Govt guns for giant projects, lacks gas

The past BNP-led alliance government's failure in power and gas sectors has pushed the caretaker government to an enormous challenge of handling a dozen major schemes for generation of 3,570 MW gas-based power and ensuring huge gas for them.
These power projects exclude the small and rental power projects having a total capacity of more than 400 MW, tenders for which are now at a very advanced stage. Most of these small and rental projects will also be gas-based.
As the country may not be able to fully meet the gas demand of these new power projects, the government is seriously considering gas import from Myanmar. A delegation of the Myanmar government will visit Dhaka soon to discuss the matter, sources said.
Foreign oil companies are already supplying half of the country's total gas consumption of 1,700 million cubic feet per day (mmcfd).
The government is paying millions of dollars for gas purchase.
But the situation is pushing the country towards spending more of its foreign exchange on gas purchase in the near future, sources said.
The 12 major new power projects alone demand that Petrobangla increase gas supply by at least 550 mmcfd in the next three years.
Power generation is already consuming about 650 mmcfd gas.
Petrobangla projects that gas supply will start falling from 2011 unless major new gas deposits are discovered.
Even if gas is available to meet the increased requirement, the government will have to spend hundreds of millions of dollars to install new distribution and transmission lines to supply this additional gas. Sources said, even right now the country needs at least two projects for installing pipelines from Kailastila to Ashuganj and Ashuganj to Chittagong to augment present supply and gas supply pressure.
Executives and representatives of a number of power companies told The Daily Star that they were concerned about future gas supply. They are also concerned whether the government would be able to handle the tender process for these power projects.
A senior energy ministry official however said there is no option but to pursue the projects because power crisis is seriously hurting the country's development. "We will ensure gas supply one way or another."
According to the Bangladesh Power Sector Development Plan and Strategies of 2004, the country in 2012 should aim at an installed power generation capacity of 9,840 MW against a power demand for up to 7,887 MW.
The present power generation capacity is about 3,800 MW against the demand for a maximum of about 5,200 MW. The highest demand for power officially recorded in June was however 4,800 MW.
"Even if the new major schemes can be properly implemented, that would leave power supply shortfall of around 500 to 1,000 MW," the energy official said.
"Power distribution system is presently covering only 42 percent of the people of the country, and per capita power consumption is only 165 kilowatt hour…We aim at ensuing power for all by 2020."
The official further said though a number of power projects were approved by the government long ago, these could not be implemented due to several reasons.
"The first reason is unnecessary time killing during a project's tender floating and evaluation phase. The second reason is lack of efficiency of the project directors about project financing, official processing, management and implementation," he said.
While handling a donor aided power project, the government wastes a lot of time in fulfilling the donors' conditions, which delays release of the funds.
"There is also a tendency of the implementing authorities like Power Development Board to enhance project costs without authorisation after its approval. This creates deep complications," he noted.
The latest example of this is the cancelled Chandpur power project budget increase by about $20 million.
Besides, there is a serious lack of coordination among various authorities involved with various aspects of a power project. There are instances of frequent replacement of project directors and also of delay in ensuring gas supply for gas-based projects.
Presently, five 450 MW power projects with a total capacity of 2,250 MW are in the pipeline. These are Meghnaghat-2, Meghnaghat-3, Sirajganj, Bibiyana and Bheramara projects.
Of them, the fate of the Bheramara project remains uncertain though the Ecnec had approved it back in 2000. It was initially planned that the scheme would be funded by the government. Later, it was decided that it would be a private sector prject. In recent years, there had been no activity over this project.
Besides, a 150 MW project in Bhola also hangs without any decision on it for years.
Meghnaghat-2 project has been cancelled recently at its final stage as its contractor --BON Consortium-- failed to announce the project's financial closure and then failed to reciprocate the government's offers. Inexperienced BON Consortium is scamster Obaidul Karim's shell company and it was awarded the contract for the project during the tenure of the previous government through violation of rules. But that was subsequently given legal coverage.
The second lowest bidder of Meghnaghat-2 tender, Malakoff of Malaysia, has meanwhile informed the government that it is ready to pursue the project according to its old proposal. The government is yet to take a decision on this.
Another project that is facing cancellation at an advanced stage is the controversial Chandpur 150 MW power project contact for which was awarded to inefficient Chinese company Harbin. After generating a lot of controversy, Harbin recently asked for a project cost hike by $20 million. As the government refused to do so, the project is now being cancelled.
The other projects include a 360 MW one in Haripur. This project was approved with 150 MW capacity a decade back. Recently, it has been revised and it would soon go for tender.
With the Asian Development Bank's financing, the government is preparing two 150 MW power projects in Khulna and Sirajganj. Tenders for these will be floated by the end of this year.
The government meanwhile floated the fourth round of tender for a 150 MW power plant in Sylhet on July 30. Though six or seven bidders purchased bid documents, only Indian Bhel submitted the bid.
The government also held the bid for 210 MW Khulna power project on July 19. This project, to be implemented under Suppliers' Credit from China, had remained shelved for about seven years. Sources said two companies -- Skoda and CMEC -- participated in it.
The PDB floated a tender for 150 MW Sikalbaha power plant three months ago. Only Chinese companies participated in the bid and sources said the bid is now at an advanced stage.
"Only two power projects are now being implemented -- 90 MW Fenchuganj power project by Harbin and the ADB-funded 240 MW Siddhirganj power project by Bhel. We are hoping these will be successful," said a senior official.