Renewing deals: Govt should’ve used existing power plants to full instead

Energy activists criticised the government's decision to extend contracts of four private rental power plants, saying the authorities should have focused on utilising the full capacity of existing plants instead.

The Cabinet Committee on Government Purchase on Wednesday extended contracts of the plants for two more years.

According to a press statement of Bangladesh Working Group on External Debt (BWGED), there are as many as 65 furnace oil-fired power plants in the grid with a capacity of 6,310MW.

"... the plants ran approximately 41.9 percent of the time," said the statement.

"Instead of allowing new rental power plants, if the existing plants can be used to their full capacity, the government could have saved Tk 259 crore in capacity charges [per year]."

BWGED pointed out that the government will bring into operation 12 power plants, of which a majority will be coal-fired, with a total capacity of 2,128MW by December. In addition, a further six power plants with a total capacity of 2,864MW will be entering the grid by March 2023, they said.

"When these power plants enter production, either those or the older power plants will have to be kept idle, resulting in large amounts of capacity charge," said the statement.

BWGED said the current extension puts the tenure of the four short-term rental power plants at around 12.5 years each. They had initially been rented for between 3 and 5 years.

"It is important to note that the tenure of most long-term oil-fired power plants is usually around 15 years," said the statement.

Experts have said rental and quick rental power plants offer expensive energy and are onboarded for short periods for urgent supply of power, during periods of emergency, while long-term power plants recover their investment over contracts spanning many years.

"If a short-term power plant is operated for 12 years, this will discourage long-term investments," said BWGED's press release.

"Even though expensive high-furnace oil-fired power plants are expensive for private companies, it is financially damaging for the government," said the statement.

They demanded that the government stop extending the tenure of rental power plants.

The four rental power plants are Julda 100MW in Chattogram, owned by Acorn Infrastructure Services Ltd; Katakhali 50MW in Rajshahi, owned by Northern Power Solutions Ltd; Mutiara Keraniganj 100MW, owned by Powerpac; and Amnura 50MW in Chapainawabganj, owned by Sinha Power Generation Company Ltd.