Lessons from others for success in power service
Friday, 7 May 2010
Ferdaus Ara Begum
GDP growth rate at 7-8% requires increased access to energy. Uninterrupted supply of energy is the pre-condition for industrial development. Power deficit of about 2000 megawatt and about 400 mmcfd of gas shortage with the advent of summer and peak irrigation season have made the government and relevant ministries to work hard in bridging the gap.
As per government statistics the installed generation capacity of electricity in the country is about 3800-4200 megawatt, of which about 55-60% is generated by government owned organisations and remaining 40-45% is generated by private producers. Electricity produced by captive power plants in the country is about 1500 megawatt; some statistics say the amount is about 3000 megawatt. Most of the large industries in the pharmaceuticals, textile, ceramics and leather sectors are using captive power for keeping production line uninterrupted, which has otherwise increased cost of production.
Considering its importance and the rising demand, the government has set its vision to produce 7000 MW by 2013, 9000 MW by 2015 and 20,000 MW by 2021. The government has embarked on a well-planned policy to generate more energy through higher public and private investment, reduce system loss to the minimum and harness natural gas, solar power, atomic power and hydroelectric resources.
Power and energy has been identified as the number one issue towards attaining GDP growth and meeting vision target-2021. A large number of industries have remained stalled because of power crisis. An international Conference organised recently analysed several options giving emphasis on finding alternatives to gas resources following examples set by other neighboring countries.
Among them, example of the Philippines was mentioned on several occasions. The country took a fast track 18 months policy to overcome the power crisis in 1992. An extensive rehabilitation and overhauling of their existing plants restored some 1065 MW of usable capacity. The country passed an energy power crisis act in 1993 for building, repair, rehabilitation and maintenance of power plants. About 1600 firms were asked to participate in a voluntary load curtailment programme so that their production shifts could be synchronized with the power supply schedules arranged on a rotating basis. The Philippines was also successful in implementing BOT models. It even opted for privatising national power corporation and devolved power generation, transmission, and distribution mainly to the private sector. In order to ensure use of indigenous energy and security the Philippines gave emphasis on indigenous oil supply and the renewable and alternative energy options. The country believed that speed was essential, they avoided costs of indecision and the strong political will and careful planning led to addressing the major crisis within a short span of time.
The case of our neighbouring country is another example. In Kolkata the authorities there have given emphasis on manpower resources and planning. They tried to avoid power theft and created a loss control team. They have made effective use of information technology to ensure surveillance and monitoring so that quality of services can be ensured. They took Singapore power, a global leader, as their partner to improve service quality. In November 2009, the two partners launched Asian Institute of Power Management to train power sector professionals for ensuring best practices in service delivery. They have plans to establish more coal-based thermal power plants to cover some other surrounding states with electricity.
In Bangladesh, some of the years-old power plant could not be able to produce power as per installed capacity. Ghorashal power plant is the oldest and one of the major power plants but most inefficient. Ghorashal and Ashugonj Power plants can be run under public-private partnership basis. 90 MW Fenchugonj power plant is generating 30 MW power to the national grid. We are all aware that these are all very old plants and are almost incapable to produce and run at required level. We can take lessons from the Philippines in that respect. Kaptai Hydro Power Plant will need complete overhauling. Some already tendered projects like Bibiyana, Siddirgonj, Meghnaghat Phase 11, 111 could not be implemented because of the stringent process. Stringent procurement policy has also been identified as one of the major constraints. Some experts opined that within the set policies it is almost impossible to establish a project.
For handling gas-based projects in-house expertise has to be developed. Time is running out for us to look for alternatives. Taking example from our neighbouring countries we may like to take extensive drive for skill development and make use of available expertise as much as possible. Multifarious opinions are creating problems for taking a consolidated and speedy decision. Shortage of professionals and lack of time-bound research have been standing as stumbling blocks for taking a concrete decision. Large scale brain-drain from energy sector and delay in process are discouraging foreign investors. Even though Bangladesh has a proven reserve of quality coal it is not possible to use because of high-density of habitats in the vicinity.
