BPDB
Action against officials of Petrobangla companies if fail to achieve target: Nasrul
Bangladesh's State Minister for Power, Energy and Mineral Resource Nasrul Hamid has said that each of the companies of the Petrobangla will be given target to drill wells in the gas fields for hydrocarbon exploration and if they fail, the officials concerned will be removed from their posts.
“Nobody will be speared and no persuasion will be accepted against any failure”, he told a seminar titled: “Gas Demand-Supply Scenario; Scope of Seismic Survey and Enhancement of Drilling Activities to Expedite Hydrocarbon Production” organised by Petrobangla at its auditorium in the city on Thursday (February 15, 2024).
Expressing frustration over the activities of the Petrobangla, he said that there is huge deficiency in the organisation and its subordinate bodies to work as a team.
“They don’t work in a coordinated manner. As a result, sometimes gas is found in a well, but processing plant remains unprepared to supply the gas to the national grid,” he said.
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“Sometimes it takes 4 years to get gas supply from a well to the national grid,” he added.
He said Bangladesh Power Development Board (BPDB) and other entities in power sector have been successful in achieving the goal of 100 percent electricity access as they worked as a team.
The seminar, with Petrobangla chairman Zanendra Nath Sarker in the chair, was also addressed by Energy Secretary Md Nurul Alam.
Bakhrabad Gas Distribution Company’s Managing Director Anwarul Islam and Petrobangla’s general manager Meherul Hasan made presentation on the topic of the seminar.
Nasrul Hamid said the Petrobangla planned to drill 48 wells to produce 500 million cubic feet per day (mmcfd) while the country’s demand will go up by 2000 mmcfd.
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“We’re all looking at Petrobangla to see effective results of its plan…, there is huge prospects in the gas sector,” he added.
He said the country has many inefficient captive power plants which efficiency is 20 percent when some new power plants installed with 62 percent efficiency.
“If we can divert gas to those efficient new power plants, power production cost will come down by 70 percent,” he noted.
In the presentation the Petrobangla officials showed that it has planned to drill 100 wells across the country from which 1500 mmcfd gas will be produced by 2027 when gas demand will go up to 6000 mmcfd.
Read more: Nasrul Hamid seeks ADB's help to create regional power market
Govt in dilemma over raising power tariff or floating more bonds to cut losses
The government of Bangladesh is caught up in a dilemma in choosing the right option to reduce the gap between the cost of power production and revenues generated from sales.
“Top policymakers are divided over whether the government should go for increasing the power tariff further or issuing more bonds through the banking system,” said a top official at the state-owned Bangladesh Power Development Board (BPDB).
He said if the government wants to raise the power tariff, either it has to do it before Ramadan or after Ramadan - these are the questions almost every day that are being discussed at the policy level.
They are also analysing the impacts of floating more bonds to reduce the burden of soaring losses on the part of BPDB, he added.
Read: Retail power tariff hiked 5% to Tk0.19 per unit for lifeline consumers, Tk0.36 on average for others
According to official sources, currently, the production of each unit of electricity costs about Tk 12 while it sells at a rate of about Tk 6.7.
It means the government has to bear the brunt of Tk 5.3 per unit, a top BPDB official told UNB.
The BPDB’s Annual Report 2022-23 shows, the BPDB, as a single buyer, generated 87,024 million kilowatt hours of electricity in 2022-23 fiscal at a total cost of TK 98,646.42 crore.
Its per unit production cost was at Tk 11.33 while it was selling electricity at Tk 6.7 per unit incurring a loss of about Tk 4.63 per unit.
The bulk tariff was last raised by 8.06 percent to Tk 6.70 from Tk 6.20 per unit on January 31 with effect from February 2023.
Read more: Over 10,000MW power in 29 projects in the pipeline, despite yawning overcapacity
Against this, its revenues were Tk 50,858.25 crore, incurring a loss of Tk 47,788.17 crore, showed the BPDB Annual Report.
With this huge loss, the government has been in great trouble as it has to purchase electricity worth Tk 82,778.25 from private sector power producers while it generates electricity worth Tk 13,306.62 crore from its own generation plants.
The annual report also shows that the BPDB’s average per unit production cost from its own plants is Tk 7.63, while it is Tk 14.62 at the independent power producers or IPPs (private sector), at rental plants Tk 12.53, at public plants Tk 6.85 and imported power from India at Tk 8.77.
The government purchases electricity from the private sector and India in dollars.
