[🇧🇩] Energy Security of Bangladesh

[Saif]

Payra thermal power plant resumes full production

The Payra 1,320MW Thermal Power Plant in Kalapara upazila of Patuakhali has resumed full production following a roughly two-month halt for maintenance works on its second unit and test runs of a neighbouring facility..Upon completing maintenance works, which began on November 9 last year,

www.thedailystar.net

Payra thermal power plant resumes full production
Test runs of neighbouring facility nearly complete

A partial view of Payra port in Patuakhali district. With capital dredging works of Ramnabad channel now complete, only the construction of the first terminal remains for Payra port to become the third fully operational seaport in Bangladesh. PHOTO: Sohrab Hossain

The Payra 1,320MW Thermal Power Plant in Kalapara upazila of Patuakhali has resumed full production following a roughly two-month halt for maintenance works on its second unit and test runs of a neighbouring facility.

Upon completing maintenance works, which began on November 9 last year, the authorities began generating electricity from the second unit of the coal-fired power plant at around 9:30pm on Tuesday.

Now, the plant is supplying its full 1,320-megawatt (MW) capacity to the national grid, according to Shah Moni Jico, assistant manager of the Payra plant.

Meanwhile, the first unit of a neighbouring facility with an identical power generation capacity run by RPCL-NORINCO International Power Limited (RNPL) has been undergoing experimental production since mid-January this year.

As such, the first unit of the Payra plant had also been shut down for a week starting December 16.

The second unit of the new plant, which is located just two kilometres north of the Payra plant, is scheduled to begin production this June.

And with its first unit almost commissioned, the facility will have a total power generation capacity of 1,320MW in full production, thereby meeting 10 percent of the country's demand.

Construction of the RNPCL Thermal Power Plant in Londa village under Kalapara began in 2019. However, the facility was unable to commence production as planned last year for various challenges.

The commissioning of its first unit, which has a power generation capacity of 660MW, will likely be complete within the second week of January, said Mohammad Ashraf Uddin, superintendent engineer of the plant.

He informed that all construction works, including that of the power transmission line and coal transport jetty, are now complete.

The first unit is undergoing trial production, with commercial production expected to begin in March.

Shawkat Osman, executive engineer (mechanical) of the RNPCL power plant, said 1.25 lakh tonnes of coal have been stored at the facility to ensure its uninterrupted production once fully operational.

He added that another 1.65 lakh tonnes of coal is expected to arrive this month.

Osman further said that the cost of each unit of electricity generated by the plant is estimated at Tk 9.

Yang Ling, commercial manager of the RNPCL power plant, assured that the facility was built in compliance with global standards.

"It will use the latest ultra-supercritical technology and is designed to operate without causing harm to the environment," he said.​

 

[Saif]

INDUSTRIAL, CAPTIVE GAS SUPPLY: Gas price hike of up to 152pc proposed

The Bangladesh Energy Regulatory Commission is evaluating a Petrobangla’s proposal to increase by up to 152 per cent the price of gas supplied to industries and captive power plants...

www.newagebd.net

INDUSTRIAL, CAPTIVE GAS SUPPLY: Gas price hike of up to 152pc proposed
Emran Hossain 09 January, 2025, 00:23

Industrialists say hike to raise production cost

The Bangladesh Energy Regulatory Commission is evaluating a Petrobangla’s proposal to increase by up to 152 per cent the price of gas supplied to industries and captive power plants.

Now a decision on the state-owned agency’s proposal seeking to set the gas price for the two consumer categories on per with imported liquefied natural gas price is due to come by the first half of March.

The decision will come through a public hearing — such hearing has not held since 2023 after the Awami League government ousted amid a mass uprising on August 5, 2024 had curtailed the BERC’s authority to set energy tariffs.

The prospect of the gas price hike angered industrialists who likened the price hike move to following in the footsteps of the past fascist government: trying to solve problem by increasing price arbitrarily.

Industrialists warned that the gas price hike would raise production costs, eventually impacting ordinary people. Production costs would particularly increase in some industries, such as steel, ceramics, glass, and textiles, whose production is directly reliant on gas, they said.

‘BERC’s technical evaluation will complete in about 20 days,’ said Khalilur Rahman Khan, secretary of the BERC.

The public hearing will be held based on the findings of the technical evaluation committee, he said.

The price increase proposal has been approved in principle by the power, energy and mineral resources ministry. The proposal sought the per unit gas price supplied to industries to be increased by more than 152 per cent to Tk 75.72 from existing Tk 30. Per unit gas price for captive power generation has been proposed to be increased by 140 per cent to Tk 75.72 from existing Tk 31.50.

The ousted AL government increased the gas price for four consumer categories, including industry, by up to 179 per cent in January 2023.

In its proposal sent to the BERC, the Petrobangla argued that the gas price needs to be raised to increase its supply from both domestic and import sources to reduce the widening gap between the demand and the production, the same justification used by the past AL government for frequently increasing gas price.

The current gas price was calculated considering LNG import of 1,000mmcfd. But the past government never imported that much of LNG, leaving industries and households depending on gas supply in a serious crisis.

‘This is definitely not the right time to increase energy price,’ former Dhaka Chamber of Commerce and Industry president Abul Kasem Khan told New Age, referring to the slowing down of the country’s economic growth.

Struggling to recover from the Covid pandemic impact, coupled with the dollar crisis and staggering inflation, he said, many industrialists were considering closing down their businesses.

‘Gas is an important raw material and energy source. We are losing competiveness daily. Price hike will block future industrial expansion as well,’ he said.

Bangladesh began importing LNG on August 19, 2018. Until November past year, the average LNG import was 579mmcfd. In 2023-24, the highest annual LNG import of 676mmcfd was recorded. The import dropped a little in 2024-25. The current LNG import capacity is 1,000mmcfd.

A technical evaluation of the BERC revealed in March 2022 that the Petrobangla pocketed Tk 2,538 crore by importing 553mmcfd less LNG than promised in the financial years 2019-20 and 2020–21.

The Petrobangla in its latest proposal estimated that the deficit from selling gas in less than its production price would exceed Tk 16,162 crore if 101 LNG cargoes are bought. The deficit would reach Tk 22,315 crore next financial year if 115 cargoes are bought, the estimation said.

