The government move to extend contracts with some rental power plants may suffer a setback as sponsors have found the new conditions tougher than earlier.
According to sources, the government recently decided to extend its power purchase agreements (PPAs) with four rental power plants as their contracts have either expired or are going to expire soon.
The plants are RZ Power’s 47 MW diesel-fired plant in Thakurgaon, Precision Energy’s 55MW gas-fired plant in Ashuganj, Energies Power’s 55MW furnace oil-fired plant at Shikalbaha and KPCLs 40MW plant in Khulna.
Sources said the Power Division officials held a series of negotiation meetings with the sponsors of the rental power plants over the last two months.
At the final stage of the negotiation, the officials last week informed the sponsors of the rental plants that the government would extend deals with them only if they agree to reduce both the tariff and the supply capacity of their plants and accept some other conditions.
These newly-imposed conditions pushed them into a great dilemma as they found the conditions unviable to run their plants and sell electricity to the government.
“We may renegotiate the issue of tariff to some extent, but some other conditions will be hard to accept as those will make our business commercially unviable and lead to financial losses,” said a rental power plant sponsor wishing not to be named.
“We’re examining the new conditions. If we find those unsuitable for our business, nobody will be willing to extend deals with the government,” he said.
Referring to the country’s inflation spillover effect, another sponsor said it has already pushed up their operational costs. New conditions will increase the operational costs further, he added.
Contacted, Additional Secretary of the Power Division Mofazzal Hossain, who is leading negotiation from the government site, refrained from making any comment on the issue.
“The negotiation is still on. So, no comment should be made at this stage,” he told UNB.
Another official at the Power Division said the government hopes the sponsors will agree to extend their deals accepting the new conditions. “Because, the operational costs of those conditions have been lesser than earlier,” he claimed.
Meanwhile, a recent study by The Bangladesh Institute of Development Studies (BIDS), a state-run research organisation, recommended the government to extend the power purchase agreements with the rental plants which run on ‘good’ operational conditions.
According to the research findings, the electricity generated by the rental power plants made a contribution to the national GDP between Tk 52,093 and Tk 121,168 crore in the last three years.
Source: UNBConnect