Read more: Power generation capacity increased by almost 20% to cross 30,000MW in 2023
According to official sources, the government's cumulative outstanding bills have now jumped to about $5 billion, of which the backlog amount in the power sector is about $4 billion (about Tk 43,093 crore), and the remaining $1 billion is in the energy sector.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid also admitted the severity of the crisis.
“Actually the crisis is not of local currency. Somehow we can manage it. But the main crisis is the dollar. We’re not getting dollars from Bangladesh Bank as per our needs,” he recently told UNB.
He noted that the power and energy sectors need at least $1 billion a month to meet payment obligations.
Read: Govt to raise retail power tariff this month
In such a situation, the government recently introduced a number of bonds through Bangladesh Bank to facilitate the BPDB to clear some dues.
“Initially, we have floated bonds worth Tk 5000 crore and it may go up to Tk 12,000 crore,” said a BPDB official on condition of anonymity, adding that it will not be enough to cover the losses, although the government is providing subsidies on a regular basis.
“That’s why the government will have to go for raising power tariff further or introducing more bonds,” he said adding, if more bonds are floated, it may squeeze the private sector’s credit from the banking sector.
But a final decision on what they would do still remains pending.
Read more: Power, energy sectors are saddled with $5 billion outstanding payment amid dollar crisis: Sources
Over 10,000MW power in 29 projects in the pipeline, despite yawning overcapacity
Some 29 more power generation projects, having a combined capacity of 10,881 MW are now under construction, even as the country struggles to manage the costs of overcapacity to the tune of 40 percent in the power sector.
The recently published “Annual Report 2022-23” of the Bangladesh Power Development Board (BPDB)contains information on the under-construction 29 power generation projects.
It said, “Diversified fuel-based power generation expansion plans are adopted to meet the ever growing electricity demand in Bangladesh. As a part of these plans, 29 power generation projects of capacity 10,881 MW are now under construction, out of which, BPDB is directly implementing 5 projects of capacity 730 MW and 17 projects of capacity 4,230 MW through the IPP sector.”
The annual report further said, “The plan envisages around 20,416 MW new generation addition from July 2023 to December 2027, out of which 728 MW capacity has already been added up to September 2023.”
Many experts in the power and energy sector believe that keeping a 40 percent surplus, adding another 10,881 MW to the national grid in the next three years will further increase the burden of capacity payments, which are written into contracts with independent power producers, as the private sector players owning power plants are referred to.
Power, energy sectors are saddled with $5 billion outstanding payment amid dollar crisis: Sources
Of the total 29 projects, 5 are in the public sector while17 are in the private sector as independent power producer (IPP) projects, the annual report said. The ownership structure of the remaining 7 is not clear, with some hybrid combination possible.
According to available data, the country’s overall power generation, combining grid capacity and off-grid (mainly captive) power, increased by about 5000MW in 2023 to reach a new benchmark of 30,700MW, although with demand failing to keep up, this is expected to lead to higher capacity payments for the government.
This is disclosed in available data from the state-owned Bangladesh Power Development Board (BPDB), Bangladesh Energy Regulatory Commission (BERC) and Sustainable and Renewable Energy Development Authority (Sreda).
The BPDB data shows that of the 5000MW new power generation, some 3,343MW was added to the national grid by the import electricity from India and production from newly set up local power plants while about 1400MW came from off-grid captive and off-grid solar power.
It also shows that the country’s installed grid-connected power generation capacity has reached to 25,951 MW on December 30 in 2023 from 22,608 MW in 2022 showing a capacity enhancement of 3343 MW.
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Beyond the national grid, as per BERC data, the captive power generation has increased by 1379MW to reach 4760 MW in 2023 from 3,381MW in 2022.
The captive power plants were mainly set up by industries for their own consumption to get uninterrupted power supply as the grid power does not guarantee uninterrupted supply.
Sources in the power sector said that despite more than 40 percent surplus power generation in the country, still many industries prefer to use their captive power for uninterrupted supply.
Together the new off-grid captive power and grid-connected power has pushed up the country’s total power generation capacity to 30,711 MW in 2023 from about 25,700 MW at the end of 2022.
The officials said the import of 1600 MW from India’s Adani Group and setting up of a number of coal-based new power plants played a vital role in increasing power generation by 5000 MW in a single year.
