Power sector : Searching the other better options
Saturday, 21 March 2009
Enayet Rasul Bhuiyan
Prime Minister (PM) Sheikh Hasina steered through a decision in her Cabinet recently which would mean immediate turning off of gas supply to two fertiliser plants in the country. But the production foregone from the two fertiliser plants would be much more than compensated by likely production increases in diverse sectors of the economy including the vital industrial and agricultural sectors. The production and other losses from the closure of two fertiliser factories would translate into greater power to be supplied to a large or wider number of industrial users and services. Agricultural productivity would also benefit notably from better running of irrigation pumps with the added power. If it were possible to take stock of the total cumulative gains in different sectors of the economy from turning away gas supplies to two fertiliser plants to power generating plants for producing additional power, then the gains would be seen as far more in value compared to what can be experienced by not closing down the fertiliser plants and not diverting their gas supplies.
Thus, the decision to divert a part of gas supplies for the greater good of the broader economy, has been an exercise in prudence. Economics is all about making right decisions at the right time. Resources are scarce and the art of applied economics involves allocating these limited available resources-- prudently-- for optimum overall returns to the economy as a whole. Therefore, as a decision designed to address the power crisis in the short term, the move to turn off gas supplies to the fertiliser plants, is a good one. Besides, no immediate insecurity is sensed from temporarily keeping shut these two plants as existing fertiliser stocks in the country are considered to be enough to last nearly a year and prices of imported fertilisers have fallen drastically.
But the pertinent question is whether the PM can take some more decisions just as swiftly that would be seen as immediately fruitful for the power sector. For this is the greatest expectation of power users that the government would immediately and effectively do its best in the short term to mitigate their power related sufferings.
Adding new generation capacities in the power sector involve choices, evaluation of different proposals and from the stage of decision-making to implementation leading finally to completed projects, all of these things take not months but years. But the moot question is : whether anything can be done on a contingency basis to add power to the starved national grid in this hot summer when demand for power has soared and the unfulfilled demand is creating great agonies for the users.
Building power plants will take time. But what about other smart plans to provide notable relief till these plants are built ? For example, the possibility existed to add not only some 50 or 60 mw of power but at least 300 mw to the grid within a month or so if steps were readily taken to make this happen, This amount of power could be immediately sent to the grid on a daily basis. When businesses are required to keep shutters down in the evening to save less than a 100 mw of power at the costs of significant losses for not being able to keep open their shops longer , in this situation the addition of some 300mw to the grid instantly can make a whole lot of difference. Not only it should make unnecessary the present practice of forcing businesses to close down by 7 pm , a good deal of power would be available for supply to the agonized household users as well as industries in a 24 hours cycle on a daily basis.
We are discussing here the 300 mw of power or captive power as it has been named that is currently available with the country's many private producers of powers. The producers of this captive power are the various industrial operators who have set up their own mini power plants over the years in the face of unreliable power supply. Some of them are large enough to produce 20 mw of power. The owners of many of them also are able and willing to sell off the excess powers they have the capacity to produce after meeting the needs of their industries if there are any buyers of the same. This possibility was known long ago but was not acted upon amazingly for unknown reasons.
Government had formed a guideline for the purchase of the captive power. But this guideline itself, reportedly, is a flawed one. The guideline offered the purchase of power from the captive power producers (CPPs) at the maximum tariff of taka 2.12 per unit . But this rate appears discriminatory because government is presently buying electricity from different independent power producers (IPPs) at much higher rates ranging from taka 3.60 to taka 5.50 per unit. Furthermore, the gas prices paid by the CPPs for producing power is also not fair. The government is supplying power to its own Power Development Board (PDB) plants and the IPPs at a lower rate of taka 2.61 per cubic metre whereas it sells the same gas to CPPs at taka 3.73 per cubic metre.
Thus, the government is providing hardly any incentive to the CPPs to come forward and sign agreements for the conveying of their power to the national grid. However, this situation can change remarkably fast if only the government offers either reasonable prices to the CPPs for the power to be purchased from them or adjusts downwards the gas price it now charges them. Why these things are not being done form a mystery specially in the backdrop of the present very power hungry situation . Surely, it is obvious that government would not have to make any great sacrifices in the financial sense which it is not making already to immediately bring this substantial amount of power held by the CPPs to the national grid.
Another means of getting power swiftly can be buying of the same from neighbouring India or the Himalayan kingdoms of Nepal or Bhutan. This will also take some time in laying transmission poles and associated infrastructures. But this can be done faster than building new power plants. Only quick negotiations with the supplying countries followed up by equally quick steps to put the infrastructures in place, can lead to power in good amounts flowing into our national grid from across the borders. According to recent reports, there are similar possibilities of buying power from Myanmar next door. If these plans of trans-border supply of power is taken up and acted upon on emergency basis, then power from such external sources can start feeding the national grid not this year but by next year. This then, would be still better than waiting for some big power plants to hopefully start functioning by 2012.
