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Govt extends tenure of five rental plants

We'll discard those, once more capacity is created: Kamal


FE REPORT | March 24, 2022 00:00:00


Despite having abundant electricity- generation capacity of its own, the government on Wednesday approved a proposal for tenure extension of five more rental power plants with electricity cost at Tk 16.40 per unit.

The heavy fuel oil (HFO)-fired power plants will supply electricity to the Bangladesh Power Development Board (BPDB) for two more years on 'no-electricity, no-payment' basis.

The plants which got the extension are: 40-MW plant of Khulna Power Company Ltd in Jashore, 115-MW plant of Khulna Power Company Unit-II Ltd in Khulna, 100-MW plant of Dutch Bangla Power and Associates Ltd in Narayanganj, 100-MW plant of Orion Power Meghnaghat Ltd in Narayanganj, and 102-MW plant of Summit Narayanganj Power Ltd in Narayanganj.

However, questions arose, as the government kept specific allocations for the plants against their future unspecified power supplies.

"We approved their extension today on 'no electricity no payment' condition. I don't see anything for your apprehension," Finance Minister A H M Mustafa Kamal told newsmen after a virtual meeting of the Cabinet Committee on Government Purchase.

Questions also surfaced from the newsmen regarding the necessity of buying electricity at Tk 16.40 per unit, when the average public sector electricity tariff is Tk 4.29 per unit and that of private sector is Tk 8.02 per unit.

During the entire past tenure of the power plants, they were given capacity payment, even when the BPDB did not receive any electricity from them. In the extended tenure the plants do not require any fresh investment or involvement of bank loan. But their tariff rate in the new agreement dropped by only Tk 1.12 per unit, the newsmen asked.

Mr Kamal said there was specific assurance for the power plant sponsors at the first approval stage (in the past) that they would be given payment - either electricity was taken from them or not by the government.

"Otherwise, none might have invested in (setting up) power plants at that time. They came forward to make investment due to the payment assurance."

The minister said on Tuesday the government took initiative to generate 1,300 MW more electricity. "By this way, we believe, we will get 3,000 MW more electricity from new plants in the next one year."

"When we will get the new power plants, we will be able to abandon the (old) rental power plants in phases." This time the nature of the power plants is different; he said and added that the plants would be paid on the basis of consumption. "You can't say those rental plants are like (the plants) in the past."

The power plants sought extension for five more years, but this time the extension was given for two years, the finance minister mentioned. Replying to another query, Mr Kamal opined that none would be loser in the next budget. "Everyone will win. Businessmen will be more attentive to their businesses. We will play an active role in helping them run businesses."

The businessmen will get policy support. The initiatives, where employment opportunities are high, will be given extra facilities.

Asked whether inflation will remain under control, if gas prices are hiked at this stage, the minister said the Russia-Ukraine war took place suddenly and contributed to commodity price hike globally.

He asked the newsmen to compare the rate of inflation here with that of the neighbouring countries (to perceive) whether Bangladesh's one is high or not.

The Centre for Policy Dialogue (CPD) on Sunday said the prices of essential commodities in Bangladesh are much higher than those in the global market. While replying a query on this, Mr Kamal came down heavily on the private sector think-tank.

"If they say it as a table talk, I can't reply," he said, and added that even when the rate of inflation was not over 5.0 or 5.5 per cent, they said the inflation was very high.

"They then asked us to devalue our currency. I had war of words with them for a long period. Ask them, had we devalued currency that time in line with the CPD's suggestion, where would the currency stand, and what would happen to people?"

"The thinking is not fair that only the CPD knows about economics, and other people do not. The CPD definitely knows about economics, and it has enough contributions to the country's economy. I endorse their contributions," he noted.

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