Although this capacity enhancement in power generation is a pleasing development on the face of it, especially given the country’s long history of struggle with power shortages, BPDB officials are also quick to point out that the growing surplus capacity would also lead to a rise in capacity payments, whereby IPPs get paid even for the electricity the government doesn’t need from them.
They said that the new power plants being added to the grid were set up by the IPPs, or independent power producers (the private sector firms investing in the power sector, by building and often operating the plants), and the BPDB has an obligation to purchase power from them - to not let their investment go to waste or end in loss. Having them exit the power sector due to losses would be a bigger blow to BPDB's long-term vision.
The increasing burden of capacity payments may pinch the government, as well as the consumer, harder if the dollar crisis prevailing in the country persists.
According to the Centre for Policy Dialogue, a Dhaka-based think tank, capacity payments to private, rental, and quick rental power plants have increased from Tk 5,376 crores in FY2017 to as high as an estimated Tk 28,000 crores in FY 2023.
In 2024, surplus electricity generation capacity is projected to rise to 50 percent from the existing 40 percent, as the country’s peak hour demand is about 16,000 MW, according to a top BPDB official.
It would mean even at peak demand, half the plants would be surplus to requirements, and thus lie idle.
Official sources recently said that the power and energy sectors of Bangladesh have been hit by severe cash crunch, especially the US dollars, piling up a huge backlog in payment of their import bills.
According to official sources, the sectors’ cumulative outstanding bills have now jumped to about $5 billion of which the backlog amount in the power sector is about $4 billion (about Tk 43,093 crore), and the remaining 1 billion is in the energy sector.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid also admitted the severity of the crisis.
“Actually the crisis is not of local currency. Somehow we can manage it. But the main crisis is of dollar. We’re not getting dollars from Bangladesh Bank as per our needs,” he told UNB in a recent interview.
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Power generation capacity increased by almost 20% to cross 30,000MW in 2023
The country’s overall power generation, combining grid capacity and off-grid (mainly captive) power, increased by about 5000MW in 2023 to reach a new benchmark of 30,700MW, although with demand failing to keep up, this is expected to lead to higher capacity payments for the government.
This is disclosed in available data from the state-owned Bangladesh Power Development Board (BPDB), Bangladesh Energy Regulatory Commission (BERC) and Sustainable and Renewable Energy Development Authority (Sreda).
The BPDB data shows that of the 5000MW new power generation, some 3,343MW was added to the national grid by the import electricity from India and production from newly set up local power plants while about 1400MW came from off-grid captive and off-grid solar power.
Power, energy sectors are saddled with $5 billion outstanding payment amid dollar crisis: Sources
It also shows that the country’s installed grid-connected power generation capacity has reached to 25,951 MW on December 30 in 2023 from 22,608 MW in 2022 showing a capacity enhancement of 3343 MW.
Beyond the national grid, as per BERC data, the captive power generation has increased by 1379MW to reach 4760 MW in 2023 from 3,381MW in 2022.
The captive power plants were mainly set up by industries for their own consumption to get uninterrupted power supply as the grid power does not guarantee uninterrupted supply.
Govt approves import of 40 MW power from Nepal
Sources in the power sector said that despite more than 40 percent surplus power generation in the country, still many industries prefer to use their captive power for uninterrupted supply.
A huge number of applications remain pending with the Bangladesh Energy Regulatory Commission (BERC) to set up more captive plants.
The power generation from non-conventional, or renewable sources also witnessed an increase in 2023.
The Sustainable and Renewable Energy Development Authority (Sreda) statistics show that the solar power generation capacity reached 1200MW in 2023 from 700MW in 2022.
Of the 1200 MW, the off grid is 366.76 MW while ongrid is 601.02 MW. However, the country’s hydroelectric capacity of 230 MW is included in the Sreda statistics.
Together the new off-grid captive power and grid-connected power has pushed up the country’s total power generation capacity to 30,711 MW in 2023 from about 25,700 MW at the end of 2022.
BPDB officials said that the import of 1600 MW from the Adani Group’s plant for Bangladesh in Godda, Jharkhand, has played a major role in increasing the power generation capacity of the country.
Apart from the import, the commercial operations of a number of base-load power plants played a significant role in raising power generation capacity.
Read more: Power, energy sectors are saddled with $5 billion outstanding payment amid dollar crisis: Sources
These new power plants include 600 MW second unit of Rampal Power Plant, and 1200 MW Banshkhali power plant of S Alam Group. There is also a 200 MW Solar power plant in Khulna by Orion Group.
