Seven rental power plants get one year extension

Experts term decision suicidal

Jasim Khan
The government has extended the contract period for seven quick rental power plants by a
year after expiry of their tenure despite criticism by energy experts and opposition parties. As
the large power plants could not come into operation timely as per the roadmap, the
government had no alternative to renewal of the contracts with those rental power plants, a
high official at the Power Division said Thursday. According to sources, extension of the
contract period of those power plants by another year would cost the government Tk 12 billion.
Earlier the government had signed agreements with 15 quick rental power plants for three and
five years. Of them, seven plants, hired for three years, got the contract period extended by
one more year. Ministry sources said as per the contracts the government retains the same
rates of power purchase and the same terms and conditions as had been in the previous deals,
including supply of subsidised fuel. In 2009, the average electricity production cost was below
Tk. 3/kWh. The energy mix for power production was roughly 82 per cent of gas, 10 per cent of
oil, 4 per cent of hydro and 4 per cent of coal. Within a span of three years the share of oil in
power production shot up to 30 per cent reducing the gas component to 67 per cent. So, the
average production cost more than doubled to Tk. 6.5/kWh. As a result, the government was
forced to raise the electricity tariff several times recently. Meanwhile, energy experts termed
the decision suicidal and asked the government not to extend the agreements with the power
plants. Dr Akbar Ali Khan, former adviser to caretaker government, said the government could
solve the power problem by repairing the existing plants and solving the gas crisis instead of
opting for rental power plants again. "Not a single country in the world succeeded in solving
their electricity crisis through rental power plants," he said. Why the people would pay
excessive electricity bills resulting from system loss, mismanagement, corruption and quick
rental power plants, he asked. M Tamim, former caretaker government adviser, said stopping
coal development and gas exploration despite the presence of clear economic advantages
forced the government to go for short-term and expensive oil-based rental power plants. The
economy simply could not afford or sustain the burden of importing expensive fuel either, he
added. Apart from supply interruption risk, the international energy price volatility is also a
source of great uncertainty. Engr BD Rahmatullah said the government would have to provide
over Tk 20.7 billion in subsidy yearly if it takes 2,000 MW power from quick rental and rental
power plants and the cost would go up with the increasing requirement. Terming quick rental
power plants suicidal for the nation's economy, Engineer Sheikh Mohammad Shahidullah,
convener of the National Committee to Protect Oil, Gas, Mineral Resources, Power and Port,
demanded reopening of all closed state-run power plants and repair of the rest to boost
electricity production. Shahidullah said it would be possible to produce additional 2,400
megawatts of power from the existing structure if the government reopened and repaired all
the closed plants.
FE 22.12.2012
Tk 2.55b extra fund sought for fuel-based power scheme
Delay raises cost
FHM Humayan Kabir
The Power Division has sought Tk 2.55 billion in additional fund for completing the liquid fuel
oil-based 820 megawatt (MW) power generation project because of the delay in its execution.
The cost of the project has now swelled to Tk 61.34 billion, officials said Friday. Officials of
the division said, the project implementing agency --the Bangladesh Power Development Board
(BPDB)--had failed to complete the project within the stipulated time, December last year. The
cost escalation is because of the delay, he said. "Since all the project works could not be
completed within the scheduled time, the cost of project has gone up. So, we have sought
additional funds from the Planning Commission," a senior Power Division official told the FE.
The BPDB has sent a revised project proposal to the Planning Commission seeking Tk 2.55
billion in addition to the original estimated cost at Tk 58.79 billion. It has also sought extension
of the project implementation time up to December 2013. Following the delay in implementing

