The government is planning to gradually reduce the gas supplied to captive power plants and divert it to public and private power plants and industries instead.
A captive power plant is a localized power generation facility solely used by a commercial or industrial consumer.
An official of Bangladesh Power Development Board (PDB) told the Dhaka Tribune that the government began to allow captive power generation during the mid-1990s due to an unreliable power supply.
“The low price of gas at that time fuelled the growth of captive power plants, which eventually led to large-scale captive power generation,” the official said, seeking anonymity.
According to power sector insiders, around 17% of the total gas consumed currently goes to the captive power plants. Together, they currently generate around 2,400MW of electricity.
The decision to cut the supply to these plants was made following a April 9, 2015 directive from Prime Minister Sheikh Hasina following a visit to the Ministry of Power, Energy and Mineral Resources.
The state-owned energy provider Bangladesh Oil, Gas and Mineral Corporation – commonly known as Petrobangla – stopped allowing new connections to captive power plants on August 10 of the same year.
“We have been on track to implement the prime minister’s directive. We have already stopped providing new gas connections,” said Petrobangla Chairman Abul Mansur Md Faizullah.
The government has also directed the existing captive power plants to increase their thermal efficiency to at least 60%.
“In order to achieve the 60% target, the captive power plants have been asked to start cogeneration process as cogeneration plants are more thermally efficient,” said a Petrobangla official, requesting anonymity.
Cogeneration is the simultaneous production of electricity and heat. In a cogeneration system, also known as combined heat and power (CHP) system, the flue gas – the energy byproduct of power generation termed waste heat – is recovered from the atmosphere, mostly in the form of steam, and used to produce more electricity.
Currently, more than 80% of the captive generators in the country are releasing their flue gas into the atmosphere. Some captive plants have already converted to CHP to tackle the severe shortage of gas, but 70% of the flue gas collectively released by the existing captive power plants is still being wasted.
Will the government plan work?
Reducing the gas supply to the captive power plants might do more harm than good, according to Dr Ijaz Hossain, an energy expert and a professor of chemical engineering at Bangladesh University of Engineering and Technology (Buet).
He told the Dhaka Tribune that the industries that own captive power plants will face two problems if the government cuts down gas supply.
“The owners will become dependent on a national grid that cannot supply uninterrupted power, which will directly hamper their production,” he said.
“Furthermore, converting every captive power plant to a CHP system is not feasible.”
Ijaz Hossain said different kind of industries use captive power plants.
“CHP plants generate hot water and steam, which may not be suitable for every industry, which is why many captive power plant owners have still not shown interest in the conversion,” he explained.
“However, the efficiency of the captive power plants should be increased.”
A captive power plant owner, on condition of anonymity, said the government plan would cause the owners severe financial loss.
“We invested a ton of money to set up these power plants because the government could not provide uninterrupted power supply to our factories,” he told the Dhaka Tribune. “If the government starts reducing gas supply to our plants now, we will be hit with great losses, which will also adversely affect the country’s economy.”
Ijaz Hossain said there was an alternative way.
“Since the government has been showing interest in importing LNG [liquefied natural gas] to meet the national demand for gas, if the captive power plants are willing to purchase LNG, even at a higher price than the natural gas we use now, they must be given the opportunity,” he said.
Different rules for different players?
Interestingly, Petrobangla is not barring the construction of captive power plants in the economic zones being set up by the government around the country, even though the state agency is planning to cut down gas supply to the existing captive plants.
“The PDB wants to ensure uninterrupted power supply in almost all the economic zones, and that power will come from the captive power plants,” said a source, who wished to remain anonymous.
“These captive power plants will also have higher power generation capacity than the existing ones, and the PDB is seeking ways to add some of the power to be generated in the economic zones to the national grid.”
This is why the PDB wants to revise the 2008 power generation policy, which currently does not allow captive power generators to sell off excess electricity after fulfilling their demands.
According to the source, doing so will also attract more investors in the power sector.
The PDB has recently sent a proposal to the Power Division in this regard, but the latter has yet to come up with a decision.