Any new gas connection seekers in industries and captive power plants would have to pay the new price for their entire supply, the Petrobangla proposed.

Those who were promised gas connection but are yet to get it would have to pay the new price for half of its sanctioned load while the rest half of the load could be bought with the previous price, the proposal said.

Existing gas consumers would have to pay the new price if their consumption surpasses sanctioned load, the proposal said.

Businesses said that existing industrial consumers receiving gas more than their sanctioned load sounded like an unreal proposition to many. Industries complain about gas pressure in their pipeline falling nearly zero, they said. In Gazipur area, some industries regularly complain about gas pressure dropping to one to two PSI against the supposed 150.

Captive power production price hike would also contribute to increasing industries production cost, businesses said, adding that industries produced their own power because of unreliable national grid.

Bangladesh Textile Mills Association president Showkat Aziz Russell told reporters on Wednesday that the decision to sell gas at import price would be detrimental to the country’s industries.

Calling the move absurd, particularly because it came without consulting business communities, Russell said that people were expecting energy price to go down after the interim government assumed power through the people’s movement.

If the proposed gas price is approved, the gas price in industries would increase to Tk 75.72 from Tk 16 set in January 2023.

Bangladesh’s current gas demand is about 4,000mmcfd, but the supply remains below 3,000mmcfd. In 2023-24, the average gas supply was 2,493mmcfd. The approved load is 5,356mmcfd.

The piped gas is a blended supply of locally extracted natural gas and imported LNG. Imported LNG accounts for a fourth of the supply. The Petrobangla predicted in its proposal that the share of LNG in the piped gas supply would rise to 75 per cent by 2030-31.

The cost of per cubic metre of imported LNG ranges between Tk 65 and Tk 70.

Bangladesh’s local gas supply is ensured by three state-owned companies and two international oil companies. Piped gas is supplied through six distribution companies.

Two companies are currently regasifying LNG imported through long-term contracts and spot market purchases. About three-fourths of the import comes through long-term contracts.

Three new LNG terminals, including a land-based one, at different stages of development, were cancelled after the interim government assumed power since the development work was won without tender.

Bangladesh cannot drastically increase its import unless new LNG handling capacity is built. New LNG handling capacity is currently at a very preliminary stage.

According to a United News of Bangladesh report: commerce adviser Sk Bashir Uddin has described the move to raise gas price from Tk 30 to Tk 75 per cubic metre as ‘unpleasant yet unavoidable’.

‘The decision to raise gas prices is not a pleasant one for the government. However, it is necessary. The adjustment will be carried out through the Bangladesh Energy Regulatory Commission after discussions with entrepreneurs,’ he said on Wednesday.

Speaking at the inauguration of GAPExpo-2025 at the International Convention City Bashundhara in Dhaka, the adviser acknowledged the challenges posed by the price hike.​

 

[Saif]

Low gas supply for three days from today

The piped gas supply will decrease across the country, state-owned oil company Petrobangla said in a notice issued on Thursday, warning about a low pressure in the piped gas supply for 72 hours starting today noon.

www.newagebd.net

Low gas supply for three days from today
Staff Correspondent 10 January, 2025, 00:11

The piped gas supply will decrease across the country, state-owned oil company Petrobangla said in a notice issued on Thursday, warning about a low pressure in the piped gas supply for 72 hours starting today noon.

This is the second time in less than two weeks the same floating storage and regasification unit is going offline for maintenance, triggering the gas crisis.

Petrobangla officials said that the maintenance of the FSRU owned by Excelerate Energy was not scheduled.

The FSRU remained out of operation between January 1 and 3, further worsening Bangladesh’s energy crisis.

The imported liquefied natural gas supply will be 550-560 mmcfd over the three days of maintenance, the Petrobangla notice said.

On Thursday, the LNG supply was 780.8mmcfd.

LNG accounts for a fourth of piped gas supply. After import, LNG is blended with locally extracted natural gas before being distributed through the national grid. Gas accounts for 60 per cent of Bangladesh’s primary energy consumption.

For a 100mmcfd drop in gas supply, electricity production may reduce by 500MW. The current power demand of the country is about 10,000MW and there is officially no load shedding at the moment.

The impending drop in the gas supply frustrated yet again households and industrialists who have been complaining about receiving far less gas than they paid for over the years, consumers said.

They said that many households were buying food from restaurants despite paying the government for gas and housemaids for cooking.

Many households are spending extra on using liquefied petroleum gas or using electricity for cooking, they said.

Industrialists, on the other hand, are reducing their production to cope with the situation.

Some areas in and adjacent to the capital Dhaka have recently complained about gas supply falling to near zero.

Excelerate Energy began operating Bangladesh’s first FSRU with the current handling capacity of 60mmcfd on August 19, 2018. LNG import through the FSRU at Moheshkhali was disrupted for months during the monsoon in 2018.

The other FSRU, Summit LNG Terminal, remained offline in six months of the first nine months of 2024.

The Summit-owned floating storage and regasification unit was on routine maintenance in Singapore between January 22 and March 31. It shut down again on May 24 after the cyclone Remal hit. The unit could not be reconnected until September 11, prompting the government to cancel four LNG shipments. LNG deliveries to the terminal resumed on September 19.

In 2021, the Summit LNG terminal was out of service for three months due to a damaged mooring line.

In May 2023, Cyclone Mocha shut down both the FSRUs.

Both the LNG import terminals have a contract to receive about $5,00,000 every day as regasification charge, not subject to the actual amount of gas handled.​

 

[Saif]

Govt floats tenders to purchase two more spot LNG cargoes in Feb

Bangladesh’s state-run Rupantarita Prakritik Gas Company Ltd (RPGCL) has floated a fresh tender and re-issued another to purchase two spot LNG cargoes for February 13-14 and February 06-07 delivery windows, respectively. The RPGCL re-issued the tender for one spot LNG cargo for the February

thefinancialexpress.com.bd

Govt floats tenders to purchase two more spot LNG cargoes in Feb
FE ONLINE REPORT
Published :
Jan 09, 2025 19:24
Updated :
Jan 09, 2025 19:26

Bangladesh’s state-run Rupantarita Prakritik Gas Company Ltd (RPGCL) has floated a fresh tender and re-issued another to purchase two spot LNG cargoes for February 13-14 and February 06-07 delivery windows, respectively.