the projects, the BPDB dropped one 200MW Ghorasal capacity power plant from its original
820MW power generation project where there was a provision for installing 10 small power
stations. In November 2010, the government's highest economic-policy making body National
Economic Council (ECNEC) approved the 820MW power generation project for setting up a
number of plants on emergency basis to cut power outage of the country. The 10 power plants
are Gopalganj 100MW, Faridpur 50MW, Bera 80MW, Baghabari 50MW, Kantakhali 50MW,
Santahar 50MW, Hathazari 100MW, Dohazari 100MW, Daudkandi 50MW and Ghorashal 200MW.
"We have dropped 200MW Ghorasal power plant after failing to select a competitive bidder
through two separate bidding," said a senior BPDB official. He said until now nine furnace-oil
run peaking power plants have been installed. Of those, seven have already been supplying
electricity to the national grid on commercial basis and the rest two have recently started testrun. When asked, a senior BPDB official told the FE, since some miscellaneous works of the
project are still pending, they need more money and time for completing the 820MW power
generation project. According to the state-owned power generator, the Kantakhali 50MW and
Santahar 50MW plants are on test-run while the remaining seven are supplying power to the
national grid. BPDB sought highest Tk 1.0 billion additional fund for the Bera 70 MW power
plant from its original Tk 5.24 billion estimated cost, Tk 455 million from original Tk 3.86
billion cost for the Kantakhali 50 MW power plant, Tk 439.9 million additional funds for
Daudkandi 50MW plant from the the original Tk 6.52 billion cost. Besides, the BPDB has sought
Tk 327.1 million more funds from the original Tk 4.21 billion cost of the Santahar 50MW plant,
Tk 283.2 million more from Tk 5.67 billion cost of the Baghabari 50MW plant, Tk 87.6 million
more from Tk 10.89 billion estimated cost of the Dohazari 100MW plant. The BPDB has,
however, slashed Tk 171.3 million from the original Tk 7.75 billion estimated cost of the
Gopalganj 100MW power plant and Tk162.9 million from original Tk4.37 billion cost Faridpur
50MW power station. The power sector subsidy in the current fiscal is likely to reach an alltime high of Tk 90 billion because of costly electricity generated by oil-fired power plants, the
Ministry of Finance (MoF) said. The generation cost of furnace oil-based power peaking power
plant is hovering from Tk7.0 to Tk15 per kilowatt hour, BPDB officials said.
FE 22.12.2012

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Samakal 22.12.2012
Fuel price needs to be raised, says Tawfiq
No decision on Phulbari before impact assessment
A government high-up on Saturday dropped a broad hint at raising fuel price any time for the
sake of its adjustment, reports UNB. "The government is still incurring a loss of Tk 18 per litre
by selling diesel," Prime Minister's adviser on energy issues Dr Tawfiq-e-Elahi Chowdhury told
reporters on the sidelines of a seminar on renewable energy in the city. Tawfiq-e-Elahi said if
the subsidy on petroleum fuel continued, it would not be possible for the government to
allocate funds for other important sectors like education and human development. "So, for the
sake of price adjustment, the fuel price has to be raised," he said. Despite raising power tariff,
he said, some distribution companies were incurring losses and they moved to the Bangladesh
Energy Regulatory Commission (BERC) seeking a further raise in the power tariff at the retail
level. The regulator would now decide on the issue through public hearing, he added. FE
Report adds: Talking to reporters, the Prime Minister's adviser reiterated the government's
position on the Phulbari coal mine project saying the government had not yet given any
permission to Asia Energy or GCM Resources to mine it or extract coal from there. "We shall
assess the impacts following a survey to be conducted by the Institute of Water Modeling
before taking any decision," he said. Chowdhury said the government has now moved to run
several coal-fired power plants with imported coal. Local coal could be kept in reserve for
future use, he added. He also said the government stopped providing new gas connections to
industries and households mainly under compulsion of a court ruling. "The court ruling is one of

the main reasons for halting new gas connections," he told newsmen on the sidelines of the
seminar. The government was also assessing the requirement of natural gas in new industries
and other important sectors and looking to provide connections there, he added. The High
Court (HC) in November last directed the government to stop giving gas connections illegally
until a further order. It also issued a rule upon the government to explain in four weeks why
giving of gas connections should not be declared illegal and why it should not be directed to
stop such illegal connections. The court also ordered the government to form a committee to
make a list of the people responsible for the illegal gas connections. The energy ministry,
however, constituted recently a six-member committee to probe the illegal gas connections.
Advocate Manzill Murshid earlier submitted the writ petition on behalf of the Human Rights and
Peace of Bangladesh seeking an HC directive on the government to take appropriate action
against the corrupt government officials providing gas connections violating the government
decision. Petrobangla Chairman Hussain Monsur earlier alleged that the government was losing
revenue worth at least Taka 1.8 million (US$ 30,000) every day due to rampant illegal gas
connections to household consumers alone. He said at least 150,000 illegal household gas
connections had been provided over the past two years since gas connections to households
were banned officially with effect from July 13, 2010. "Petrobangla has made a survey of the
illegal household gas connections and found that around 9 million cubic feet per day (mmcfd)
of gas is being pilfered through the illegal connections to households," Monsur alleged
categorically. The Power Division under the Ministry of Power, Energy and Mineral Resources
(MPEMR) organised the seminar on 'Identification of areas of cooperation in renewable energy
between Bangladesh and India.' Director General of Power Cell Mahboob Sarwar-e-Kainat made
the keynote presentation at the seminar. State Minister for MPEMR Muhammad Enamul Haq
spoke on the occasion as special guest, where Indian experts and senior officials of power
division and different state-owned power entities took part.
FE 23.12.2012

