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.
Monday, July 4
Sunday, July 3
Local paper makers alarmed at Double A’s BD entry
FE Report (July 03, 2011)
A leading Thai firm's plan to invest in Bangladesh's fast booming paper market has raised alarm among the local manufacturers who have sought government protection for their multi-billion taka investment.
Sources said the company, Double A, has been looking for a land in Chittagong to set up its factory, with an initial investment of Tk 1.50 billion, after its plan received clearance from the Board of Investment (BoI).
"We're already in the final stage to purchase land in Chittagong and our state-of-the-art paper making machinery will arrive from Australia very soon," said an insider of the company.
Thailand-based Double A, is one of the world's top-five paper and pulp makers, which procure trees from 1.5 million Thai farmers. The company has recently expanded into China, the globe's largest paper market.
The Thai company holds two-thirds of the offset and 80-GSM computer paper market in Bangladesh.
The country's fast booming paper market is worth about Tk50 billion, with computer and offset paper being the fastest growing segment. Local papers dominate the newsprint, industrial and writing paper markets.
An official familiar with Double A's investment plan in Bangladesh said the company would set up the paper and pulp plant this year, aimed at maintaining its leadership here and export to the Middle East and india.
"We want to make Bangladesh as an export hub. Paper to be produced at the Chittagong plant will be shipped to the Middle East and northeastern Indian states," he said.
The company had earlier sought to tie up with leading local conglomerate TK Group in early 2010. But the Chittagong-based company rebuffed the offer at a final stage.
As part of its expansion drive, the Thai paper maker has already contracted farmers in the country's western districts of Magura and Jessore and some northern parts so as to ensure steady supply of raw materials i.e. trees.
The Thai firm's move, however, caused panic among the local paper manufacturers, some of whom have in the recent years invested billions to produce diversified paper products.
Bashundhara, who owns some 20 per cent of the country's newspaper and offset paper markets, has sought government intervention to protect its Tk5.00 billion investment in the sector.
"The government should take measures to protect us. No way we can compete with Double A because of its superior financial strength," said a senior Bashundhara official.
Bashundhara Group, which had launched paper production on a large-scale in 1996-97 with a capacity of 100 tonnes a day, is the local market leader. It now has nine units with a combined annual capacity of 100,000 tonnes.
He said at least 60 small and large paper mills now operate in the country, accounting for more than half of the country's writing paper and newsprint demand.
"The smaller paper mills will die out gradually as soon as Double A flexes is marketing muscle," Abu Hasnat Obaydah, chairman of Maf Paper Mills, a subsidiary of TK Group.
He said some local companies including Maf have set up plants to produce industrial and specialised paper including offset, A-4, and carbon-less in the last couple of years in view of their soaring demand in the local market.
TK Group, known for their trading and chemical business, launched its paper plant in 1999 in Chittagong. Currently, TK is producing 74000 tonnes of writing, industrial and newsprint paper a year.
A leading Thai firm's plan to invest in Bangladesh's fast booming paper market has raised alarm among the local manufacturers who have sought government protection for their multi-billion taka investment.
Sources said the company, Double A, has been looking for a land in Chittagong to set up its factory, with an initial investment of Tk 1.50 billion, after its plan received clearance from the Board of Investment (BoI).
"We're already in the final stage to purchase land in Chittagong and our state-of-the-art paper making machinery will arrive from Australia very soon," said an insider of the company.
Thailand-based Double A, is one of the world's top-five paper and pulp makers, which procure trees from 1.5 million Thai farmers. The company has recently expanded into China, the globe's largest paper market.
The Thai company holds two-thirds of the offset and 80-GSM computer paper market in Bangladesh.
The country's fast booming paper market is worth about Tk50 billion, with computer and offset paper being the fastest growing segment. Local papers dominate the newsprint, industrial and writing paper markets.
An official familiar with Double A's investment plan in Bangladesh said the company would set up the paper and pulp plant this year, aimed at maintaining its leadership here and export to the Middle East and india.
"We want to make Bangladesh as an export hub. Paper to be produced at the Chittagong plant will be shipped to the Middle East and northeastern Indian states," he said.
The company had earlier sought to tie up with leading local conglomerate TK Group in early 2010. But the Chittagong-based company rebuffed the offer at a final stage.
As part of its expansion drive, the Thai paper maker has already contracted farmers in the country's western districts of Magura and Jessore and some northern parts so as to ensure steady supply of raw materials i.e. trees.
The Thai firm's move, however, caused panic among the local paper manufacturers, some of whom have in the recent years invested billions to produce diversified paper products.