The RPGCL re-issued the tender for one spot LNG cargo for the February 6-7 delivery window after cancelling the previous one due to higher-than-expected price quotes, nearing around US$16 per million British thermal units (MMBtu) from the bidders, said an official.

The bid winners will deliver the LNG cargoes to Moheshkhali Island in the Bay of Bengal, with options to discharge the cargo at either of the country’s two FSRUs (floating storage regasification units) located on Moheshkhali Island.

RPGCL, a wholly owned subsidiary of the state-run Bangladesh Oil, Gas, and Mineral Corporation (Petrobangla), handles LNG trades in Bangladesh.

The two tenders were floated on January 8, with the bid submission deadline ending on January 13.

The volume of each spot LNG cargo will be around 3.36 million MMBtu.

Bangladesh last awarded a spot LNG cargo tender to Excelerate Energy LP of the USA for the January 30-31 delivery window at US$15.69 per MMBtu, the RPGCL official said.

Apart from spot LNG cargoes, Bangladesh has been importing LNG from its two existing long-term suppliers—Qatargas and OQ Trading International—for regasification in its two operational FSRUs.​

 

[Saif]

AL-APPROVED POWER PROJECTS: Govt still pays high capacity charge

Some of the power projects approved without tender by the Awami League regime ousted in August 2024 continue to receive excessive capacity charge, up to 73 per cent more than what they should get, according to a...

www.newagebd.net

AL-APPROVED POWER PROJECTS: Govt still pays high capacity charge
Emran Hossain 11 January, 2025, 00:08

Some of the power projects approved without tender by the Awami League regime ousted in August 2024 continue to receive excessive capacity charge, up to 73 per cent more than what they should get, according to a Bangladesh Power Development Board analysis.

The capacity charge entitlement is itself a controversial arrangement that allows power and energy sector investors handsome profits based on their investment, rather than on the quality of their service.

The capacity charge is an amount of money, often paid in dollars, guaranteed to be paid by the government irrespective of power plants producing power or floating storage and regasification units supplying gas.

Explaining how the past AL regime channelled public money into private pockets through the power sector, energy experts said that the BPDB analysis also highlighted the lack of initiatives on the part of the interim government to take steps against the companies making predatory profits.

The power sector had also turned into a key window to launder money, they said.

The interim government that took office after the ouster of AL regime on August 5, 2024 cancelled the special power act under which the past government had approved power plants without tender, but the interim government did not take any actions against the power plants in operation, saying that taking action against the power plants would be difficult.

The BPDB analysis compared capacity charge expenses in six furnace-oil based power plants – three of them set up competitively, through bidding, while the other three were built without tender.

The contracts for building the power plants, with their installed capacity ranged between 100MW and 163MW, were awarded between April 2017 and February 2018. They began commercial operation between November 2018 and September 2022 for 15 years.

The power plants installed through bidding are 163MW B-R Powergen, jointly owned by the BPDB and the Rural Power Company Limited, 105MW RPCL, owned by the Bangladesh Rural Electrification Board, and 149MW ACE Alliance Power Limited, 64 per cent of which owned by Summit Power.

The power plants installed without tender are 104MW Orion Power Sonargaon Limited, 113 MW Confidence Power Bogura Unit-1 Limited and 100MW Acorn Infrastructure Services Unit-3 Limited.

After comparing the construction costs, the BPDB analysis said that the installation costs of the two publicly-owned power plants were about $8 lakh per MW. State-owned power plants generally cost more than private power plants to be built. The analysis also considered equal returns on equity, LIBOR and fixed interest rate for all the power plants.

Built with a government loan, the power purchase agreement of B-R Power Generation Limited allowed $5.22 as capacity charge per MW per month, which could have been $8.37 per MW/month if the power plant got set up with commercial loan, the BPDB analysis showed.

The PPA of RPCL, built with commercial loan, allowed $8.35 as capacity charge per MW/month, which was less than what should be the actual capacity charge of such a power plant — $8.44 MW/month, the analysis said.

Of the power plants, Ace Alliance Power Limited secured a PPA allowing $8.81 MW/month as capacity charge, 10 per cent higher than the rate should be — $7.99 MW/month, according to the analysis.

Confidence Power’s PPA secured a capacity charge of $13.79 MW/month, which is 73 per cent higher than what the actual rate should be — $7.99 MW/month, the BPDB analysis said.

The PPA of Acorn Infrastructure Services allowed capacity charge payment of $12.75 MW/month, 60 per cent more than the reasonable rate of $7.99 MW/month.

Orion Power has a PPA with capacity charge entitlement of $12.64 MW/month, 58 per cent higher than the reasonable rate of capacity charge of $7.99 MW/month, the BPDB analysis revealed.

‘The same picture would have been found with all other power projects taken under the special power act without tender during the past AL regime,’ said Hasan Mehedi, member secretary of the Bangladesh Working Group on Ecology and Development, a coalition of green activists.

‘The lack of initiatives on the part of the interim government to stop paying such excessive capacity charges is a matter of concern,’ he said.

The AL government had approved more than 100 power projects after assuming power in 2009 under the Quick Enhancement of Electricity and Energy Supply Act, scaling up its installed power generation capacity to about 28,000MW, excluding 2,800MW of captive power capacity, in 2024 from about 5,000MW in 2009.

The power deals signed under the special act accommodated conditions discriminatory to Bangladesh and it remained entirely out of public notice for the deals were never made public, not even after the new government took office.

Energy experts had criticised the special act, often labelling it as the tool to transfer public money into private pocket, eventually leading to the dollar and economic crises that hit the country more than two years ago.

The BPDB said that the past AL government spent $32 billion only in the power sector before its ouster amid a student-led mass uprising.

Former state minister for power Nasrul Hamid told parliament in September 2023 that his government paid Tk 1.04 lakh crore to 82 independent and 32 rental power producers as capacity charge in the past 14 years.

