Govt renews deals with six rental power plants

The government yesterday renewed contracts with six rental power producers by five years and also doubled the tariff rate, considering the rise in fuel prices and a weakened taka against the dollar since the first contract was signed.

The cabinet committee on purchase approved the proposals from the furnace oil-based rental and quick rental power plants at a meeting in the secretariat with Finance Minister AMA Muhith in the chair.

The plants that got the extensions are: 102MW Summit Narayanganj Power Ltd in Narayanganj; 100MW Dutch Bangla Power and Associates Ltd in Narayanganj; 100MW Acorn Infrastructure Services Ltd in Chittagong; 100MW Orion Power Meghnaghat Ltd in Narayanganj; 40MW Khanjahan Ali Power Company in Jessore; and 115MW Khulna Power Company Ltd Unit II.

The tariff for Summit Narayanganj was adjusted upwards to Tk 15.45 a kilowatt-hour from Tk 7.78; for Dutch Bangla Power to Tk 15.75 from Tk 7.78; for Acorn Infrastructure to Tk 15.66 from Tk 7.76; for Orion Meghnaghat to Tk 15.75 from Tk 7.78; for Khanjahan Ali Power to Tk 15.75 from Tk 7.78; for Khulna Power to Tk 15.33 from Tk 7.78.

When the plants were awarded contracts in 2010, the price of furnace oil was Tk 26 a litre and a US dollar was Tk 69.35.

The power division renewed the contracts at a time when the price of furnace oil is Tk 62 a litre, while the taka hovers around Tk 80 per dollar, according to UNB. 

The government renewed the contracts to ensure a smooth supply of power, as the country would have to wait until 2018 to implement coal-based base load power plants, according to a summary of the proposals submitted at the purchase committee meeting.

The six furnace oil-based power plants signed the contracts with Bangladesh Power Development Board in 2010 and came into operation the following year.

Last year, the government extended contracts with four gas-based rental power plants with renegotiated tariff rates.

In 2014, the World Bank also recommended phasing out the quick rental power plants to ease the government's subsidy burden.

However, Muhith, in 2013, said the country's rental power plants need to be kept in operation until the power supply situation gets stabilised.

Since 2010, the government allowed two dozen rental and quick rental power plants to help the country ride out the stubborn shortage of power at the time. Businesses welcomed the decision. 

According to the government's projection, the country's demand for power in 2021 would be 24,000 MW.