The Power Division will place a proposal to extend the tenures of three rental power plants for five years at the next meeting of the cabinet committee on purchase.
Besides, proposal for another independent power producer (IPP) may be placed at the meeting.
“We had several meetings with some entrepreneurs to extend the tenure and fix tariff rates of the existing rental, quick rental and independent power plants,” Power Secretary Monowar Islam told the Dhaka Tribune.
The three power plants are the 55MW Ashuganj gas-fired plant of Precession Energy Limited, the 55MW Shikalbaha HFO-fired plant of Energies Power Company and the 100MW Siddhirganj diesel-fired plant of Desh Energy.
The government has also decided to extend the tenure of the 110MW barge-mounted plant of Summit Group’s Khulna Power Company Ltd after the expiry of a 15 years’ old contract on October 12, 2013.
This is the country’s first independent power producer that commenced its operation in October 1998.
The Power Division has also discussed revision of tariff rates with the entrepreneurs of 50MW Thakurgaon diesel-fired power of RZ Power Limited, 55 MW Khulna diesel-based plant of Aggrekko and 100MW Bheramara diesel-fired plant of Quantum Power.
“They repeatedly pressed us to continue purchasing the power at the existing rate for the extended period but we asked them to revise it downward,” a Power Division official said.
The government earlier scrapped deal with the 55MW Sikalbaha rental power plant in Chittagong for discharging ash that causes damage to the PDB power plant near the site.
But the Power Development Board has continued to purchase electricity from RZ Power and Precision Energy Ltd, although their terms expired on August 2 and April 7 respectively.
The three-year contract with Desh Energy will expire on February 18, 2014 and Quantum Power on December 31, 2013.
The expensive rental and quick rental plants were set up during the regimes of 2007-08 caretaker government and present government on emergency basis to overcome the nagging outages.
These were said to be a stopgap arrangement to face the growing demand until the government takes up long-term projects including renovation of age-old plants in the state sector. But no visible steps have taken place in this regard requiring the government to seek continuation of rental plants for some more years.
Experts have always been against the arrangement, which they billed as a drain on national exchequer. But businesspeople said the plants, though expensive, have helped them overcome power crisis to some extent.
Professor Shamsul Alam, energy adviser of Consumers Association of Bangladesh, told the Dhaka Tribune that the production cost of oil-based power plants was very high and extension of rental power plants would be suicidal.
On an average, PDB purchased around 1500MW of electricity every day from 32 rental and quick rental power plants during the last fiscal year. The amount is one fourth of the total generation, PDB officials said.
The country currently faces a deficit of 1,000MW electricity while demand hovers around 6,500MW. The government provides a subsidy of Tk 90 to 100 bn annually to buy electricity from all power plants including the rental ones.
The Power Division earlier formed a committee, which in April this year recommended that contacts for rental plants should be extended in phases.
“As the tenures of the contacts have almost come to an end, an influential section among the sponsors of the plants have started lobbying hard to get their contracts renewed for a longer period,” said Prof Alam.