RPCL and Bangla Trac, the owner of Acorn Infrastructure Services, were among the top 10 capacity charge receiving independent power producers with Tk 4,004.08 crore and Tk 1,853.22 crore received over the 14 years, respectively, Nasrul had said.

Two companies of Summit Power, partial owner of ACE Alliance Power, also found places on the list of top 10 capacity charge receiving IPPs with Tk 3,644.39 crore and Tk 2,683.03 crore earned as capacity charge over the 14 years.

Acorn Infrastructure Services was also among the top 10 rental power companies which had received Tk 1,484.30 crore over the 14 years in accordance with the government account.

Confidence Group was ranked sixth among a dozen IPPs listed as the ‘dirty dozen’ in a 2022 study released in March by the BWGED. The combined capacity of the ‘dirty dozen’ was 29.7 per cent of the then installed capacity and they accounted for 32.7 per cent of electricity generated in 2020-21. But the ‘dirty dozen’ received 66.4 per cent or Tk 8,730.14 crore of the capacity payment made in the financial year.

Rental power plants were introduced immediately after the AL assumed power as an immediate measure to tackle power shortages and were supposed to expire in a maximum of five years. But the past government continued to retain them, allegedly for paying huge sums to its favourites.

BD Rahmatullah, a former director general of the Power Cell, a regulatory agency under the power, energy and mineral resources ministry, said that those who had pulled the strings during the past AL regime still got to call the shots.

‘This is frustrating to see that the interim government fails to take initiative to change the system established by the past AL government,’ he said.

The power and energy adviser, the power secretary and the BPDB chairman could not be reached for comments on the issue over phone despite several attempts.​

 

[Saif]

Energy ministry order allowed United Power to make excessive profits

About four and a half months before a student-led mass uprising overthrew prime minister Sheikh Hasina, the energy ministry in an order sealed the deal on making excessive profits by the United Power, a private power generation company.

www.newagebd.net

Energy ministry order allowed United Power to make excessive profits
Emran Hossain 11 January, 2025, 00:13

About four and a half months before a student-led mass uprising overthrew prime minister Sheikh Hasina, the energy ministry in an order sealed the deal on making excessive profits by the United Power, a private power generation company.

Sheikh Hasina also held power, energy and mineral resources portfolio then.

Dated March 25, 2024, the order said that the United Power’s two power plants in the Dhaka and Chattogram export processing zones would receive gas at the independent power plant (IPP) rate for electricity generation supplied to the national grid and Bangladesh Export Processing Zones Authority.

The order went against a February 8 Supreme Court order that settled that the two power plants would pay the IPP rate for gas used for producing electricity supplied to the national grid and the captive rate for gas used for generating electricity commercially sold.

The ministry order immediately guaranteed the United Power an additional profit of Tk 4.61 per kWh besides its regular margin from selling electricity produced at the plants, according to a Bangladesh Power Development Board analysis.

The tariff of per unit electricity, generated using gas at the IPP rate of Tk 15.50 a unit, is Tk 6.41, as per the notification issued by the Bangladesh Energy Regulatory Commission on May 14. The tariff is far less than what the United Power gets by supplying per unit of electricity under a contract signed with BEPZA, Tk 11.03.

The contract with BEPZA was signed in May 2007, allowing the power plants to sell electricity to clients in the export processing zones.

Commercial power producers are supposed to pay the captive rate for gas, which is Tk 30.75 a unit.

The IPP rate is meant for independent power plants who supply electricity to the national grid and are not allowed to privately sell electricity.

Electricity supplied through the national grid is all bought by the BPDB. The power sector is highly subsidised. A quarter of the supply of gas to the power sector comes via import as liquefied natural gas. A unit of LNG costs over Tk 60.

The annual power sector subsidy has recently crossed Tk 30,000 crore.

The order of the energy ministry is reminiscent of the arbitrary use of power by the past government to benefit its cronies, according to experts.

Almost all power and energy deals that the Hasina government allowed over the 14 years since 2010 had come through without bidding, mostly through one-to-one negotiation, under an indemnity law that the interim government has recently cancelled, they said.

The past government also striped the Bangladesh Energy Regulatory Commission of its power to set tariffs in December 2022. The BERC got back the tariff-setting power after the interim government took office on August 8.

The white paper on Bangladesh’s economy submitted recently to the interim government cited the United Group as the past AL government favourite raking abnormal profits by running its power plants in the export processing zones.

Initially, the United Power’s two power generation units used gas at the captive rate, which the company stopped paying in 2009 after the AL government assumed power. The plants with a combined capacity installed generation capacity of 164MW started commercial operation in 2008 and 2009.

Authorities, however, did not raise any objection over the United Power switching to the IPP rate, until in 2018, demanding that the company pay separate prices for electricity sold to the BPDB and private industries.

A prolonged legal wrangle ensued when the United Power went to the High Court challenging authorities’ demand for separate rates. The legal battle ended with the review of the Appellate Division order in February 2024 that went against the United Power.

United Power’s dues to state-owned Titas Gas Transmission and Distribution Company Ltd rose to Tk 486 crore by October 2024 as the company paid less than it should be for gas supplied by the Titas.

The company commercially producing power was not supposed to receive the gas in the first place, considering the 2008 policy, which spoke against supplying scarce national resources such as gas to commercial entities. The policy requires commercial power producers to arrange for their own energy.

The United Power that purchased gas for Tk 988 crore between 2017–18 and 2023–24, earned Tk 3,799 crore from electricity sales. The company enjoys monopoly at the export processing zone in its power business.

An analysis by the Bangladesh Working Group on Ecology and Development revealed that 23 per cent of the power produced between 2017–18 and 2023–24 was supplied to the national grid, while the rest went as a commercial supply to BEPZA.

In the past year, the plant factor at the CEPZ power plant was 76 per cent, following the DEPZ power plant running at 54 per cent capacity.

The United Power in the past year declared 20 per cent profit. Its profit stood at 74 per cent in 2018, followed by similar profits made in 2016 and 2017. In the other years, since 2013, the company has reported 50 per cent or more profit.

