When desperation writ large in tenders
Wednesday, 2 September 2009
Shamsul Huq Zahid
Giving up the idea of setting up dual-fuel fed power plants, the government, as the available indicators suggest, is fast going back to diesel and furnace oil based plants.
The power division, as it appears is in a desperate mood in a situation where the country's gas reserve is depleting fast and the power deficit widening with every passing day.
Narrowing the gap between demand for, and supply of, power and gas matters most to the government. The generation cost per unit of electricity is not that important to the government, at least, for now.
As part of the incumbent government's seriousness to improve the power situation, the power development board (PDB), according to a report published in the FE early this week, would be inviting bids next week for installation of 17 diesel and furnace oil-run power plants on a fast-track basis.
Out of the proposed 17 power plants, eight, to be set up by the private sector, would be rental ones having a total generation capacity of 530 megawatt (MW) and the remaining plants would be set up in the public sector. The PDB expects to award contracts for the rental power plants within next three months and the public sector ones by December 31 next.
The PDB has already acquired land for setting up the power plants having generation capacity between 30MW and 200 MW both in the northern and southern parts of the country.
The FE report based on interactions with the officials of the power ministry some big names in the country's private sector have shown their interest in setting up rental power plants that would be operated under build-own-operate (BOO) model.
There is no denying that the country badly needs more power to meet the present as well as future demands. Without ensured power supply, it is hard to expect the existing industries to operate up to their full capacity and new industrial investment to come up. In fact, every sector of the economy would continue to suffer, leading to the rise of serious discontentment among the population.
The prevailing power situation, no doubt, demands actions on the part of the government to beef up power supply and the people would always welcome such actions. But before embarking on actions, which are, actually, different from those planned earlier, the government does need to be transparent to avoid any future embarrassment.
For instance, the government should clearly explain to the people the present power and gas supply situation and the reasons for going back to expensive liquid fuel-based power plants. It should also explain the issues relating to the exploitation of the country's coal reserves, which could be a cheap fuel for running the power plants.
Such explanations are necessary because the cost of generation of power in liquid fuel-based power plants would be higher than that of gas and coal-fired power plants. In that case, the cost of power purchase from the private sector rental power plants would also be higher than that of the existing gas-based independent power producers (IPPs). Similarly, the cost of generation in the proposed liquid fuel-run power plants in the public sector would be higher.
The per unit generation cost in case of diesel-run plants would be around Tk 16 and that of furnace oil-fed ones Tk 10 as against the average tariff of Tk 3.75. The government would have to provide Tk 170 billion over a period of three years for buying power from private sector rental power plants and the annual amount of subsidy in the case of public sector liquid fuel-based power plants is estimated at Tk 20 billion.
These issues would obviously come to the fore if the operating losses of the PDB go further up or the government decides in favour of an unpleasant move to hike power tariff at the consumers' level.
The government should also make the people know about its future plan on coal and the time required to start exploitation of this cheap energy source, particularly for its use in power generation. The country might or might not hit new gas reserves soon. But it has proven reserves of a substantial quantity of quality coal. While taking urgent measures to narrow the ever-widening power deficit, the government should make bold decisions on the recovery of coal and the use of the same for power generation. There is, actually, no room for the government to drag its feet on coal policy.
Out of the proposed 17 power plants, the smaller ones having power generation capacity between 30MW and 50 MW, if everything goes as planned, might start power generation within next four to six months. The bigger ones might take between 18 months and 24 months.
However, the installation of these plants might suffer a serious setback if there was replay of events surrounding the implementation of small power projects in the private sector during the BNP-led alliance government. Lobbying by many ruling party lawmakers and businessmen having links with the powerful people to set up power plants did spoil the earlier move. The multilateral lenders had expressed deep frustration over the developments around new power plants and implementation of the programme got stalled.
The people would expect that such interference by the political quarters would not take place this time and the genuine businessmen, having knowledge and expertise in power sector, would be allowed to set up power plants.