Although this capacity enhancement in power generation is a pleasing development on the face of it, especially given the country’s long history of struggle with power shortages, BPDB officials are also quick to point out that the growing surplus capacity would also lead to a rise in capacity payments, whereby IPPs get paid even for the electricity the government doesn’t need from them.
They said that the new power plants being added to the grid were set up by the IPPs, or independent power producers (the private sector firms investing in the power sector, by building and often operating the plants), and the BPDB has an obligation to purchase power from them - to not let their investment go to waste or end in loss. Having them exit the power sector due to losses would be a bigger blow to BPDB's long-term vision.
The increasing burden of capacity payments may pinch the government, as well as the consumer, harder if the dollar crisis prevailing in the country persists. According to the Centre for Policy Dialogue, a Dhaka-based think tank, capacity payments to private, rental, and quick rental power plants have increased from Tk 5,376 crores in FY2017 to as high as an estimated Tk 28,000 crores in FY 2023.
In 2024, surplus electricity generation capacity is projected to rise to 50 percent from the existing 40 percent, as the country’s peak hour demand is about 16,000 MW, according to a top BPDB official.
It would mean even at peak demand, half the plants would be surplus to requirements, and thus lie idle.
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Power, energy sectors are saddled with $5 billion outstanding payment amid dollar crisis: Sources
The power and energy sectors of Bangladesh have been hit by severe cash crunch, especially the US dollars, piling up a huge backlog in payment of their import bills, official sources said this week.
According to official sources, the sectors’ cumulative outstanding bills have now jumped to about $5 billion of which the backlog amount in the power sector is about $4 billion (about Tk 43,093 crore), and the remaining 1 billion is in the energy sector.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid also admitted the severity of the crisis.
“Actually the crisis is not of local currency. Somehow we can manage it. But the main crisis is of dollar. We’re not getting dollar from Bangladesh Bank as per our needs,” he told UNB this week.
He noted that the power and energy sectors need at least $1 billion a month to meet payment obligations.
"But we’re just getting less than half of that,” he said, adding, “As a result, cumulative outstanding is rising every month”.
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Sources said that the two main state-owned organisations' energy sector – Petrobangla and Bangladesh Petroleum Corporations have to spend huge amounts to import primary fuels like crude and refined petroleum and liquefied natural gas (LNG) from abroad.
Petrobangla also needs to pay foreign gas companies like Chevron to purchase natural gas to meet the local demands. All are paid in foreign currencies.
Similarly, the state-owned Bangladesh Power Development Board (BPDB) has to purchase electricity from independent power producers (IPPs) in dollars.
In addition, it has to import 2500 MW of electricity from India of which 1500 MW is coming from Adani power plant.
Sources familiar with the situation said that under the existing arrangement, the BPDB pays some large IPPs like SS Power, Payra, Rampal and Adani in foreign currency while the other IPPs are paid in local currency but they are allowed to convert the payment in foreign currency as deals’ obligation.
Read: Govt approves import of 40 MW power from Nepal
“Each day we need at least 40 million US dollars from Bangladesh Bank to meet our payment obligation. But we’re getting 5-7 million dollars a day”, a top official of the BPDB told UNB, wishing anonymity as he is not authorised to talk to media.
Officials at the Energy and Mineral Resources Division said the Petrobangla and BPC also need huge foreign currency, particularly the US dollar to continue its petroleum and gas imports and also to buy gas from foreign gas companies.
According to BPC’s Annual Report, the total import of petroleum products was about 6.86 million metric tons and the total expenses of import was US$ 6 billion (equivalent to Tk 62,132.61 crore) in fiscal 2022-23.
For the financial year 2023-24, the BPC planned to import more petroleum products than the previous fiscal, officials said.
Petrobangla has also to import over 5 million metric tons from Qatar Gas, Oman Trading, and the Spot market spending US$ 4.5 billion. It has also to pay US giant Chevron to buy gas from its three gas fields where unpaid bills now stand at $300 million due to backlog in payment.
Nasrul Hamid said his ministry has regularly been negotiating with the Bangladesh Bank to get more dollar supply.
“But the central bank only advises increasing the price of electricity, gas and petroleum which is not frequently possible for a political government”, he said.
He also informed that his ministry was planning to receive a loan from Multilateral Investment Guarantee Agency (MIGA) to ease the situation.
“But the central bank is not supporting the idea”, he added.