Since 2011, the United Power has set up seven more power plants — all IPPs — with installed generation capacity of 1,041MW.​

 

[Saif]

PDB plans to cut cost by Tk 10,000cr in FY25

The interim government has come up with a plan to reduce power sector expenses by Tk 10,000 crore while energy experts term the plan impractical, saying that a right intervention could save Tk 30,000 crore overnight.

www.newagebd.net

PDB plans to cut cost by Tk 10,000cr in FY25
Emran Hossain 18 January, 2025, 00:36

The interim government has come up with a plan to reduce power sector expenses by Tk 10,000 crore while energy experts term the plan impractical, saying that a right intervention could save Tk 30,000 crore overnight.

The interim government has made the plan as part of the ongoing efforts to revitalise the economy destroyed substantially during the ousted Awami League regime by predatory power and energy expenses.

Energy experts said that the plan ignored key areas of corruption and some proposals would bear serious consequences for industries, environment and public health.

‘The plan reflects our inefficiencies,’ said Hasan Mehedi, member secretary of the Bangladesh Working Group on Ecology and Development, a platform of green activists.

Prepared by Bangladesh Power Development Board, the plan aims at reducing cost by 10 per cent or Tk 10,548 crore in 2025 by reducing generation cost, avoiding surcharge, not renewing retired power plants and adopting austerity measures.

The power generation cost is planned to be reduced by Tk 6,830 by increasing gas use, replacing the use of furnace oil and coal substantially.

The plan proposes increasing gas supply by 150mmcfd which would cause an additional expense of Tk 2,405 crore. The gas supply now stands at 913mmcfd, BPDB document showed.

Increasing gas use implies an increase in liquefied natural gas import since output from local gas fields continues to decline. The BPDB used the subsidised rate of Tk 14.75 per cubic metre in calculating the expense needed to raise the gas supply, rather than using the current LNG import rate of nearly Tk 66 per unit. Petrobangla recently said that the gas import price would soon hit Tk 75.72.

The planned increase in gas supply through import will involve an additional spending of Tk 9,000 crore, more than what will be saved by reducing furnace oil and coal use –– Tk 6,299 crore and Tk 2,563 crore respectively, the experts said.

‘More imports will keep draining the forex reserve, affecting industrial production even more,’ said Hasan Mehedi.

Meeting the demand of additional gas supply from the existing supply, without increasing LNG import, implies diverting gas from industries, where gas is used both as raw material and fuel.

The problem with reducing the use of power plants based on furnace oil and coal is their capacity charge entitlement. More idle plants mean increased payment of capacity charge, the money the government is legally obligated to pay.

The BPDB plans to reduce the plant factor, the ratio of a power plant’s energy output to its capacity, in furnace oil-based power plants to 9 per cent from the existing 16 per cent. The plant factor was 21 per cent in the financial year 2023-24.

Similarly, the plant factor in the coal power plants is planned to be reduced to 58 per cent from the existing 64 per cent.

According to the plan, the increased gas use would reduce the power generation cost by 7.68 per cent to Tk 10.58 from Tk 11.46 per kWh.

Shafiqul Alam, lead analyst at the Institute for Energy Economics and Financial Analysis, Bangladesh found the plan too simple to address power sector challenges.

Power generation costs went up in FY24 despite substantial drop in fuel prices following new capacity addition, he said.

In FY24, the installed power generation capacity was increased by 3,187MW with 9,543MW of new capacity under construction and Tk 26,000 crore was paid in capacity charge.

‘For reducing cost power consumption will have to be increased besides rationalising fuel use,’ said Shafiq.

Bangladesh’s current installed power generation capacity is about 28,000MW. The peak demand during next high summer is estimated to be 17,500MW. The average maximum generation remains around 13,000MW.

Installment of 3,000MW of renewable energy could have saved about Tk 6,000 crore, Shafiq estimated.

The government, however, planned to reduce power production from renewable energy and to reduce the renewable energy plant factor to 18 per cent, which was 21 per cent in FY24.

‘Renewable energy revitalises the economy by saving dollars cutting the need to import fuel,’ said Hasan Mehedi.

The BPDB also planned to cut non-fuel costs by Tk 2,280 crore.

By halving the payment owed to Indian power plants, the BPDB planned to save Tk 543 crore in surcharge. Indian companies are entitled to get up to 1.5 per cent interest for delayed payment every month.

The BPDB planned to reduce its departmental cost by Tk 370 crore in six areas, including travel, power consumption, telephone and postal and machinery purchase. About 80 per cent of the savings is planned to be made in equipment procurement.

The BPDB planned to save Tk 525 crore by not extending contracts of 10 power plants. The power plants, worth 1,010MW, including seven based on furnace oil, retired by August 2024.

The implementation of the plan is subject to completion of the capacity building projects of Meghnaghat and Aminbazar grid substations and the transmission works in Cumilla, Mymensingh, Kodda, Kaliakair, Rangpur and Thakurgaon, the BPDB said.

Energy experts said that the plan ignored essential steps such as renegotiating predatory tariffs awarded to power producers through power purchase agreements necessary for saving the BPDB.

The energy transition policy, proposed by Consumers Association of Bangladesh in March 2022, estimated the power sector’s unjustified cost at Tk 8,000 crore.

In Bangladesh, transmission line construction costs Tk 10 crore per kilometre in Bangladesh against Tk 98 lakh in India, the association said.

In 2019-20, Barapukuria thermal power plant purchased coal at $150 a tonne, far higher than the then imported coal cost of $100, the CAB said.

‘The BPDB plan will rather increase cost. This is absurd. They are failing to make right interventions,’ said CAB energy adviser Shamsul Alam.

The right intervention, according to Shamsul Alam, included shutting down furnace oil-based power plants, refusing to pay local power plants in dollars and rationalising coal price.

‘The steps could save about Tk 30,000 crore overnight,’ he said.

