Prospects brighten for power investors
Bangladesh's power sector offers boundless opportunities for foreign investors as the country looks to generate 60,000MW of electricity by 2041 -- a move that will require investment worth $20 billion.
Tawfiq-e-Elahi Chowdhury, the prime minister's adviser on power, energy and mineral resources, invited foreign entrepreneurs to invest in gas and coal-based power projects. “We need this investment so that we can smoothly supply power to the industries and entrepreneurs.”
The investment opportunities are not restricted to generation of power: the country will require another $20 billion of investment in transmission and distribution, he said.
“Although there is monopoly in transmission, we want to come up with innovative ways for the private sector to participate, either as investors or financiers in transmission.”
Bangladesh recorded robust growth in power generation over the last seven years, he said. During the period, the sector saw $8 billion of investment flow in public-private partnerships, while another $13 billion is waiting in the pipeline.
The investment has resulted in access to electricity for nearly 80 percent of the population; seven years ago, it was only 47 percent, according to Chowdhury.
Being a least-developed country, Bangladesh is not required to take steps to bring down its carbon footprint, but the government is still considering the issue, he said.
Bangladesh's carbon footprint is only 0.4 tonnes per capita per annum, whereas the OECD countries' is 20 tonnes.
On coal-based power plants, the adviser said it is a 'dirty fuel'. “But we have to depend on coal-fired power plants because there is no alternative fuel for us.”
But to mitigate the environmental damages, the government has chosen ultra-supercritical technology, which requires less coal per megawatt-hour, leading to lower emissions, higher efficiency and lower fuel costs.
“We are investing in additional facilities, which would raise the cost for a while but would protect or mitigate the likely environmental impacts.” Chowdhury also said liquefied natural gas will be in place by 2017 or early 2018.
In a discussion on energy and power, Mohammad Hossain, director general of the power cell at the power, energy and mineral resources ministry, said the country is not compromising on the environment by introducing coal-fired power plants. “We have adopted the latest technologies to address the environmental concerns.”
The government has decided to import LNG and a couple of terminals are under construction, he said.
Bangladesh imports 600MW of power through regional cooperation.
“We were supposed to import 3,500MW through regional cooperation as per the power system master plan of 2010. But we have revised the plan, which is in its final stages, where we have targeted to import 6,500MW from regional grids.”
Sohail RK Hussain, managing director of City Bank, said power projects need long-term funding.
Local banks can fund them up to a certain period -- may be 8 to 10 years -- and it is doable for a 100MW to 150MW plant.
“But when we talk about a 1,300MW plant, we need long-term financing. We will need a combination of foreign investment, equity and debt.”
Humayun Rashid, managing director of Energypac, said Bangladesh is hungry for electricity as the country's per capita power consumption is one of the lowest -- only around 370KW.
The existing power generation capacity is around 12,000MW.
“By 2021, we have to get 24,000MW and by 2030 we have to get 36,000MW to 40,000MW in power generation. That's the opportunity and I don't think my friends [foreign investors] will miss the opportunity to invest in Bangladesh.”
He, however, said problems in transmission and distribution, instrumentations and controls are the biggest challenges today. “It's the government's task to turn all these challenges into opportunities.”
He said the exit policy is one of the exciting factors for a foreign entrepreneur to invest in the power sector, as anyone can exit or get back the investment easily. “Many countries do not have the exit policy.”
Mamun Rashid, managing partner of PwC Bangladesh, said the country's power and energy sector is grappling with several challenges such as a widening gap between demand and supply, ageing power generation assets, inadequate gas supply, increased dependence on furnace oil and overdependence on natural gas.
“Assessing patterns in sectoral gas consumption is necessary for efficient allocation of gas resources and exploring opportunities for fuel diversification.”
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