END/UNB/SH/F
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Costly rental power plants keep getting extensions, even in the era of surplus capacity
Despite demand being nearly half of electricity generation capacity, the government of Bangladesh continues to extend the tenure of costly rental power plants.
The latest decision for extension of contract for a gas-based rental power plant was made in the Cabinet Committee on Government Purchase on November 8.
As per the decision, a 55 MW gas-based rental power plant of Precision Energy Ltd. will get an extension of 5 years to their existing contract with the state-owned Bangladesh Power Development Board (BPDB).
Under the Power Purchase Agreement (PPA), the BPDB will buy electricity from the plant at a tariff rate of US Cent 5.7 (equivalent to about Tk 6) per kilowatt hour while it has been buying electricity from base-load plants at around half the price.
Read: Despite surplus electricity, contracts of 10 rental power plants extended in four months
For instance, the government has been purchasing electricity from Summit-GE's Bibiyana 450 MW gas-fired power project at US 3.32 cents per kilowatt-hour, with a contract for a period of 22 years.
The government approved a PPA in October 2021 under which Consortium of (1) Edra Power Holdings Sdn Bhd, Malaysia and (2) Winnievision Power Ltd, Bangladesh, will set up the 660 MW base-load combined cycle plant and the BPDB will purchase electricity from the plant over a contract period of 22 years at a levelised power tariff of US 3.679 Cents (equivalent to Tk 2.94) per kilowatt hour to be run by local gas.
The move for continuing the extension of rental and quick rental power plants' contracts raised the eyebrows of the energy experts.
Many experts and power industry insiders believe that such a move to continue entertaining the costly rental power plants will increase the burden on the government for more subsidies, at a time when the sector has already been facing huge capacity payments' obligation with surplus capacity of electricity generation reaching about 50 percent.
Read: Power flow set up from Payra plant to Rampal sub-station
Last year, the government extended the contracts of at least 10 rental power plants with a new provision of “No Electricity, No Payment” but kept a fund allocation of Tk 6,564.08 crore to pay the owners of the rental power plants.
This time also Tk 1205.40 crore was kept as allocation while approving the latest extension proposal of Precision Energy's 55 MW Ashuganj gas-fired rental power plant which will be paid in in next 5 years.
According to the Power Division’s official statistics, as of September 13, 2023, the country's power generation capacity was 27,834 MW including off-grid renewable and captive power, while the highest generated in a day was 15,648 MW.
The BPDB official data shows the country generated 14,021 MW on September 26, while covering the excess demand by resorting to load shedding of 113 MW.
Read: 5 rental power plants with 457 MW get 2-year extension
The demand was decreasing with the coming winter and the country's power demand was recorded to be 10,954 MW on November 8 while on-grid installed capacity was showing 25,339 MW meaning that the surplus capacity was more than double at 14,385 MW.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid, however, defended the extension of the rental power plants’ contracts saying that the deals were extended for “emergency necessity” to tackle the current situation when last year 10 rental power plants' contracts were extended.
“As there is a gas shortage, we have to run liquid-fuel based rental and quick rental power plants on full capacity to meet the demands," he had told UNB.
He also said these plants don’t oblige the government to make 'capacity payment' - i.e. payment for unused electricity, that was the case with some earlier contracts. “As a result, the cost of electricity from these extended rental power plants came down by 30-40 percent from the original cost," Nasrul Hamid said.
The government documents show that of the approved 5 plants in March last year, three belong to Summit Group, one belongs to Dutch-Bangla Group and one to Orion Group.
'Admit the mistake first'
About the country's growing surplus electricity and extension of rental power plants, vice president of Consumer Association of Bangladesh (CAB) Prof M Shamsul Alam said: “There will be a big indiscipline in the power sector as pressure for private sector’s capacity payment will continue to go up while import of primary fuel will be increasing. Finally, it will lead to energy insecurity."
Read: Deal period with rental, quick rental power plant owners can’t be extended: BPDB Chairman
In such a situation, he said, the only way-out is that the government has to admit first it has done a mistake by giving permission to the private sector for excessive power generation without consideration of the demand and then change the current policy and strategy.
Otherwise, the situation will be more difficult to manage as pressure from the International Monetary Fund (IMF) is coming to raise electricity tariff again. If so, it will further push up inflation, he added.
Cross-border power trade between Dhaka, Kathmandu unlikely to start before Nov
Despite an understanding among Bangladesh, Nepal and India, state-owned Bangladesh Power Development Board (BPDB) still cannot import electricity from the Himalayan nation.
