The power sector would turn profitable if dependency on quick rental plants was reduced significantly, said a government report.
Despite such an observation in a report made by the government itself, the cabinet committee on purchase Thursday approved a five-year extension of contracts with five rental power companies.
The extension was approved even though three of those companies had not yet paid around $97m as penalties faced because of several violations of contracts.
Finance Division’s macroeconomic wing recently published the report titled “Subsidy: a quest of appropriate policy.”
The wing was established in 2008 to assist finance ministry in forecasting the country’s macroeconomic situation and advise accordingly to reduce if any unnecessary expenditure.
The report recommends increasing power supply to national grid from independent power plants instead of quick rental plants.
A senior finance division official however commented to the Dhaka Tribune that the government was not listening to such advices at the fag-end of its tenure.
According to him, an influential section of sponsors having links with the present government played a role in getting the approvals at the Thursday’s meeting.
The quick rental plants are known as short-term but highly expensive power sources.
Power Division sources claimed that influential section was actually trying to have 15-year approvals and upgrade them to independent power producers (IPPs).
The companies running five quick rental plants include Desh Energy, Energis, Precision, Quantum Power and RJ Power.
Of them, Desh Energy and Energis are facing penalties of $15m each for using excessive fuel and going into too many shutdowns.
Desh Energy runs a 100-megawatt plant while Energis operate a 55-MW plant. But both the companies generate power much less than their declared amount.
Quantum Power was asked to pay a fine of $67m due to failure in its two rental projects.
The company operates a 110-MW diesel-based power plant, producing 15-20 MW.
Quantum proposed converting the plant from diesel-based to cheaper heavy fuel oil-based.
The report estimated if the government had raised the electricity price by 37%, PDB would have earned Tk700m profit in last fiscal year.
It said total annual generation would have reached 40,319MW while earning from electricity stood at Tk211.80bn against the expenditure of Tk211.10bn.
The average cost of PDB’s power generation would have been Tk3.29 per unit while IPP’s Tk4.15 and rental and quit rental plants’ Tk10.73.
PDB shares 50.84% of the country’s total power generation. IPPs share 23.98% and rental plants 23.15%.
Finance Minister AMA Muhith recently told the Dhaka Tribune that he had to “compromise with politics in making decisions on the country’s economic issues.”
Currently, a total of 35 oil-fired power plants are operational across the country. Their total electricity generation capacity is 2,280MW, showed the data from the Power Division.
Out of them, 23 are running with furnace oil and have the overall electricity generation capacity for 1,787MW and the remaining 12 are diesel-run with their aggregate generation capacity being estimated at 393MW.
Source: Dhaka Tribune
