More rental power plants on the cards

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A move is under way to allow a few more liquid fuel-guzzling rental power plants having a total capacity of 400-500 MW amid alleged persuasion by some ruling party lawmakers and influential business quarters, reports UNB. According to official sources, the government in the last two years signed contracts with private sponsors to set up a total of 16 quick rental power plant projects having total capacity of 1,488 MW. Contracts were also signed with private sponsors for another three rental power plants having total capacity of 265 MW. The electricity tariff of these plants was fixed at Tk 7.78 per unit for furnace oil-fired plants and Tk 14.39 per unit for diesel-based projects, while the PDB's normal production cost is below Tk 3 per unit. Initially, the government had a plan to set up a total of 8 rental power plants for a period of 3-5 years to provide ad-hoc support until large-scale power plants come into operation. As part of the plan, tenders were invited for the projects, but the government could sign contracts only for 3 rental plants because of various tender related complications. Showing the complications as an excuse, the Power Division moved for setting up some more rental and quick rental power plants without any tendering. At that time, the top functionaries at the Power Ministry said that the government is following the extraordinary course only to hasten the power plants implementation process to give a quick remedy to the nagging power crisis. This stance of the Power Division was also endorsed by the government's top policymakers. But they restricted Power Division to go for such projects because of their excessively high tariff rates. The Power Secretary also announced that the government would invite the world's famous power generation companies and sign contracts with only a few companies to set up projects without tender. For its non-tendering process, many insiders in the power industry and social pressure groups heavily criticised the government's move questioning its transparency. Even then the Power Division moved ahead with the projects. But as soon as the Power Division moved to implement such unsolicited projects without tender, a huge number of local companies, who have no track record in power sector, appeared on the scene as key-players having the blessings of the powerful quarters. Finally, the government was forced to accept offers for as many as 16 quick rental power plants having total capacity of 1488 MW. When the government signed contracts, the sponsors of these plants were given 120 days (4 months) to set up their plants. But almost all these plants failed to come into operation as per schedule. Despite such failure, again a move is on to allow a few more quick rental power plants to entertain some of the business groups having links with the ruling party. "Two ruling party MPs are even creating pressure for accepting two non-responsive firms' offers for two IPP (independent power plant) projects," said a Power Division official. He said there is a firm instruction from the Prime Minister's Principal Secretary not to allow any more quick rental power plants in future. Another official said a different group is lobbying to convince the Power Division to extend the power purchase contract of Khulna 40 MW (3 years) plant, which is scheduled to expire in June this year. The contract was signed during the last caretaker government at an exorbitant rate. The government is now buying electricity from this diesel-based plant at Tk 16.30 which is one of the highest rates.