On August 28 this year, State Minister for Power, Energy and Mineral Resources Nasrul Hamid had said that import of hydropower from Nepal was almost final.
It seems unlikely that the power trade will happen before November. That means, Bangladesh will not get the opportunity to export its surplus electricity to Nepal during peak demand season in winter in the Himalayan nation.
Electricity demand decreases during winter in Bangladesh while it increases in Nepal.
According to official sources, after a long discussion at political and bureaucratic levels among the countries, India finally agreed to allow Bangladesh to initially import 40 MW electricity from Nepal.
The import was supposed to start between August and September 2023, but negotiation on tariff remained incomplete.
Sources said the decision to start the import of 40 MW power from Nepal was finalised in a two-day meeting of the joint steering committee (JSC) and joint working committee (JWC) on Bangladesh-Nepal power and energy sector cooperation on May 14-15 this year at Patuakhali in Bangladesh.
Ahead of the meeting, Nepalese Foreign Minister Narayan Prakash Saud visited Dhaka and held a meeting with Bangladeshi public and private sector officials where he urged them to invest in the hydropower sector in the Himalayan nation, holding about 60,000 MW of clean energy potentials.
Read: Power tariff raised again by 5 percent at retail level, effective from Wednesday
After the meeting at Nepalese Embassy in Dhaka, Saud had told UNB that he was expecting all issues to be resolved during the Nepalese prime minister’s visit to India – to facilitate Nepal’s export of electricity to Bangladesh.
In the follow-up, according to a report of the Kathmandu Post, during the Nepalese prime minister’s India visit (May 30-June 1), India agreed to facilitate Nepal to export 40 MW electricity to Bangladesh through Indian transmission infrastructure.
India also made an announcement to buy 10,000 MW electricity from Nepal over the next 10 years.
According to a recent report of The Kathmandu Post, “The Bangladeshi side has notified Nepal that they are seeking clearance from the political authorities on the agreement reached between the two sides at the bureaucratic level,” said Kul Man Ghising, managing director of the Nepal Electricity Authority (NEA). “We are awaiting a final response from the Bangladeshi side to move on to tariff negotiation,” he added.
NEA officials said that the two sides have concluded discussion on everything except tariff at the bureaucratic level.
Read: Adani Power team likely to visit Bangladesh to discuss coal price, power tariff
Power Cell Director General Mohammad Hossain said that he is not aware of the latest situation in this regard. He, however, noted that all necessary arrangements have been made for the cross-border power trade from both Bangladesh and Nepal sides.
He said that 40 MW electricity was to be imported through Baharampur-Bheramara transmission lines which have enough capacity to import electricity from Nepal through Indian territory.
Sources said under the planned arrangement, Bangladesh will import electricity from Nepal through an Indian company as a service provider which will first import electricity from Nepal through Indian transmission line and then sell it to Bangladesh.
They said Bangladesh and Nepal prefer a tripartite or regional agreement while India wants bilateral deal in this regard.
Explaining the matter, they said, if Bangladesh wants to import power from Nepal, it has to first sign a deal with India, not directly with Nepal. Then Nepal will sign a separate deal with India. Each deal will be on bilateral basis, and then a trilateral agreement among the three nations will be signed to facilitate the cross-border power trade.
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Currently, Bangladesh is importing electricity from India through a similar arrangement where the Indian company NTPC Vidyut Vyapar Nigam (NVVN) is selling power to BPDB.
In case of electricity trade between Dhaka and Kathmandu, Nepal Electricity Authority (NEA) will have to sign agreements with both NVVN and BPDB.
Apart from the 40 MW import plan, Bangladesh wants to import 500 MW of hydroelectricity from Nepal via Indian company GMR.
Also read: Retail power tariff hiked 5% to Tk0.19 per unit for lifeline consumers, Tk0.36 on average for others
Officials said Bangladesh and Nepal are still pursuing India to sign the tripartite deal to facilitate the sub-regional power trade among the three nations.
Growing backlog in payments to independent producers a bottleneck in power sector
The growing backlog in payment obligation is emerging as a major problem in Bangladesh's power sector that may impede the growth of the sector.
According to official sources, the payment mode in Bangladesh Government's power purchase agreement (PPA) with the private sector has mainly been made in foreign currency, specially, the US dollar.
As per the existing arrangement, as a single payer the state-owned Bangladesh Power Development Board (BPDB) pays to the private power producers in local currency against its purchase of electricity.