Bashundhara, who owns some 20 per cent of the country's newspaper and offset paper markets, has sought government intervention to protect its Tk5.00 billion investment in the sector.
"The government should take measures to protect us. No way we can compete with Double A because of its superior financial strength," said a senior Bashundhara official.
Bashundhara Group, which had launched paper production on a large-scale in 1996-97 with a capacity of 100 tonnes a day, is the local market leader. It now has nine units with a combined annual capacity of 100,000 tonnes.
He said at least 60 small and large paper mills now operate in the country, accounting for more than half of the country's writing paper and newsprint demand.
"The smaller paper mills will die out gradually as soon as Double A flexes is marketing muscle," Abu Hasnat Obaydah, chairman of Maf Paper Mills, a subsidiary of TK Group.
He said some local companies including Maf have set up plants to produce industrial and specialised paper including offset, A-4, and carbon-less in the last couple of years in view of their soaring demand in the local market.
TK Group, known for their trading and chemical business, launched its paper plant in 1999 in Chittagong. Currently, TK is producing 74000 tonnes of writing, industrial and newsprint paper a year.
Saturday, July 2
Bourses' leaders oppose CDBL listing
FE Report (June 30, 2011)
The leaders of the bourses have opposed the move to listing Central Depository Bangladesh Limited (CDBL) with the stock exchanges saying that the company might become controversial if it fails to safeguard the investors' rights.
The leaders of the bourses who are also directors of the CDBL expressed the opinion Wednesday while they paid a courtesy call on chairman and members of the Securities and Exchange Commission (SEC).
However, the stock market experts expressed mixed reactions regarding the listing issue.
Md Shakil Rizvi, president of the Dhaka Stock Exchange (DSE), said after the listing of CDBL, investors' confidence might be misplaced if the company fails to maintain the formalities of a listed company.
"CDBL is a very sensitive organisation, which preserves the information of all listed companies. So we should keep the company above controversy," Mr Rizvi told the FE.
He also said there is no example of listing such companies around the world.
"If the company fails to offer dividends properly, investors will raise questions against the company performance," he added.
He said at the same time if any chaos takes place at the annual general meeting (AGM) of the company, its reputation will be hampered.
When asked, former SEC chairman and former adviser to the caretaker government AB Mirza Azizul Islam supported the opinions of bourses' leaders for the time being.
"So many problems arise at the AGMs, which may reduce investors' confidence to CDBL if it goes public. So, at this stage I do not support the proposal of listing of the company," Mr Islam told the FE.
But, he said CDBL could be listed after the demutualisation of the country's bourses.
Former DSE chief executive officer Professor Salauddin Ahmed Khan told the FE that it was not true that there was no example of listing such companies like CDBL around the world.
"There are many examples across the globe regarding the listing of such companies. Even the stock exchanges are listed in other countries," Mr Khan commented.
The leaders of the bourses have opposed the move to listing Central Depository Bangladesh Limited (CDBL) with the stock exchanges saying that the company might become controversial if it fails to safeguard the investors' rights.
The leaders of the bourses who are also directors of the CDBL expressed the opinion Wednesday while they paid a courtesy call on chairman and members of the Securities and Exchange Commission (SEC).
However, the stock market experts expressed mixed reactions regarding the listing issue.
Md Shakil Rizvi, president of the Dhaka Stock Exchange (DSE), said after the listing of CDBL, investors' confidence might be misplaced if the company fails to maintain the formalities of a listed company.
"CDBL is a very sensitive organisation, which preserves the information of all listed companies. So we should keep the company above controversy," Mr Rizvi told the FE.
He also said there is no example of listing such companies around the world.
"If the company fails to offer dividends properly, investors will raise questions against the company performance," he added.
He said at the same time if any chaos takes place at the annual general meeting (AGM) of the company, its reputation will be hampered.
When asked, former SEC chairman and former adviser to the caretaker government AB Mirza Azizul Islam supported the opinions of bourses' leaders for the time being.
"So many problems arise at the AGMs, which may reduce investors' confidence to CDBL if it goes public. So, at this stage I do not support the proposal of listing of the company," Mr Islam told the FE.
But, he said CDBL could be listed after the demutualisation of the country's bourses.
Former DSE chief executive officer Professor Salauddin Ahmed Khan told the FE that it was not true that there was no example of listing such companies like CDBL around the world.
"There are many examples across the globe regarding the listing of such companies. Even the stock exchanges are listed in other countries," Mr Khan commented.
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