12:00 AM, June 16, 2014 / LAST MODIFIED: 01:53 AM, March 08, 2015

Energy sector is key

Energy sector is key

Mushfiqur Rahman

IN his budget speech, Finance Minister Mr. A.M.A. Muhith said that the government plans to increase power generation capacity within 2018 to 18,162 MW. The present installed capacity for power generation is nearly 10,000 MW but effectively the existing power plants can generate around 7,000 MW. So, the target is to double the generation capacity within the next three years. Earlier, the government had targeted generation of 20,000 MW power within 2021. This target has been re-fixed at 24,000 MW for the same period.
As stated in the Budget for the fiscal year 2014-2015, the government intends to reduce gas-based power generation (which is currently around 78%) and gradually shift to coal-fired power generation. Following the guideline, the government is targeting generation of 1,426 MW coal-fired power within 2017. Presently, the Barapukuria mine coal-fired power plants generate nearly 160MW electricity (installed capacity 250 MW) only.
1,320 MW coal-fired power plant at Rampal was the major initiative of the government in its previous term. Reports say that the land development works have been carried out and it was expected that the physical construction works would commence in October-November this year. Apart from the planned ultra-supercritical coal-fired power plant construction works, the Rampal power plant will require development of coal import facilities through the sensitive Sundarbans mangrove forests. Huge river dredging, and barging and anchoring facilities for oceangoing coal-carrying mother vessels at Akram Point are some of the major necessary infrastructure development works associated with the Rampal project.
Reports suggest that the JV Company (Bangladesh-India Friendship Power Generation Company Ltd., a 50:50 joint venture company of BPDB and NTPC of India), which is responsible for arranging funds from international financing institutes is still waiting for funding commitments. It is expected that the Rampal power plant proponent will take $4 1.82 billion commercial loans for implementation of the project. The government's proposed budget for 2014-2015 did not propose any fund allocation for Rampal power plant or associated infrastructure development.
Recently, M/S Fischtner GmbH of Germany was appointed as 'Owner's Engineer' to assist the project implementation authority. Fischtner will, among others, help the proponent to prepare the international bid documents for selecting EPC Contractor, and evaluate and recommend appointment of the EPC Contractor. Until the EPC Contractor is engaged, no construction work will be started. The optimistic expectation is that the Rampal 1,320 MW power plant will come into operation in 2019.
In the meantime, the government signed a major agreement for developing Matarbari 1,320 MW coal-fired power plant in Moheshkhali Island with Japanese assistance during the official visit of Prime Minister Sheikh Hasina in May 2014. The Japanese commitment for $ 6 billion assistance to Bangladesh includes the Matarbari plant and associated infrastructure development. It is estimated that the project will cost approximately $44 billion. Japanese JICA is set to sign the loan agreement for Matarbari plant development project this month so that the project could be implemented by 2021.
Another major Chinese government assistance for funding 1,320 MW coal-fired power plant at Kolapara, Patuakhali was agreed between Bangladesh and Chinese government during Prime Minister Sheikh Hasina's visit to China (June 2014). As reported, Bangladesh and China signed five major economic cooperation agreements during the meeting between the Bangladesh Premier Sheikh Hasina and her Chinese counterpart Li Keqiang in Beijing. The deals include implementation of 1,320 MW Patuakhali coal-fired power plant to be executed by the Joint Venture between China Machinery Import and Export Company (CMC) and North West Power Generation Company of Bangladesh. The plant will use imported coal and the construction work is expected to be completed in 2020.
The energy and power sectors received allocation of Tk. 11,540 crore (14.3%) in the proposed budget for the fiscal year 2014-2015.  It is not clear how the major infrastructure developments associated with the large coal-fired power plant development initiatives and their necessary infrastructure for huge coal import operations can be implemented without adequate budget allocations. The officials concerned indicate that after the international loans arrangements, government will divert necessary funds from its 'blocked allocation' (approximately Tk. 5,500 crore) for annual development programme during the fiscal year 2014-2015. The government also expects that international development partners like Asian Development Bank will actively join hands in power sector development projects including in coal-fired power generation initiatives.
Ruppoor Nuclear Power Plant Project with 2000 MW power generation capacity remains the government's priority project, and furthering its implementation will require budget allocation in the  range of Tk. 2000 crore.
The government also plans to attain 800 MW capacity building for power generation from renewable energy sources within the fiscal year 2014-2015 and a Tk. 4,000 crore budget allocation has been proposed. Currently, power generation capacity from renewable sources, including Kaptai hydroelectric power plant, is nearly 350 MW. LNG terminal and re-gasification project development in Moheshkhali island and drilling of 21 wells for oil and gas exploration and development by Bangladesh Petroleum Exploration Company are also major projected programmes of the government within the budget year 2014-2015. In addition, the government intends to install 60,000 pre-paid electricity meters to increase power supply and management efficiency in the country within fiscal 2014-2015. Government sources say that approximately 27% electricity is lost in the generation, transmission and distribution stages.
All the above activities will require budget allocations and appropriate management capacity mobilisation. The government's target 7.3% GDP growth will depend on enhancing energy and power sectors performances and steady and planned growth.

The writer is a mining engineer.


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