Under the PPA, the private power producers are allowed to convert the payments into US dollars to meet their different kinds of payment obligations like bank loan, fuel and machinery imports and also paying foreign staff salaries.
If the investors are foreign companies, they can repatriate their profits in US dollars, said the officials of the BPDB.
They also noted that the BPDB always remains in constant contact with power producers, their banks and the central bank to smooth the foreign currency repatriation.
But following the dollar crisis in the country, official sources said in recent months, both the BPDB and the private power producers have been experiencing severe problems in getting dollars from their banks and also from the Bangladesh Bank.
Official sources said the BPDB has been struggling to keep up with its payments owed to the private power producers for more than a year.
Officials at the Power Division and BPDB said currently the total owed to the Independent Power Producers (IPPs) is $3.5 billion (equivalent to over Tk 35,000 crore) as of September 2023.
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As per contract with the government, the IPPs are facing dual problems with their bills. First, they are not getting bills on time and secondly, they are getting partial bills, but not being able to convert the payment into foreign exchange due to the dollar crisis.
A top BPDB official admitted the problem to UNB, saying that they had reached an understanding with Bangladesh Bank under a mediation of the Finance Ministry that the central bank will provide on average $20 million every day to BPDB to cover its costs.
“But we’re not getting more than $10-15 million a day,” a top BPDB official told UNB on condition of anonymity as the issue is very sensitive and he is not allowed to speak on the issue.
He also said that if measures are not taken to contain the growing dues in the power sector it will further aggravate the problem.
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Admitting about the payment backlog, Imran Karim, former president of Bangladesh Independent power Producers Association (BIPPA), said the government should take necessary measures to clear the dues in the power sector.
"Otherwise, it will accumulate the dues and create a major problem in the sector", he told UNB.
Energy experts said the country is heading for problems in the power sector and it would have a big impact on the overall economy pushing up inflation further.
Eminent energy expert and advisor to the Consumers Association of Bangladesh (CAB) Prof M Shamsul Alam said the government has been put in such a major problem because of its wrong planning in the power sector.
He said that as a result of the wrong planning, the country is witnessing 50 percent surplus power in summer and 70 percent in winter, for which it is heading towards a disastrous situation.
“There will be a big indiscipline in the power sector as pressure for private sector’s capacity payment will continue to go up while import of primary fuel will be increasing. Finally, it will lead to energy insecurity,” he told UNB.
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Country may witness 70% surplus in electricity generation capacity this winter
More than two-thirds of the total power generation capacity will remain idle this coming winter, as more power is added to the national grid from the private sector pushing up the capacity payment obligation of the government of Bangladesh.
It comes at a time when already the government’s outstanding bills to the private sector power producers has ballooned out to $3.5 billion.
According to the Power Division’s official statistics, as of September 13, 2023, the country's power generation capacity was 27,834 MW including off-grid renewable and captive power, while the highest generated in a day was 15,648 MW.
Bangladesh Power Development Board (BPDB) official data shows the country generated 14,021 MW on September 26, while covering the excess demand by resorting to load shedding of 113 MW.
It means half the power generation capacity remains utilised, while load shedding is also unavoidable.
Read: Japan provides $1500 million to implement Matarbari coal-fired power plant
According to power industry insiders, the surplus power situation will be getting worse in the coming winter with more electricity coming to the national grid from the private sector power plants in the next few months and installed generation capacity may cross 30,000 MW, increasing the surplus electricity to about 70 percent as demand usually dips during the season.
The expected boost to capacity includes 1,224 MW from S Alam Group’s power plant in Bashkhali of Chattagram (of which first unit of 620 MW already came to the grid), 718 MW electricity from Reliance Power LNG-based Plant in Meghnaghat, 590 MW from LNG-based GE-Summit Meghnaghat-2 power plant and 584 MW from LNG-based Unique Group’s power plant in Meghnaghat.
The sponsors of these plants are working hard to persuade the government to allow them to officially commission their plants as all of them are ready for operation. But due to shortage of gas they are not allowed to start operation.
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In the meantime, more electricity from some of the recently completed power plants already came to the grid, including the second unit of the Adani Group’s 1,600 MW coal-fired power plant, and 620 MW from the second unit of Rampal Power Plant.
Last winter, the power generation came down to below 10,000 MW with the decreasing demand.
