The government may extend the tenure of oil-fired Shikalbaha 55MW rental power plant in Chittagong, six months after it refused to extend the power purchase contract considering environmental hazards.
A meeting is likely to be held between the Power Division and several rental power plant entrepreneurs tomorrow, when the Shikalbaha power plant may receive a three-year extension.
The government is now negotiating with the rental power plant entrepreneurs to renew the contracts to buy electricity at a lower price for different terms until 2020, said a Power Division official.
The previous caretaker government approved the Shikalbaha plant for three years that ended on May 6. Several requests since made by Energies Power Corporation Limited, owner of the plant, for an extension were rejected since its black smoke was harming other power plants in the vicinity. Now it is urging the authorities to extend the contract by three years.
The state-owned Power Development Board generally purchases electricity from rental power plants at high prices and sells it to consumers at considerably lower prices. This has forced the government to cover up the gap by giving huge subsidy in the power sector.
The PDB has sought from the government about Tk10bn as subsidy to pay outstanding bills to the “costly” rental, quick rental and independent power plants for July and August period. Now the government is buying electricity at Tk14-17 per unit from the rental power plants that use fuel oil. According to officials, the PDB incurred a loss of about Tk5bn each month in July and August this year since it distributed electricity at subsidised prices.
Upon a “verbal order” of the Power Division, the board is currently purchasing electricity from two private rental power plants even though their terms have expired, a PDB official told the Dhaka Tribune.
RZ Power owns the 47MW diesel-fired plant in Thakurgaon while Precision Energy Ltd runs the gas-fired 55MW plant in Ashuganj. The three-year contract with RZ Power expired on August 2 while the other agreement lapsed on April 7.
Extension plea rejected several times
In March, the PDB recommended that the Power Division should not extend the existing contract.
“We rejected the proposal for extending the tenure as it was causing damages to the PDB power plant by discharging huge amount of black smoke,” PDB Chairman Abdul Wahab Khan to the Dhaka Tribune.
The PDB has a 150MW gas-based power plant and another proposed dual-fuel plant of the same capacity near the Shikalbaha 50MW one.
On October 7, a meeting held between the Power Division and several rental power plant entrepreneurs including Energies ended in stalemate as the companies were rigid on their demand to realise the same price for electricity in the extended period.
