Friday, June 14, 2024

Officials divided over extension of power projects

Officials are divided over a proposal to convert rental and quick-rental power projects into IPPs and extend their tenure, to stave off a possible power crisis in the country.
At present, rental and quick-rental power projects jointly generate 1,561MW of electricity. This is about a third of the country’s total generation capacity. Supporters said the tenure of these plants would expire in 2016, and base-load power projects would not be commissioned till 2020. Therefore, the existing projects should be allowed to function in the intervening years, to meet the country’s demand for electricity.
Naysayers, however, argued that these oil-based plants were eating into a large amount (44 per cent) of subsidy for the power sector, and extending their tenure would be suicidal for the country’s economy.
According to sources in the power division, the idea to extend the tenure of the existing plants was first mooted by an adviser to the power ministry. Following this, some private owners had sought the ministry’s permission to run their projects beyond 2016.
The government had formed a committee headed by additional secretary Md Mofazzel Hossain on April 17, to sort out the issue. The committee was asked to submit its report by May 15. Sources said the committee had held three meetings, but failed to reach a conclusion.
“Several officials in the meetings were opposed to extending the tenure of the power projects, saying that it would be a suicidal for the Power Development Board (PDB) and the national economy. Rather, they proposed that the government should give extension only to the efficient projects,” a PDB official told The Independent, on condition of anonymity.
“We identified certain problems with the existing projects. We saw that 12 such projects were suffering from operational faults, low technical performances and legal complexities. Moreover, six rental power projects tripped frequently due to low capacity engines and this created instability in the national grid system,” the official said.
“Due to these causes, the outage rate of these plants is high and they also use additional fuel that finally increased cost,” he said, adding: “But the final word is that we are under pressure.”
CPD head Mustafizur Rahman said, “These costly oil-based plants put the country’s financial health under serious strain as the PDB has to bear a huge burden of subsidy because of very high purchasing price of electricity.”
“On the one hand, consumers are paying higher power tariffs. On the other, the government is paying higher subsidies to the power sector.” Bangladesh Institute of Development Studies, a government-funded research organisation, on the other hand, said that the government could renew its power purchase contracts with a select group of the privately run quick-rental plants that were running on “good operational conditions”. Their findings are based on the recent government estimate that the electricity generated by the quick-rental power plants contributed between Tk. 52,093 crore and Tk. 121,168 crore to the national GDP, in the last three years.

-With The Independent input

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