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P-Alo 23.12.2012
COMMERCIAL POWER PRICE
BERC for Tk 2.83 per unit
Bangladesh Energy Regulatory Commissions technical committee has suggested that the
indicative price of power should be Tk 2.83 a kilowatt-hour (unit) at which the gas-run
commercial plants will sell their surplus electricity to the public sector utilities. The technical
committee at an open meeting on Monday suggested that the fuel cost should be Tk 0.75,
considering the gas price at Tk 79 per thousand cubic feet, and the non-fuel cost installation
cost, operation and maintenance, salaries and other expenditures with profit margin Tk 2.08
for the indicative price. In the meeting, the Consumers Association of Bangladesh suggested
that the indicative price should not be more than Tk 2.25 a unit while the entrepreneurs
insisted that the price should be Tk 5.09 a unit. BERC chairman Md Emdadul Huque presided
over the meeting. The commission member Salim Mahmud said that the commission had heard
the opinions of all stakeholders and asked them to place the suggestions in writing by January 6
next year to enable the commission to give its judgment on the indicative price for commercial
plants. United, Summit, Dooren and Energypack are among the commercial power producers
selling electricity directly to consumers at negotiated prices and sell the surplus power to
either the Power Development Board or the Rural Electrification Board, two state-run power
utilities. In 2010, BERC set the indicative prices for furnace oil- and coal-fired commercial
power plants.
NA 25.12.2012

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BB 26.12.2012
9pc increase in power prices likely from Jan
The Bangladesh Energy Regulatory Commission, which earlier said that it would not increase
power prices in the current financial years, is likely to increase retail prices by up to 9 per cent
with effect from January 1, officials said. The energy commission will hold a public hearing
today on the Rural Electrification Boards proposal for increase in retail prices. The commission
will also hold a public hearing on the proposals of the Power Development Board and West Zone
Power Distribution Company on Sunday and of Dhaka Electric Supply Company and Dhaka Power
Distribution Company on Monday. The commission on September 20 increased average retail
prices by 15 per cent on an interim basis against an increase in bulk price by 16.92 per cent on
an average, effective from September. With the latest round after February 2011, the
commission has so far increased retail prices by 43.75 per cent on an average in six phases
from Tk 4 a unit to Tk 5.75 a unit. In the order, the commission said that the power price
would not be increased further in the financial year if the price of fuel-oil on the international
market would not go up. There has, however, been no significant increase in fuel oil prices on
the international market, officials said. The commission in November also decided not to
increase power prices for consumers even if power agencies count losses. The amount of losses

will be offset with money from the Energy Support Fund, set up with a portion of profits power
and gas distribution agencies make. The decision will benefit power agencies as four out of five
power agencies are making losses and all gas agencies are making profits. The commission
planned to give detailed instructions to gas and power agencies in its coming judgement on
Petrobanglas proposal for an increase in gas price. Commission member Salim Mahmud told
New Age that the commission was backtracking on its earlier decision because of noncooperation of Petrobangla and its subsidiaries. Salim Mhmud said that the commission could
enforce its order if gas agencies were its licensees. But, he said, only Petrobangla, the parent
organisation of gas agencies, was the commissions licensee. Power distribution agencies
wanted another round of increase in retail prices in the range of 912 per cent as they are
incurring losses even after the price increase by 15 per cent on an average with effect from
September 1, officials said. They, however, said that the commission needed to hold the
hearing as it increased retail power prices in an interim order. In the price hike proposals, the
Rural Electrification Board wanted a 9 per cent increase, or Tk 6.45 billion in subsidy, West
Zone Power Distribution Company 10.5 per cent, or 0.96 billion in subsidy, Dhaka Power
Distribution Company 11.31 per cent, or Tk 3.25 billion in subsidy, and Dhaka Electric Supply
Company 11.69 per cent, or about Tk1 billion in subsidy. The power board has planned to seek
a 12 per cent increase, or Tk 5.16 billion in subsidy, on the increase effected in September.
NA 27.12.2012