Private firms line up to build commercial power plants

FE Report (July 04, 2011)

Local firms, including a few conglomerates, have unveiled ambitious plans to produce more than 2,000 megwatt of power after the government opened up commercial electricity generation for the private sector, a top official said Sunday.

BSRM, the country's leading steel maker, alone has submitted proposal to generate 300 mw power by burning coals in Chittagong, while Beximco plans to add 540 mw tying up with a major Australian power producer.

"We've got huge response from the private companies to generate power," head of the government Power Cell Mahboob Sarwar-E-Kainat told the FE.

"Thirteen firms and their foreign partners have submitted proposals to set up 14 power plants in the country with the capacity to produce 2,007 mw, which is one-third of the country's present demand," he said.

The proposals came after the government deregulated the power sector, by allowing private companies to produce and distribute electricity on their own.

Under the scheme, called Commercial Power Plants, the government has given guarantee to buy 30 per cent of the power to be produced by the private sector.

Previously, a private firm could generate power only for selling to the state-owned power distributors. The private firms were selected through competitive bidding and sold power at a rate fixed by the government.

Although that right has allowed the government to maintain a total dominance over power pricing in the country, it left state companies with heavy losses every year, thus, cutting the government's ability to finance in new power plants.

Mahboob said the 14 proposals were submitted to the Power Cell before the end of the deadline on June 30. "All of them will be allowed to set up plants after we scrutinise their proposals in 15 days."

Among the firms, BSRM will build its plant at Mirsharai, close to the country's main manufacturing hub of Sitakundu. Beximco will set up its plant at Shikalbaha on the mouth of the river Karnaphuli.

Meghna Electricity Generation Co, a subsidiary of salt-cement conglomerate Meghna Group, plans to build a 300 mw coal or furnace oil-fired power plant at Meghnaghat, near its main factory site.

Fastgrowth Infratech Engineering will build two 100 mw capacity HSFO-burnt power plants at Uttara and Tangail, while Fastgrowth Triangle Joint Venture will install a 100 mw furnace oil-burnt power plant at Tongi.

Majestica Power will install a 102 mw HSFO-fired power plant at Tangail, Green Power a 100 mw furnace oil-fired plant at Bagerhat, Impress Energy Service a 100 mw HSFO-fired power plant at Shitalakhya and Everest Power Generation a 100 mw HSFO-fired power plant at Meghnaghat.

Tiger Cement, Quality Power and JRC Tech have submitted proposals to set up 50 mw HSFO-fired power plant each outside the capital. Streamer Solution wants to build a 15-mw plant at Moddhopara, Dinajpur.

Under the scheme, the private firms will have to find buyers for their remaining 70 per cent electricity, said the Power Cell director general.

"We will offer open access permission to the country's national power grid to all the 13 firms to ensure that these plants are implemented as soon as possible," Mr. Mahboob said.

He did not elaborate how much the companies had planned to invest in the plants. But experts said total investment by the companies could surpass US$2.5 billion.

The government has opened up the power sector as part of a wide-ranging reform to deregulate the sector. The aim is to cut losses and augment generation keeping in pace with soaring demand.

The power producers will be able to transmit electricity to private buyers through national grid owned by the state-owned Power Grid Corporation of Bangladesh (PGCB) at an agreed tariff for 'wheeling'.

The country's energy regulator -- Bangladesh Energy Regulatory Commission (BERC) -- has fixed an indicative price for purchase of electricity from these commercial power plants.

The rates as fixed by the BERC are Tk7.75 per unit (1 kWh) for HSFO-fired commercial power plant, Tk4.09 per kWh for coal-fired power plant to be installed at any coalmine mouth in the country.

Imported coal-based power plant to be built at coastal area will have to sell electricity at Tk4.51 per kWh and similar power plant to be built within the navigable area can sell at Tk4.97 per kWh.