, claimed that the government would need electricity from the quick rental plants for 20 more years as it failed to discover sufficient gas reserves and to supply coal for power generation.
He suggested the government allow the private entrepreneurs to set up more quick rental power plants with a combined generation capacity of 500MW.
On his turn, prime minister’s energy adviser Tawfiq – E- Elahi Chowdhury said that the Power Division was studying whether the contracts could be extended.
BIDS is a government funded think tank.

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