Prime Minister (PM) Sheikh Hasina steered through a decision in her Cabinet recently which would mean immediate turning off of gas supply to two fertiliser plants in the country. But the production foregone from the two fertiliser plants would be much more than compensated by likely production increases in diverse sectors of the economy including the vital industrial and agricultural sectors. The production and other losses from the closure of two fertiliser factories would translate into greater power to be supplied to a large or wider number of industrial users and services. Agricultural productivity would also benefit notably from better running of irrigation pumps with the added power. If it were possible to take stock of the total cumulative gains in different sectors of the economy from turning away gas supplies to two fertiliser plants to power generating plants for producing additional power, then the gains would be seen as far more in value compared to what can be experienced by not closing down the fertiliser plants and not diverting their gas supplies.
Thus, the decision to divert a part of gas supplies for the greater good of the broader economy, has been an exercise in prudence. Economics is all about making right decisions at the right time. Resources are scarce and the art of applied economics involves allocating these limited available resources-- prudently-- for optimum overall returns to the economy as a whole. Therefore, as a decision designed to address the power crisis in the short term, the move to turn off gas supplies to the fertiliser plants, is a good one. Besides, no immediate insecurity is sensed from temporarily keeping shut these two plants as existing fertiliser stocks in the country are considered to be enough to last nearly a year and prices of imported fertilisers have fallen drastically.
But the pertinent question is whether the PM can take some more decisions just as swiftly that would be seen as immediately fruitful for the power sector. For this is the greatest expectation of power users that the government would immediately and effectively do its best in the short term to mitigate their power related sufferings.
Adding new generation capacities in the power sector involve choices, evaluation of different proposals and from the stage of decision-making to implementation leading finally to completed projects, all of these things take not months but years. But the moot question is : whether anything can be done on a contingency basis to add power to the starved national grid in this hot summer when demand for power has soared and the unfulfilled demand is creating great agonies for the users.
Building power plants will take time. But what about other smart plans to provide notable relief till these plants are built ? For example, the possibility existed to add not only some 50 or 60 mw of power but at least 300 mw to the grid within a month or so if steps were readily taken to make this happen, This amount of power could be immediately sent to the grid on a daily basis. When businesses are required to keep shutters down in the evening to save less than a 100 mw of power at the costs of significant losses for not being able to keep open their shops longer , in this situation the addition of some 300mw to the grid instantly can make a whole lot of difference. Not only it should make unnecessary the present practice of forcing businesses to close down by 7 pm , a good deal of power would be available for supply to the agonized household users as well as industries in a 24 hours cycle on a daily basis.
We are discussing here the 300 mw of power or captive power as it has been named that is currently available with the country's many private producers of powers. The producers of this captive power are the various industrial operators who have set up their own mini power plants over the years in the face of unreliable power supply. Some of them are large enough to produce 20 mw of power. The owners of many of them also are able and willing to sell off the excess powers they have the capacity to produce after meeting the needs of their industries if there are any buyers of the same. This possibility was known long ago but was not acted upon amazingly for unknown reasons.
Government had formed a guideline for the purchase of the captive power. But this guideline itself, reportedly, is a flawed one. The guideline offered the purchase of power from the captive power producers (CPPs) at the maximum tariff of taka 2.12 per unit . But this rate appears discriminatory because government is presently buying electricity from different independent power producers (IPPs) at much higher rates ranging from taka 3.60 to taka 5.50 per unit. Furthermore, the gas prices paid by the CPPs for producing power is also not fair. The government is supplying power to its own Power Development Board (PDB) plants and the IPPs at a lower rate of taka 2.61 per cubic metre whereas it sells the same gas to CPPs at taka 3.73 per cubic metre.
Thus, the government is providing hardly any incentive to the CPPs to come forward and sign agreements for the conveying of their power to the national grid. However, this situation can change remarkably fast if only the government offers either reasonable prices to the CPPs for the power to be purchased from them or adjusts downwards the gas price it now charges them. Why these things are not being done form a mystery specially in the backdrop of the present very power hungry situation . Surely, it is obvious that government would not have to make any great sacrifices in the financial sense which it is not making already to immediately bring this substantial amount of power held by the CPPs to the national grid.
Another means of getting power swiftly can be buying of the same from neighbouring India or the Himalayan kingdoms of Nepal or Bhutan. This will also take some time in laying transmission poles and associated infrastructures. But this can be done faster than building new power plants. Only quick negotiations with the supplying countries followed up by equally quick steps to put the infrastructures in place, can lead to power in good amounts flowing into our national grid from across the borders. According to recent reports, there are similar possibilities of buying power from Myanmar next door. If these plans of trans-border supply of power is taken up and acted upon on emergency basis, then power from such external sources can start feeding the national grid not this year but by next year. This then, would be still better than waiting for some big power plants to hopefully start functioning by 2012.