Merchant power plant : Bangladesh perspective
Saturday, 25 October 2008
Arthur Kendal Malrose
Immediately after the creation of Bangladesh as the government was trying to take stock of the whole situation for forward planning the demand-supply gap in electricity / power was felt very much; and accordingly a master plan was placed to Asian Development Bank (ADB)/ International Monetary Fund (IMF) and other bilateral donor and credit agencies for necessary support.
In the meantime, as the world has been experiencing many challenges, the developing economies in Asia have had to consider certain aggressive steps to come out of the "brunt" facing the socio-political and economic fronts. Bangladesh, amongst others, was not immune to those unpredictable external pressure.
Power generation and supply is talk of the town in every capital city of Asia. No matter what you have underneath your soil or up in the sky, the think-tanks in every cabinet meeting are spending their valuable times to find a workable solution for closing the gap -- the gap between supply and demand and gap between haves and have-nots.
At this time of world economic recession where IMF is urging the donor countries to keep their "commitments" intact, the developing countries keep standing at a crossroads.
No denial of the fact that merchant investment theory has been contributing for centuries to narrow the gap in every corner of the globe.
As of today while Bangladesh has severe short supply of natural gas resulting in economic melt-down and where new supply stands on long-term prospects, furnace oil and fossil fuel will have favourable choice in terms of available technology, supply source and cost, ahead of solar and wind energy as they require higher capital investment.
While imported fuel on proper planning can supply electricity on 365 x 24 basis, allocation of import-funds in Bangladesh needs to be addressed "hassle free" at bank desk. Since local fuels for power generation are available at subsidized rates, imported fuel's landed cost will expect due attention to fit into desired power tariff.
A number of Asian countries now investing on renewable energy using the latest technology on low flow wind turbine can set a starting example for Bangladesh's coastal belt and off-shore areas. Since wind energy needs comparatively higher investment but involves low operating cost, a consortium platform will be required between foreign investors and Bangladesh.
In most Asian countries now-a-days, electricity is considered as one of the basic daily needed commodities and hence market economy is playing its due role to bridge the gap between demand and supply. Private sector power industry is one of the key to India's economic success.
Bangladesh decision for merchant power plant needs to be encouraged. Between three basic fuels : oil / gas / coal for power generation, coal stands out as the cheapest and reliable source to supply electricity. The earlier thermal coal technology is phasing out rapidly in world power market to make room for pollution control. As such, new technology breeding super-critical steam boilers are in the market to serve dual purpose -- high conversion and low emission.
A number of Asian countries, including India and China, are now actively working on low emission procedures under Kyoto Protocol. A mega size coal fired power plant based on super-critical technology under private sector investment in Western India has recently been qualified to earn USD 30 million / annum green subsidy under UN Carbon Trading Scheme. The plant will use imported coal. Bangladesh can win likewise.
On economic scale, a minimum capacity coal-fired power plant (300+ MW) has a sizeable plant cost in foreign currency, keeping aside all other local inputs for Bangladesh, thereby raising the big question of who will invest : foreign or local or joint venture ?
The answer to this big question for any developing economy is to be implanted in the investment policy of any country desirous of attaining the required national growth within a set time-frame.
Investment formulation for merchant power plant, even in Asian context, requires an open-mix recipe where foreign investment can contribute, in terms of plant capital, technology and fuel source.
Bangladesh has tremendous prospect to attract foreign investment in merchant-style infrastructure development including power generation.
(The writer is an Energy & Investment Consultant, based in Australia)
Immediately after the creation of Bangladesh as the government was trying to take stock of the whole situation for forward planning the demand-supply gap in electricity / power was felt very much; and accordingly a master plan was placed to Asian Development Bank (ADB)/ International Monetary Fund (IMF) and other bilateral donor and credit agencies for necessary support.
In the meantime, as the world has been experiencing many challenges, the developing economies in Asia have had to consider certain aggressive steps to come out of the "brunt" facing the socio-political and economic fronts. Bangladesh, amongst others, was not immune to those unpredictable external pressure.
Power generation and supply is talk of the town in every capital city of Asia. No matter what you have underneath your soil or up in the sky, the think-tanks in every cabinet meeting are spending their valuable times to find a workable solution for closing the gap -- the gap between supply and demand and gap between haves and have-nots.
At this time of world economic recession where IMF is urging the donor countries to keep their "commitments" intact, the developing countries keep standing at a crossroads.
No denial of the fact that merchant investment theory has been contributing for centuries to narrow the gap in every corner of the globe.
As of today while Bangladesh has severe short supply of natural gas resulting in economic melt-down and where new supply stands on long-term prospects, furnace oil and fossil fuel will have favourable choice in terms of available technology, supply source and cost, ahead of solar and wind energy as they require higher capital investment.
While imported fuel on proper planning can supply electricity on 365 x 24 basis, allocation of import-funds in Bangladesh needs to be addressed "hassle free" at bank desk. Since local fuels for power generation are available at subsidized rates, imported fuel's landed cost will expect due attention to fit into desired power tariff.
A number of Asian countries now investing on renewable energy using the latest technology on low flow wind turbine can set a starting example for Bangladesh's coastal belt and off-shore areas. Since wind energy needs comparatively higher investment but involves low operating cost, a consortium platform will be required between foreign investors and Bangladesh.
In most Asian countries now-a-days, electricity is considered as one of the basic daily needed commodities and hence market economy is playing its due role to bridge the gap between demand and supply. Private sector power industry is one of the key to India's economic success.
Bangladesh decision for merchant power plant needs to be encouraged. Between three basic fuels : oil / gas / coal for power generation, coal stands out as the cheapest and reliable source to supply electricity. The earlier thermal coal technology is phasing out rapidly in world power market to make room for pollution control. As such, new technology breeding super-critical steam boilers are in the market to serve dual purpose -- high conversion and low emission.
A number of Asian countries, including India and China, are now actively working on low emission procedures under Kyoto Protocol. A mega size coal fired power plant based on super-critical technology under private sector investment in Western India has recently been qualified to earn USD 30 million / annum green subsidy under UN Carbon Trading Scheme. The plant will use imported coal. Bangladesh can win likewise.
On economic scale, a minimum capacity coal-fired power plant (300+ MW) has a sizeable plant cost in foreign currency, keeping aside all other local inputs for Bangladesh, thereby raising the big question of who will invest : foreign or local or joint venture ?
The answer to this big question for any developing economy is to be implanted in the investment policy of any country desirous of attaining the required national growth within a set time-frame.
Investment formulation for merchant power plant, even in Asian context, requires an open-mix recipe where foreign investment can contribute, in terms of plant capital, technology and fuel source.
Bangladesh has tremendous prospect to attract foreign investment in merchant-style infrastructure development including power generation.
(The writer is an Energy & Investment Consultant, based in Australia)