BPDB record shows the generation was recorded at 9,134 MW on December 31 in 2022. Experts believe the generation will remain below 10,000 MW in the coming winter as demand is not increasing at a faster pace.
Though 70 percent electricity will remain idle, the sponsors will get their payments in the form of capacity charges as per their contract with the government, said the BPDB officials.
Read: Climate change and the shift to cleaner energy push Southeast Asia to finally start sharing power
The government is already struggling to keep up with its payments owed to the private power producers.
Officials at the Power Division and BPDB said currently the total owed to the Independent Power Producers (IPPS) is $3.5 billion (equivalent to over Tk 35,000 crore) as of September 2023.
As per contract with the government, the IPPs are facing dual problems with their bills. First, they are not getting bills on time and secondly, they are getting partial bills, but not being able to convert the payment into foreign exchange due to the dollar crisis.
A top BPDB official admitted the problem to UNB, saying that they had reached an understanding with Bangladesh Bank under a mediation of the Finance Ministry that the central bank will provide on average $20 million every day to BPDB to cover its costs.
Read: Power Cell engages top US consultancy in move towards ‘Smart Grid’
“But we’re not getting more than $10-15 million a day,” a top BPDB official told UNB on condition of anonymity as the issue is very sensitive and he is not allowed to speak on the issue.
Energy experts said the country is heading for problems in the power sector and it would have a big impact on the overall economy pushing up inflation further.
Eminent energy expert and advisor to the Consumers Association of Bangladesh (CAB) Prof M Shamsul Alam said that with the 50 percent surplus power in summer and 70 percent in winter, the country will be heading towards a disastrous situation.
Read: S Alam Group’s 1320 MW Banshkhali coal-fired power plant starts commercial operation
“There will be a big indiscipline in the power sector as pressure for private sector’s capacity payment will continue to go up while import of primary fuel will be increasing. Finally, it will lead to energy insecurity,” he told UNB.
In such a situation, he said, the only way-out is that the government has to admit first it has done a mistake by giving permission to the private sector for excessive power generation without consideration of the demand and then change the current policy and strategy.
Otherwise, the situation will be more difficult to manage as pressure from the International Monetary Fund (IMF) is coming to raise electricity tariff again. If so, it will further push up inflation, he added.
Transmission from Adani’s Gadda power plant to national grid resumes
Transmission from Adani’s Gadda Power Plant, in the Indian state of Jharkhand, to Bangladesh's national grid resumed at 3:43 am (early hour) on Thursday (June 8, 2023).
According to official sources, the transmission line from Godda power plant tripped at 2:46 pm on Wednesday (June 7, 2023), worsening the already severe load shedding situation across the country.
According to officials of the Power Grid Company of Bangladesh (PGCB), the operation of the Godda power plant was first resumed at 11 pm on Wednesday night through sending auxiliary power from Bangladesh, and then after a series of technical checks in the system, power transmission to Bangladesh's national grid resumed.
Read more: Adani's Godda plant commissioned with issues over coal tariff unresolved
“Power supply from Adani's (Godda) plant became normal at 3:43 am on Thursday,” Badruddoza Sumon, spokesman of PGCB, told UNB.
India's Adani Group set up the 1,600 MW capacity coal-fired power plant at Godda to exclusively supply electricity to Bangladesh. Its 800 MW unit started commercial operation in March while the second unit is now on test run -- generating 50-100 MW every day.
Read more: Adani Power starts commercial electricity supply to Bangladesh keeping tariff issue unsettled
Meanwhile, officials of Bangladesh Power Development Board (BPDB) said that excessive load shedding across the country continues with lower power supply.
The official data from National Load Dispatch Centre shows that the country experienced a load shedding of 2961 MW at 1 am, 2976 MW at 2 am, 2939 MW at 3 am, 2819 MW at 4 pm, 2606 MW at 5 am, and 2463 MW at 6 am when power supply was between 11,700 MW and 11,300 MW against demand between 14,800 MW and 13,900 MW.
Read more: Test transmission of power supply from Adani plant to Bangladesh's national grid starts
BPDB officials said there is a projection that the country’s highest demand will be 15,200 while the highest generation will be 12,200, leaving a shortage of nearly 3000 MW.
It is a widespread allegation that people in rural areas have to experience much more frequent power cuts than in urban areas, especially in the capital Dhaka and other major cities. People living in some rural areas say they experience load shedding for over 12 hours a day.
Read more: The Tk 700 crore per month hole in the deal with Adani Power