Govt to allow private power plants for bulk consumers
Tuesday, 25 November 2008
M Azizur Rahman
The government Monday approved a policy allowing the private sector to set up power plants to feed only bulk consumers.
The new policy approved at the council of advisers' meeting allows private entrepreneurs to set up individual and joint venture power plants with public sector, rehabilitate the existing old and inefficient ones.
Under the provision, the investors will have the liberty to establish and operate private power plants subject to obtaining licence from Bangladesh Energy Regulatory Commission (BERC).
But they have to find their own clients, who must be bulk consumers, to sell the electricity from their plants at a rate to be fixed through negotiation.
The developers for private power plants will also have to arrange the source of energy to run their plants.
Given the fast depleting reserves of natural gas, the new power plants should preferably rely on coal, imported gas, liquid fuel, or renewable energy sources like solar, wind, hydro, biomass, municipal waste, and others, as fuels, instead of domestic natural gas.
Distribution licencees may purchase power from private power plants subject to approval of the BERC, but the government will not provide any guarantee in favour of any distribution licencee.
Under the new policy, the private sector entrepreneurs will be allowed to rehabilitate old and inefficient power plants of government under rehabilitate, own and operate (ROO) or rehabilitate, own and transfer (ROT) basis.
The public sector power utilities will invite public-private partnership for rehabilitation of old and inefficient power plants through a tender and award the job in accordance with provisions under the Private Sector Infrastructure Guidelines 2004 or Public Procurement Act, 2006 or both, as applicable.
The valuation of the assets of relevant power plants will be done by an independent agency.
The valuation report determining the market value of the existing assets of such plants will be made available to all bidders.
The successful bidders will be required to pay the consideration money upfront to public sector power utilities.
Alternatively, subject to government approval, the consideration money might be adjusted against the tariff.
Local private investors will be able to develop new power plants under joint ventures with the public sector power entities on build, own and operate (BOO) basis.
A special project vehicle (SPV) with at least 51 per cent shares owned by local private investors should be established to implement and operate such projects, the newly established policy, spells out.
The terms and conditions of the joint venture will be stipulated in a joint venture or partnership deed.
Contribution of public sector power entities like project land and other relevant assets will be monetised and added to the cash contribution, if any, and should form the basis for determining its share in the joint venture.
To avail the opportunities as offered in the policy the private entrepreneurs must have proven financial capacity to arrange financing for development of private power plant, proven experience in developing and operating power plant of same or higher capacity as independent power plant, rental power plant, small power plant, or captive power plant and selling power to large consumers.
"The policy has opened up a new window of opportunity for investments in the power sector," chief advisor's special assistant professor M Tamim told the FE Monday night.
It will help augment power supply in the country, he said.
The new 'private power policy' will facilitate electricity supply to only large consumers that include large industrial enterprise, export processing zones, special economic zone, private economic zones, high tech parks, large real estate, Mr Tamim added.
Also, the council gave final approval to the Private University Ordinance 2008 for bringing dynamism in the academic activities of private universities, ensuring transparency and accountability.
Furthermore, the meeting approved the Bangladesh Economic Zones Ordinance 2008 aimed at "enhancing industrialization and employment generation in the country".
It also approved some additions and amendments to the BEPZA Act 1980.
The council of advisers also discussed the Voters' List (Amendment) Ordinance 2008 and sent it back for further examination.
CA's Press Secretary Syed Fahim Munaim briefed newsmen about the outcome of the meeting.
The government Monday approved a policy allowing the private sector to set up power plants to feed only bulk consumers.
The new policy approved at the council of advisers' meeting allows private entrepreneurs to set up individual and joint venture power plants with public sector, rehabilitate the existing old and inefficient ones.
Under the provision, the investors will have the liberty to establish and operate private power plants subject to obtaining licence from Bangladesh Energy Regulatory Commission (BERC).
But they have to find their own clients, who must be bulk consumers, to sell the electricity from their plants at a rate to be fixed through negotiation.
The developers for private power plants will also have to arrange the source of energy to run their plants.
Given the fast depleting reserves of natural gas, the new power plants should preferably rely on coal, imported gas, liquid fuel, or renewable energy sources like solar, wind, hydro, biomass, municipal waste, and others, as fuels, instead of domestic natural gas.
Distribution licencees may purchase power from private power plants subject to approval of the BERC, but the government will not provide any guarantee in favour of any distribution licencee.
Under the new policy, the private sector entrepreneurs will be allowed to rehabilitate old and inefficient power plants of government under rehabilitate, own and operate (ROO) or rehabilitate, own and transfer (ROT) basis.
The public sector power utilities will invite public-private partnership for rehabilitation of old and inefficient power plants through a tender and award the job in accordance with provisions under the Private Sector Infrastructure Guidelines 2004 or Public Procurement Act, 2006 or both, as applicable.
The valuation of the assets of relevant power plants will be done by an independent agency.
The valuation report determining the market value of the existing assets of such plants will be made available to all bidders.
The successful bidders will be required to pay the consideration money upfront to public sector power utilities.
Alternatively, subject to government approval, the consideration money might be adjusted against the tariff.
Local private investors will be able to develop new power plants under joint ventures with the public sector power entities on build, own and operate (BOO) basis.
A special project vehicle (SPV) with at least 51 per cent shares owned by local private investors should be established to implement and operate such projects, the newly established policy, spells out.
The terms and conditions of the joint venture will be stipulated in a joint venture or partnership deed.
Contribution of public sector power entities like project land and other relevant assets will be monetised and added to the cash contribution, if any, and should form the basis for determining its share in the joint venture.
To avail the opportunities as offered in the policy the private entrepreneurs must have proven financial capacity to arrange financing for development of private power plant, proven experience in developing and operating power plant of same or higher capacity as independent power plant, rental power plant, small power plant, or captive power plant and selling power to large consumers.
"The policy has opened up a new window of opportunity for investments in the power sector," chief advisor's special assistant professor M Tamim told the FE Monday night.
It will help augment power supply in the country, he said.
The new 'private power policy' will facilitate electricity supply to only large consumers that include large industrial enterprise, export processing zones, special economic zone, private economic zones, high tech parks, large real estate, Mr Tamim added.
Also, the council gave final approval to the Private University Ordinance 2008 for bringing dynamism in the academic activities of private universities, ensuring transparency and accountability.
Furthermore, the meeting approved the Bangladesh Economic Zones Ordinance 2008 aimed at "enhancing industrialization and employment generation in the country".
It also approved some additions and amendments to the BEPZA Act 1980.
The council of advisers also discussed the Voters' List (Amendment) Ordinance 2008 and sent it back for further examination.
CA's Press Secretary Syed Fahim Munaim briefed newsmen about the outcome of the meeting.