Financing has been identified as one of the major constraints and discussed widely. However, some dismissed the issue saying financing is not at all a problem. The recently organised conference tried to attract foreign investment, where some of them have shown interest, but the question is whether we are ready to accept foreign investment as there are indications that private sector is also ready for investing in the Power and energy sector.
Primary raw materials for power generation have been identified as another major problem as production of electricity is heavily dependent on gas. About 88 percent of power generation is based on natural gas. So far, we have not much utilised other alternatives of energy sources, like coal, furnace, hard rock.
The demand for power is increasing and some statistics say that it will increase by 300 MW annually. Large investment is required to meet the growing demand. It can be an attractive business sector both for local and foreign companies if policy packages are adequately streamlined.
The private power generation policy offers attractive incentives including tax holidays for 15 years and one-window service.
For the first time the government has created a provision in the budget for 2009-10 a PPP allocation worth Tk25 billion. The government has formed a separate company to manage the proposed special fund to be raised from public and private sectors for investing in power and energy projects.
Besides there is an Investment Promotion Financing Facility (IPFF) amounting to about $250m. Some power and energy companies like Summit Power, DESCO Ltd, Power Grid Company Ltd(PGCL), Meghna Petroleum, Titas Gas(TDCL) have been listed on the stock exchanges to raise fund. Besides, PDB is going to release bond for raising some funds from the market.
New power plants should be duel-fuel or coal. PPP Budget announced in the Budget 2009-2010 should be used for establishing backward linkages, e.g, transmission Line, gas pipelines, land preparation etc so that PPP can find project implementation less cumbersome.
The electricity sector has to move from its present situation of single buyer model to a competitive model, where the electricity grid is accessible to all. It will help reduce power crisis. Management Efficiency should be improved so that existing capacities can be fully utilised. Licence for captive power generation should be given as much as possible while application fees can be reduced. Rental power plant can be attracted based on imported furnace oil.
An independent study should be commissioned as soon as possible to explore the potentials of already discovered coal and identify procedure of extracting coal from the reserve and rehabilitate old power plants to raise their capacity to partly address the country's energy crisis.
The writer is additional secy (R&P) & Former ED SCCI. She can be reached at email:
nothing_man2000@yahoo.com
GDP growth rate at 7-8% requires increased access to energy. Uninterrupted supply of energy is the pre-condition for industrial development. Power deficit of about 2000 megawatt and about 400 mmcfd of gas shortage with the advent of summer and peak irrigation season have made the government and relevant ministries to work hard in bridging the gap.
As per government statistics the installed generation capacity of electricity in the country is about 3800-4200 megawatt, of which about 55-60% is generated by government owned organisations and remaining 40-45% is generated by private producers. Electricity produced by captive power plants in the country is about 1500 megawatt; some statistics say the amount is about 3000 megawatt. Most of the large industries in the pharmaceuticals, textile, ceramics and leather sectors are using captive power for keeping production line uninterrupted, which has otherwise increased cost of production.
Considering its importance and the rising demand, the government has set its vision to produce 7000 MW by 2013, 9000 MW by 2015 and 20,000 MW by 2021. The government has embarked on a well-planned policy to generate more energy through higher public and private investment, reduce system loss to the minimum and harness natural gas, solar power, atomic power and hydroelectric resources.
Power and energy has been identified as the number one issue towards attaining GDP growth and meeting vision target-2021. A large number of industries have remained stalled because of power crisis. An international Conference organised recently analysed several options giving emphasis on finding alternatives to gas resources following examples set by other neighboring countries.
Among them, example of the Philippines was mentioned on several occasions. The country took a fast track 18 months policy to overcome the power crisis in 1992. An extensive rehabilitation and overhauling of their existing plants restored some 1065 MW of usable capacity. The country passed an energy power crisis act in 1993 for building, repair, rehabilitation and maintenance of power plants. About 1600 firms were asked to participate in a voluntary load curtailment programme so that their production shifts could be synchronized with the power supply schedules arranged on a rotating basis. The Philippines was also successful in implementing BOT models. It even opted for privatising national power corporation and devolved power generation, transmission, and distribution mainly to the private sector. In order to ensure use of indigenous energy and security the Philippines gave emphasis on indigenous oil supply and the renewable and alternative energy options. The country believed that speed was essential, they avoided costs of indecision and the strong political will and careful planning led to addressing the major crisis within a short span of time.