Power secretary and BPDB chairman could not be reached over their phones for comments despite repeated attempts.​

 

[Saif]

Power producers call for clearing dues citing forex losses

Private power producers have urged the Bangladesh Bank for a solution to recover losses stemming from delayed payments by the Bangladesh Power Development Board (PDB).

www.thedailystar.net

Power producers call for clearing dues citing forex losses

Private power producers have urged the Bangladesh Bank for a solution to recover losses stemming from delayed payments by the Bangladesh Power Development Board (PDB).

Members of the Bangladesh Independent Power Producers Association (BIPPA) made this request at a meeting with Ahsan H Mansur, governor of the central bank, at his office in Dhaka yesterday.

The BIPPA members, comprising mostly owners of liquid fuel-based power plants, told Mansur that they incurred combined losses of Tk 8,500 crore due to delayed payments by the PDB following the start of currency fluctuations.

The exchange rate between the taka and the US dollar has been repeatedly revised since August 2021, with the local currency depreciating by more than 30 percent.

"The governor told us they will closely monitor the exchange rate with commercial banks in the future," BIPPA President David Hasanat told The Daily Star.

He said the central bank governor was very cordial and assured him that he would convey their message to senior government officials.

BIPPA has long been pushing the government to clear at least half of its overdue payments, amounting to Tk 9,000 crore, as soon as possible.

They wrote to the Ministry of Power, Energy and Mineral Resources on January 9, requesting that the payments be cleared within 10 days to ensure uninterrupted power supply during Ramadan.

Hasanat said that the unpaid dues are preventing local power producers from importing the furnace oil needed to generate electricity.

"If we don't get at least half of our payments, we will not be able to open letters of credit to import furnace oil in due time to generate adequate power during Ramadan," he added.

In its letter, BIPPA mentioned the significant financial losses being caused by the taka's devaluation.

Besides, the foreign exchange losses of independent power producers were compounded by delayed interest payments.

"These losses have eroded financial confidence among lenders," it said.

Hasanat provided an example of how delayed payments exacerbate foreign exchange losses.

"When we submitted bills [for electricity or fuel imports], the exchange rate was Tk 118. But by the time we received payments, it had risen to Tk 126," he said.

The PDB is obligated under its power purchase agreements to clear payments within 45 days.

However, payments are being delayed for more than five months at a time, with the resulting backlog having persisted for more than three years now.

"The situation is critical," BIPPA said in its letter, adding that the nation's energy supply chain faces imminent collapse if the payments are not made.

This will, in turn, have severe and widespread impacts, jeopardising agricultural production, national food security, industrial output, and essential household services during crucial periods like Ramadan and summer, it added.​

 

[Saif]

Bangladesh’s power subsidies highest among neighbours despite low use

Cement sales in Bangladesh plunged in 2024 due to political instability, rising production costs, and the deferment of the implementation of government infrastructure projects, leaving the industry operating at less than half its capacity.

www.thedailystar.net

Bangladesh’s power subsidies highest among neighbours despite low use

Cement sales in Bangladesh plunged in 2024 due to political instability, rising production costs, and the deferment of the implementation of government infrastructure projects, leaving the industry operating at less than half its capacity.

"The cement sales in 2024 declined due to political instability, macroeconomic challenges, inflation, and the suspension of government infrastructure projects," said Mohammad Iqbal Chowdhury, chief executive officer (CEO) of LafargeHolcim Bangladesh PLC.

Industry experts echoed similar concerns, emphasising that these factors have led to significant disruptions in the construction sector.

Mohammed Amirul Haque, managing director and CEO of Premier Cement Mills Limited, highlighted that the suspension of major infrastructure projects, a key customer of the cement industry, has exacerbated the downturn.

Despite these hurdles, Haque expressed optimism, emphasising that political stability and economic recovery could enable a rebound.

"The cement sector has weathered crises before and stands resilient," he said, underscoring the industry's potential for recovery in the coming years.

Haque further said the cement industry in Bangladesh, a critical driver of the construction sector, is grappling with declining demand and rising production costs.

"Traditionally, around 60 percent of the country's cement consumption is through individual initiatives," said Md Moshiur Rahman Dalim, head of business at Akij Cement Company Limited.

"…the remaining 40 percent is used in government development projects and infrastructure of other organisations," he said.

However, the dynamics have shifted drastically, painting a bleak picture for the sector.

He said cement consumption at the individual level has dropped by over 90 percent.

According to him, this decline can be largely attributed to delays in the issuance of approvals from local government bodies, including city corporations, municipalities, and urban development authorities, which are crucial for construction projects.

People also face hurdles in obtaining necessary clearances due to the absence of elected public representatives in the local government bodies, further stalling individual construction projects, he said.

Bangladesh boasts 42 cement factories with a combined production capacity of 84 lakh tonnes per month, according to the Bangladesh Cement Manufacturers Association.

However, Dalim said sales have plummeted to just 34 lakh tonnes per month, leaving the industry operating at a mere 45 percent of its capacity.

This sector, where annual growth in consumption typically ranges from 9 to 10 percent, saw an unprecedented decline in sales of around 1.2 percent in 2024, he said.

The industry's woes are compounded by soaring costs of production, driven by hikes in electricity and fuel prices, he added.

"We are now in a difficult situation. The same manpower required to produce 10 lakh tonnes of cement is being utilised for just one lakh tonne. Despite the downturn, we have not resorted to layoffs," said Dalim.

Adding to the burden is a discrepancy in import duties on raw materials, he said.

"Although the international price of cement clinker has dropped to $44 per tonne, the government continues to calculate import duty based on a rate of $62 per tonne," he said.

Dalim said this disparity results in an additional cost of nearly Tk 2,000 per tonne. Meanwhile, a 10 percent hike in supplementary duty on limestone has further raised costs.

He said winter, usually the peak season for cement sales, has also failed to deliver relief.

The combined impact of declining demand and increasing costs has taken a toll on the overall construction sector, leaving businesses and stakeholders in a risky position, he explained.

Mohammed Khurshed Alam, executive director of Fresh Cement, a concern of the Meghna Group of Industries, highlighted the severe challenges faced by the cement sector due to declining demand.

Despite rising production costs, manufacturers have been compelled to slash prices by at least 15 percent to survive in an increasingly competitive market, he said.

Alam noted that the manufacturers had turned hypercompetitive, which was a significant factor behind the price drop.

