Govt set to adopt policy for merchant power plants
M Azizur Rahman | Monday, 4 August 2008
The government is set to adopt a merchant power plant policy to promote private sector investments and develop public-private partnership in the country's ailing power sector, officials said.
"Unlike the existing regulations of providing fuel supply and power purchase guarantees to power plant sponsors by the government, the new policy would provide liberty to the sponsors to make own arrangements for fuel and select their own customers," a senior power ministry official told the FE.
He said once the policy is adopted the power ministry would not have to struggle for arranging fuel for the power plants against the backdrop of mounting energy crisis especially of natural gas, said the power ministry official.
Due to dwindling gas supply the country's power plants are now getting around 620 million cubic feet of gas per day (mmcfd) on an average against the demand for 850 mmcfd.
The energy ministry has already informed its inability to supply gas to eight planned large and medium power plant projects having a combined generation capacity of 1,700MW electricity.
Electricity generation of around 700 MW is now being hampered in different units of gas-fired power plants across the country due to gas supply crunch.
Chief Adviser Dr Fakhruddin Ahmed has already directed the power ministry for adoption of the policy immediately to mitigate the nagging electricity crisis across the country.
The power ministry has already asked the state-run Power Grid Company of Bangladesh (PGCB) to prepare a draft of the proposed policy and submit it to the power division.
Under the proposed merchant power plant policy the private sector would be allowed to have access to transmission and distribution lines in exchange for payment of agreed wheeling charges.
He said the policy would shatter the single buyer system under which the state-owned Bangladesh Power Development Board (BPDB) purchases electricity from private producers at higher rates and sells to distribution utilities at lower rates.
The state-owned distribution companies like Dhaka Electric Supply Authority (DESA), Dhaka Electric Supply Company (DESCO) and Rural Electrification Board (REB) purchases electricity from the BPDB at prices fixed by the government.
The electricity distribution companies also sell electricity to different clients like, industries, commercial entities and households at the prices fixed by the government, as per the existing system.
But once the policy is adopted the private entrepreneurs would have an edge in setting up power generation plants and sell the electricity to the clients of their choices, the power ministry officials said.
Under the planned policy private entrepreneurs would fix the tariffs of their electricity and settle relevant issues through negotiations with their respective clients, while the PGCB would collect wheeling charges from the private sector entrepreneurs for using its facility, they added.
The existing system has created a monopolistic situation, as the BPDB is the lone buyer of electricity from the power plants.
It has fueled corruption in the power sector as the clients do not have any option open before them other than buying electricity from the BPDB, said sources.
"Unlike the existing regulations of providing fuel supply and power purchase guarantees to power plant sponsors by the government, the new policy would provide liberty to the sponsors to make own arrangements for fuel and select their own customers," a senior power ministry official told the FE.
He said once the policy is adopted the power ministry would not have to struggle for arranging fuel for the power plants against the backdrop of mounting energy crisis especially of natural gas, said the power ministry official.
Due to dwindling gas supply the country's power plants are now getting around 620 million cubic feet of gas per day (mmcfd) on an average against the demand for 850 mmcfd.
The energy ministry has already informed its inability to supply gas to eight planned large and medium power plant projects having a combined generation capacity of 1,700MW electricity.
Electricity generation of around 700 MW is now being hampered in different units of gas-fired power plants across the country due to gas supply crunch.
Chief Adviser Dr Fakhruddin Ahmed has already directed the power ministry for adoption of the policy immediately to mitigate the nagging electricity crisis across the country.
The power ministry has already asked the state-run Power Grid Company of Bangladesh (PGCB) to prepare a draft of the proposed policy and submit it to the power division.
Under the proposed merchant power plant policy the private sector would be allowed to have access to transmission and distribution lines in exchange for payment of agreed wheeling charges.
He said the policy would shatter the single buyer system under which the state-owned Bangladesh Power Development Board (BPDB) purchases electricity from private producers at higher rates and sells to distribution utilities at lower rates.
The state-owned distribution companies like Dhaka Electric Supply Authority (DESA), Dhaka Electric Supply Company (DESCO) and Rural Electrification Board (REB) purchases electricity from the BPDB at prices fixed by the government.
The electricity distribution companies also sell electricity to different clients like, industries, commercial entities and households at the prices fixed by the government, as per the existing system.
But once the policy is adopted the private entrepreneurs would have an edge in setting up power generation plants and sell the electricity to the clients of their choices, the power ministry officials said.
Under the planned policy private entrepreneurs would fix the tariffs of their electricity and settle relevant issues through negotiations with their respective clients, while the PGCB would collect wheeling charges from the private sector entrepreneurs for using its facility, they added.
The existing system has created a monopolistic situation, as the BPDB is the lone buyer of electricity from the power plants.
It has fueled corruption in the power sector as the clients do not have any option open before them other than buying electricity from the BPDB, said sources.