Experts say phasing out rental power plants by 2018 will be impossible, something the Finance Minister AMA Muhith had claimed in his budget speech for FY2017-18 on Thursday.
In the present situation and with everything else constant, not until 2021 can the government start to remove their dependence on expensive rental plants, they said.
Finance Minister Muhith said: “In order to reduce dependence on rental power plants, they will be gradually phased out from 2018 onwards.”
The minister had earlier made a similar statement that the plants would be phased out by this year while announcing the national budget in 2013. He made a similar statement in 2014 as well.
The government is counting on the introduction of liquefied natural gas to reduce their dependence on rental power plants. However, experts believe it will take a while for the transition to take place.
Bangladesh University of Engineering and Technology Professor Dr Ijaz Hossain said even if the initiative to import liquefied natural gas comes through and LNG is supplied to different sectors, the government cannot phase out rental plants by 2021 because there will be a shortage of supply of gas, which will affect the national grid.
In 2021, the large coal-based plants Rampal and Payra, as well as several independent power producers, with a capacity of 1,000MW, will begin operations, which is when Ijaz thinks the phasing out can begin.
Around 30 rental power plants of three to five-year tenures, with capacity of 3,500MW, were set up during the incumbent government’s rule without any tender under the Speedy Supply of Power and Energy (Special Provision) Act, 2010 to make up for the electricity crisis. The rest were set up during the tenure of the previous caretaker government in 2008.
The finance ministry, from 2010 to 2014, published a booklet on a road-map for the power and energy sector, but later ceased its publication.
In the 2013 edition, the minister in the preface cited his budget speech, saying that not establishing energy-based power plants have led to different problems. He also said subsidies had risen because of the increased dependency on power from rental plants.
In the preface of the 2014 edition, he said the dependency on short-term energy has increased to 19% from 6% in 2009, but will return to a normal state in 2016.
We are expecting that the subsidies will decrease in 2017 and the electricity price will come down to a more bearable level, he had written in the preface.
The price of electricity has gone up a number of times since the introduction of rental power plants because of its heavy dependence on imported fuel oils.
The bulk price of per unit electricity increased between Tk2.37 and Tk4.87 from February 2011 to September 2015.
Muhith had argued in the 2013 booklet that low-cost electricity through subsidised prices had played a critical role in the growth and development of the Bangladesh economy.
Dr Ijaz Hossain said the government has to depend on rental electricity because of a lack of primary energy sources and adequate numbers of large power plants. “This is the reality,” he added.