The Power Division has moved to extend the tenure of the contracts of two more rental power plants for next five (5) years despite strong criticism from the power sector experts.
These two power projects are Max Power Ltd’s 78.5 MW plant at Ghorasal and DPA Power Generation’s 50 MW plant at Pagla in Narayanganj.
Earlier, the government extended the agreement of a number of rental and quick rental power plants last year, which drew strong criticism from the power sector experts who blamed the rental plants as the main reason for rising power tariff.
Official sources said the state-owned Power Development Board’s (PDB) had a three-year power purchase agreement (PPA) with Max Power, which will expire on May 26 this year while the while the DPA’s three-year agreement already expired in November last year.
The PDB has been purchasing each unit of electricity from the Max Power’s gas-fired 78.5 MW plant at Tk 5.41 per unit against about Tk 2 per unit (each kilowatt hour) of the gas fired state-owned power plant’s production cost.
On the other hand, the Bangladesh Army-operated DPA’s diesel-fired 50 MW plant was selling electricity at Tk 13.96 per unit to the PDB.
Power Division officials said delay in setting up of base-load large power plant is prompting them to go for extending the contracts of the two rental plants for another five (5) years.
The Power Division already sent separate proposals to the Cabinet Purchase Committee seeking approval for the extension of the contracts.
Power Secretary Monowar Islam mentioned in the executive summary of the proposals that as per Power System Master Plan-2010, the country will need 24,000 MW of electricity by 2021. The government will have to wait until 2018 to install the planned coal-fired base-load power plants.
“In this perspective, the contracts of the quick rental and rental power plant required to be extended to meet the power demand,” he said in the proposal.
However, the Power Division has proposed to set the tariff at Tk 3.29 per unit, which is about Tk 2.11 less or 39.15 percent lower than the existing tariff.
The DPA Power’s tariff was proposed to be increased to Tk 19.99 from the existing rate of Tk 13.96 per unit. The increased dollar rate and increased prices of diesel were mentioned as the reason for tariff enhancement, said a top official.
After approval of the DPA power’s agreement for next five (5) years, the government will have pay a total of Tk 3502 crore to the company. It was mentioned that if the government approves the extension, it will need Tk 906 crore to pay the Max Power for purchase of electricity at 80 percent plant factor.
This means, the government will have to pay a total of Tk 4,408 crore in next five years.
Source: UNBConnect