Giving up the idea of setting up dual-fuel fed power plants, the government, as the available indicators suggest, is fast going back to diesel and furnace oil based plants.
The power division, as it appears is in a desperate mood in a situation where the country's gas reserve is depleting fast and the power deficit widening with every passing day.
Narrowing the gap between demand for, and supply of, power and gas matters most to the government. The generation cost per unit of electricity is not that important to the government, at least, for now.
As part of the incumbent government's seriousness to improve the power situation, the power development board (PDB), according to a report published in the FE early this week, would be inviting bids next week for installation of 17 diesel and furnace oil-run power plants on a fast-track basis.
Out of the proposed 17 power plants, eight, to be set up by the private sector, would be rental ones having a total generation capacity of 530 megawatt (MW) and the remaining plants would be set up in the public sector. The PDB expects to award contracts for the rental power plants within next three months and the public sector ones by December 31 next.
The PDB has already acquired land for setting up the power plants having generation capacity between 30MW and 200 MW both in the northern and southern parts of the country.
The FE report based on interactions with the officials of the power ministry some big names in the country's private sector have shown their interest in setting up rental power plants that would be operated under build-own-operate (BOO) model.
There is no denying that the country badly needs more power to meet the present as well as future demands. Without ensured power supply, it is hard to expect the existing industries to operate up to their full capacity and new industrial investment to come up. In fact, every sector of the economy would continue to suffer, leading to the rise of serious discontentment among the population.
The prevailing power situation, no doubt, demands actions on the part of the government to beef up power supply and the people would always welcome such actions. But before embarking on actions, which are, actually, different from those planned earlier, the government does need to be transparent to avoid any future embarrassment.
For instance, the government should clearly explain to the people the present power and gas supply situation and the reasons for going back to expensive liquid fuel-based power plants. It should also explain the issues relating to the exploitation of the country's coal reserves, which could be a cheap fuel for running the power plants.
Such explanations are necessary because the cost of generation of power in liquid fuel-based power plants would be higher than that of gas and coal-fired power plants. In that case, the cost of power purchase from the private sector rental power plants would also be higher than that of the existing gas-based independent power producers (IPPs). Similarly, the cost of generation in the proposed liquid fuel-run power plants in the public sector would be higher.
The per unit generation cost in case of diesel-run plants would be around Tk 16 and that of furnace oil-fed ones Tk 10 as against the average tariff of Tk 3.75. The government would have to provide Tk 170 billion over a period of three years for buying power from private sector rental power plants and the annual amount of subsidy in the case of public sector liquid fuel-based power plants is estimated at Tk 20 billion.
These issues would obviously come to the fore if the operating losses of the PDB go further up or the government decides in favour of an unpleasant move to hike power tariff at the consumers' level.
The government should also make the people know about its future plan on coal and the time required to start exploitation of this cheap energy source, particularly for its use in power generation. The country might or might not hit new gas reserves soon. But it has proven reserves of a substantial quantity of quality coal. While taking urgent measures to narrow the ever-widening power deficit, the government should make bold decisions on the recovery of coal and the use of the same for power generation. There is, actually, no room for the government to drag its feet on coal policy.
Out of the proposed 17 power plants, the smaller ones having power generation capacity between 30MW and 50 MW, if everything goes as planned, might start power generation within next four to six months. The bigger ones might take between 18 months and 24 months.
However, the installation of these plants might suffer a serious setback if there was replay of events surrounding the implementation of small power projects in the private sector during the BNP-led alliance government. Lobbying by many ruling party lawmakers and businessmen having links with the powerful people to set up power plants did spoil the earlier move. The multilateral lenders had expressed deep frustration over the developments around new power plants and implementation of the programme got stalled.
The people would expect that such interference by the political quarters would not take place this time and the genuine businessmen, having knowledge and expertise in power sector, would be allowed to set up power plants.