The case of our neighbouring country is another example. In Kolkata the authorities there have given emphasis on manpower resources and planning. They tried to avoid power theft and created a loss control team. They have made effective use of information technology to ensure surveillance and monitoring so that quality of services can be ensured. They took Singapore power, a global leader, as their partner to improve service quality. In November 2009, the two partners launched Asian Institute of Power Management to train power sector professionals for ensuring best practices in service delivery. They have plans to establish more coal-based thermal power plants to cover some other surrounding states with electricity.
In Bangladesh, some of the years-old power plant could not be able to produce power as per installed capacity. Ghorashal power plant is the oldest and one of the major power plants but most inefficient. Ghorashal and Ashugonj Power plants can be run under public-private partnership basis. 90 MW Fenchugonj power plant is generating 30 MW power to the national grid. We are all aware that these are all very old plants and are almost incapable to produce and run at required level. We can take lessons from the Philippines in that respect. Kaptai Hydro Power Plant will need complete overhauling. Some already tendered projects like Bibiyana, Siddirgonj, Meghnaghat Phase 11, 111 could not be implemented because of the stringent process. Stringent procurement policy has also been identified as one of the major constraints. Some experts opined that within the set policies it is almost impossible to establish a project.
For handling gas-based projects in-house expertise has to be developed. Time is running out for us to look for alternatives. Taking example from our neighbouring countries we may like to take extensive drive for skill development and make use of available expertise as much as possible. Multifarious opinions are creating problems for taking a consolidated and speedy decision. Shortage of professionals and lack of time-bound research have been standing as stumbling blocks for taking a concrete decision. Large scale brain-drain from energy sector and delay in process are discouraging foreign investors. Even though Bangladesh has a proven reserve of quality coal it is not possible to use because of high-density of habitats in the vicinity.
Financing has been identified as one of the major constraints and discussed widely. However, some dismissed the issue saying financing is not at all a problem. The recently organised conference tried to attract foreign investment, where some of them have shown interest, but the question is whether we are ready to accept foreign investment as there are indications that private sector is also ready for investing in the Power and energy sector.
Primary raw materials for power generation have been identified as another major problem as production of electricity is heavily dependent on gas. About 88 percent of power generation is based on natural gas. So far, we have not much utilised other alternatives of energy sources, like coal, furnace, hard rock.
The demand for power is increasing and some statistics say that it will increase by 300 MW annually. Large investment is required to meet the growing demand. It can be an attractive business sector both for local and foreign companies if policy packages are adequately streamlined.
The private power generation policy offers attractive incentives including tax holidays for 15 years and one-window service.
For the first time the government has created a provision in the budget for 2009-10 a PPP allocation worth Tk25 billion. The government has formed a separate company to manage the proposed special fund to be raised from public and private sectors for investing in power and energy projects.
Besides there is an Investment Promotion Financing Facility (IPFF) amounting to about $250m. Some power and energy companies like Summit Power, DESCO Ltd, Power Grid Company Ltd(PGCL), Meghna Petroleum, Titas Gas(TDCL) have been listed on the stock exchanges to raise fund. Besides, PDB is going to release bond for raising some funds from the market.
New power plants should be duel-fuel or coal. PPP Budget announced in the Budget 2009-2010 should be used for establishing backward linkages, e.g, transmission Line, gas pipelines, land preparation etc so that PPP can find project implementation less cumbersome.
The electricity sector has to move from its present situation of single buyer model to a competitive model, where the electricity grid is accessible to all. It will help reduce power crisis. Management Efficiency should be improved so that existing capacities can be fully utilised. Licence for captive power generation should be given as much as possible while application fees can be reduced. Rental power plant can be attracted based on imported furnace oil.
An independent study should be commissioned as soon as possible to explore the potentials of already discovered coal and identify procedure of extracting coal from the reserve and rehabilitate old power plants to raise their capacity to partly address the country's energy crisis.
The writer is additional secy (R&P) & Former ED SCCI. She can be reached at email:
nothing_man2000@yahoo.com