"The sector has been struggling since 2022, with consistent de-growth each year, despite averaging at an 8 percent annual growth since 2010," he said.

Alam attributed the sector's ongoing uncertainties to the absence of an elected government, which has hindered consumer confidence and construction activity.

"People are hesitant to spend money or start new projects, given the prevailing political uncertainties," he remarked.

He expressed hope that the situation would improve once an elected government assumes power and begins implementing large-scale development projects.

"When development projects are launched, and people regain confidence to construct buildings, the demand for cement will naturally rebound," he added.

Until then, the cement and other construction-related industries are likely to remain subdued, he said.​

 

[Saif]

Power, energy sector: No effective steps taken to mend unequal deals

Over five months of the interim government have passed, there are still no effective initiatives to rein in power and energy sector profiteers, undermining the government’s ongoing effort to bring in economic and other reforms.

www.newagebd.net

Power, energy sector: No effective steps taken to mend unequal deals
Emran Hossain 21 January, 2025, 00:19

Over five months of the interim government have passed, there are still no effective initiatives to rein in power and energy sector profiteers, undermining the government’s ongoing effort to bring in economic and other reforms.

Energy experts said that there were laws to stop the profiteers, unjustly benefitted throughout the past Awami League regime, bleeding the economy under the protection of now-defunct indemnity law.

There are also other ways to get the profiteers to the negotiation table to reduce excessive tariffs awarded to them through unequal power deals and end their many illegal practices, they said.

By continuing to subscribe to the profiteers’ service since assuming power on August 8, 2024, the interim government is rather validating their existence, weakening its own case, energy experts said.

The interim government repeatedly said that the task of cancelling power and energy deals, signed under international law, was tough, especially financially, as it involves the payment of billions of dollars.

‘The government has to realise that allowing the profiteers to operate is even more harmful,’ said economist and rights campaigner Anu Muhammad.

‘Besides pocketing huge profits, the profiteers will ruin environment and public health,’ he said.

Bangladesh suffers from over 50 per cent overcapacity following a more than five-fold expansion of fossil-fuel-based power plants during the AL regime ousted on August 5 amid a student-led mass uprising.

The massive expansion occurred through power deals almost without tender, offering unjustified privileges to power sector investors.

For instance, up to 73 per cent excessive capacity charge was given to many of the companies. During the AL regime, over Tk 1 lakh crore was paid to idle power plants.

If the government wishes to exit a power deal, the government would, in most cases, have to pay 85 per cent of the income that the power plant would have made over its lifetime.

A power plant could last from 15 to 25 years. Bangladesh also spent far more than the other countries in building power plants — $2.4 billion spent in constructing a 1,320MW coal-based power plant. The past government invested $33 billion in its 15 year’s regime in the power sector alone.

The power deals, replete with other privileges, including opportunities to manipulate fuel price, have spared many power producers to pay discount on imported fuel.

‘There are many instruments to prevent these profiteers,’ said Hasan Mehedi, member secretary of the Bangladesh Working Group on Ecology and Development, a platform of green activists.

International laws, energy experts said, entertains the concept of odious debt, which defined the national debt incurred by despotic regime as illegitimate debt and there are precedents of countries refusing to pay odious debt. The past AL regime was autocratic as it had rigged the past three elections to hold onto power.

‘We have a clean case of deals passed under pressure or influence or through fraudulent practices, bypassing the public procurement policy,’ said M Abdul Quaiyum, a Supreme Court lawyer, who recently moved the court seeking order to scrap the unequal deal signed with the Adani Power by the past government.

The court ordered the government review the Adani deal and report to it by January 25.

The government is also under instructions from the High Court to review all power, energy deals since the indemnity law used to pass the deals was declared illegal.

Many power, energy deals require investors to follow the country’s existing laws, which were generally overlooked during the AL regime, apparently to maximise the profits of AL favourites.

For instance, the 1,234MW coal-based Rampal power plant, a joint venture with India, operated for almost two years till the past year without using effluent treatment plan, releasing wastewater directly into the River Maidara.

Coal is handled openly at the Rampal, leading to its direct release into the air and river while facilities such as coal-shed, coal stack yard and ash silo were not completed as per the plan.

Power plants are supposed to renew their environmental certificate and environmental management plan every year. The DoE is supposed to update the list of environment certificate by March 31 every year. The DoE also has the responsibility to assess industries’ ability to assess environmental impacts and implement their environmental management plan.

Department of Environment director Masud Iqbal Md Shameem claimed that power plants regularly updated their environmental certificates.

He, however, failed to provide an account of such certificates renewed this year.

SC lawyer Qazi Zahed Iqbal said that treaty signed under international law could be challenged or even have declared void for contradicting or violating domestic law.

‘Deals going against domestic law will have no legality. Environment is protected by the constitution,’ he said.

Energy experts also called on the government for withdrawing numerous special privileges still being enjoyed by power plants to let their authorities know about its uncompromising stance and bring them to the negotiation table.

Power plants have 100 per cent tax exemption on their income until 2034. Their foreign employees and consultants enjoy income tax exemption. Power companies do not pay tax on interest paid under loans. Supplementary and import duties on machinery and spare parts are also exempted. Coal importer’s tax was reduced to 5 per cent from 15 per cent.

Private furnace oil importers often use their half capacity to be illegally benefited by the provision of 9 per cent service charge. A BPDB account showed that Bangladesh had spent 20 per cent extra on furnace oil import during the AL regime. Many companies are also using fake offshore companies to import furnace oil to avoid paying 25 per cent customs duty. There are also allegations about companies importing more furnace oil than they need to generate power.

‘Widespread corruption must have left many cues to hold the profiteers accountable. The government just needs to launch a thorough investigation,’ said Sharif Jamil, coordinator of the Waterkeepers Bangladesh, which works to protect the water and water bodies in Bangladesh.

Experts said that there were also amicable ways of settlement by simply inviting all power and energy businesses to talks. Many power plants have been in operation for 15 years though they earned a handsome profit on their investment in the first three to five years.

Consumers Association of Bangladesh energy adviser Shamsul Alam refused to accept the government’s excuse that there were not many ways to come out of power and energy deals.

