Official sources said the government revoked the move to implement the project on public initiative about 4-5 months back as it did not find any suitable bidder, and instead decided to execute it under the Independent Power Producer (IPP) mode.
“Overstating cost quoted by the bidders was the main reason behind the cancellation of the project on public initiative,” said a top official of the Power Ministry.
Official sources said the Power Ministry had moved to implement the project on a pilot basis following a huge interest by State Minister for Power and Energy Nasrul Hamid who is an elected member of parliament from the locality.
On many occasions, he mentioned that he wanted to implement the project as part of his plan to build his constituency as a modern locality.
When tender was floated by state-owned Power Development Board (PDB) last year to pick an engineering, procurement and construction (EPC) contractor for the project, four companies submitted their respective bids for the 1 MW grid-connected waste-based power plant.
But in the evaluation, a Chinese company - Yamato Technologies Pte Ltd - was technically responsive. But when its financial offer was opened, it was found that the cost is much beyond the estimation.
A PDB official, who was involved in the tender process, said the Chinese firm offered about Tk 200 crore for such a (1 MW) project while the government’s estimation was below Tk 100 crore.
He said when the firm’s offer was sent to the Power Ministry, it cancelled the tender process finding such a huge cost and asked the PDB to move for implementing the project under the private sector.
The official, preferring anonymity, also mentioned that after such a decision, the same Chinese firm submitted an unsolicited offer asking for tariff of each unit of electricity at US 45 cents which is equivalent to Tk 37.
He said an evaluation committee of the PDB is now working on the offer of the firm.
Contacted, Nazmul Haque, head of the Renewable Energy Cell of the PDB, which invited the tender earlier, admitted the Power Ministry’s latest directive for implementing the project as an IPP.
As per the concept, the private firm will set up the project at its own cost and the government will purchase electricity from it like other private power plants.
Officials said in such waste-based power plant, mostly organic waste will be collected from residential and commercial areas, and also agro-industrial and medical garbage will be gathered from different areas to supply those to the plant for power generation.
Through anaerobic digestion process, the biogas will be produced and used for electricity generation. Some heat will also be generated in the process to generate electric power.
Officials said in the process, about 1 MW of electricity will be generated from the supply of 50 metric tonne of garbage where composition is 430 kW Electricity + 480 kW Heat.
They said the move for electricity generation from waste is not new in Bangladesh as the very first initiative was launched about 20 years ago.
But all went in vain because of the high cost of electricity which was proposed by the bidders in such projects.
They said in some cases, each unit of electricity was quoted to be over Tk 50 and no power generation or distribution companies were found to be interested to buy such costly power.
They said such waste-to-energy project always should be considered as part of waste management where electricity should be considered as byproduct instead of main product.