‘What kind of law allows such injustice to continue?’ asked Shamsul.

‘The power plants were built in violation of laws, allowing stealing from people’s pocket. Are we saying there is no way to stop that?’

BPDB chairman Rezaul Karim said that several committees were working on the matter to find out unnecessary deals and the way of getting rid of them.

‘We cannot give a precise date when we can do that,’ he said.​

 

[Saif]

Renewable ambitions still mired in uncertainty

Although the Awami League government made ambitious commitments to renewable energy before being ousted by a mass uprising in August last year, meeting those lofty goals remains a distant dream for the country.

www.thedailystar.net

Renewable ambitions still mired in uncertainty
Bangladesh produces only 0.8% of total power from sustainable sources

Although the Awami League government made ambitious commitments to renewable energy before being ousted by a mass uprising in August last year, meeting those lofty goals remains a distant dream for the country.

The interim government has been trying to accelerate the transition, but experts and businesses have voiced concerns that the new tenders, which do not feature implementation agreements, may hold back progress.

According to an analysis by the Bangladesh Independent Power Producers' Association (BIPPA), Bangladesh produces the least electricity from renewable sources compared to four other comparator countries, including India, Pakistan, Vietnam and Sri Lanka.

Bangladesh's power generation mix is skewed heavily towards fossil fuels, with only 0.8 percent of energy being produced through renewables.

The nearest competitor, Pakistan, gets 3.7 percent of its total 42,131 megawatts (MW) of installed capacity from renewables, according to the findings, which were shared with senior government officials on Monday at Rail Bhaban.

The comparison was based on data till June 2024.

At present, Bangladesh has a total installed capacity of 27,115MW, with solar and wind contributing 663MW.

According to the findings, Vietnam is leading the charge towards renewables, followed by India and Sri Lanka.

In a fresh push, Bangladesh entered the renewable energy era in 2017 with the launch of a 3MW solar power plant in Jamalpur's Sharishabari.

The Awami League government later set a global commitment to producing 6,000-16,000MW from renewable sources by 2030, but neglected due process when it came to giving primary approval.

However, after the political changeover in August, the interim government scrapped the plans for a total of 42 power plant projects, including 37 renewables plants with a combined capacity of around 3,102 megawatts (MW).

This is because those plants were awarded without any due tender process by the Awami League government under the controversial Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010.

The interim government also repealed the "indemnity act" in December.

Additionally, under the interim government, the National Board of Revenue granted a 15-year tax benefit for investments to establish grid-tied renewable energy-based power facilities, with a 10-year exemption to encourage the bidders.

The PDB has also floated two tender notices till date for 22 solar plants in different areas of the country with a total capacity of 853MW. The tender submission deadlines for those notices are in early February and March this year respectively.

Shahriar Ahmed Chowdhury, director at the Centre for Energy Research at United International University, told The Daily Star that the previous government always said it would increase renewable energy installation, but those words were insincere.

"Renewable energy installation is good for the nation in the long run as fuel cost will reduce in proportion with renewable use," he said.

Imran Karim, former president of BIPPA, who prepared the analysis, said land scarcity is the main reason solar projects are being held back.

"As a densely populated country, land acquisition is the biggest challenge in implementing renewable projects," he said.

He pointed out another major decision by the government that had caused investors to refrain from joining the tender process.

He said the new tender documents read that the government will not sign implementation agreements, under which the government assures repayments if the PDB defaults.

"That means the companies will only sign power purchase agreements with the PDB. You will rarely find lenders or investors who will agree to invest in a company that they know cannot repay them on time," Karim said.

Currently, the PDB owes around Tk 21,000 crore to independent power producers in overdue payments.

Besides, he said, the PDB sells power to customers for prices lower than their purchase cost or production cost, meaning it is not possible for them to pay bills unless the government underwrites it.

Karim, also the vice-chairman of Confidence Group, which owns several heavy fuel oil-based power plants, said they wanted to support the government's move towards renewables.

"But when we spoke to multilateral banks and development partners, we found out that they may not finance such projects."

Despite repeated attempts over the phone, Muhammad Fouzul Kabir Khan, adviser to the ministry of power, energy and mineral resources, could not be reached for comment.

Energy expert Shahriar Chowdhury said the decision to not ink implementation agreements is contrary to the government's commitment to increasing power generation from renewables.

"Fossil fuel-based power plants have been getting such benefits for a long time. If you want to compete with them, you [the government] should support the renewable investors for a certain time till the situation improves," he said.

"We have made very little progress. Government support is needed until the sector can stand on its own feet," he added.​

 

[Saif]

WB to give another $30m for power transmission

The World Bank (WB) will provide Bangladesh with an additional $30 million to help the country build up its power transmission network in eastern regions.

www.thedailystar.net

WB to give another $30m for power transmission

The World Bank (WB) will provide Bangladesh with an additional $30 million to help the country build up its power transmission network in eastern regions.

The funds will be used for an ongoing project that aims to enhance and strengthen power transmission in greater Cumilla, Chattogram and Noakhali, according to the Economic Relations Division (ERD).

ERD Secretary Md Shahriar Kader Siddiky and WB Acting Country Director Gayle Martin yesterday signed an agreement to this end, said a press release from the finance ministry division tasked with boosting domestic socioeconomic development.

Power Grid Bangladesh PLC is implementing the project aiming to ensure a reliable supply and meet the growing demand for electricity in Cumilla, Chattogram and Noakhali, it added.

The initial financing agreement for this project, amounting to $450.64 million, was signed on April 10, 2018, under the Scale Up Facility of the WB.

However, $50 million was subtracted from the total funds and repurposed for initiatives aimed at combatting the fallouts of Covid-19.

Now, Bangladesh needs another $30 million from the multilateral lender to successfully complete its efforts to improve power delivery in eastern regions, the ERD said.

With a grace period of five years, the country was given a repayment period of 30 years for the loan.

The loan's annual interest rate has been set at 1.25 percent while its service charge is 0.75 percent and maximum commitment charge is 0.5 percent.

However, the World Bank has decided to waive the commitment charge this year, it added.​