Once the cabinet committee on public purchase in its next meeting approves the agreement extension proposal forwarded by the Power Division, the seven power plants will be able to continue their operations for 5 to 15 years. The agreement expired a couple of months back.
Under the proposal, 100mw Orion Power Meghnaghat Ltd will be extended by five year and the government will have to pay a total of Tk5,518.39 crore during the period at a cost of Tk15.79 per unit to purchase electricity.
Summit Group-owned owned M/S Khulna Power Company Ltd (115 MW) crore will be extended by five years and the government needs to pay Tk6179.26 crore at a cost of Tk15.33 per unit.
M/S Khanjahan Ali Power Company Limited (40MW) will be extended by five years and the government needs to pay Tk2,207.31 crore during the period at a cost of Tk15.75 per unit.
M/S Acorn Infrastructure Service (100MW) will be extended by five years and the government will have to pay Tk5,487.50 crore at per unit price of Tk15.66. Summit Narayanganj Power Ltd (102 MW) will be extended by the same period and the government has to pay Tk5,523.35 crore with per unit cost Tk15.45.
Dutch Bangla Power and Association Ltd (100 MW) will be extended by five years and the government needs to pay Tk5,523 crore at a cost of Tk15.45 per unit and 116 MW Individual Power Plant will be extended for 15 years and the government needs to pay Tk17,923.48 crore during the period with per unit cost of Tk14.7.
Earlier, the government had spent Tk32,000 crore as subsidy for running the quick rental power plants.
This fiscal year 2016-17 , Tk 8,000 crore has been allocated for power subsidy, whereas in the original budget for this fiscal year it was for Tk 7,000 crore.
An official in the Power Division said though the country will require at least 24,000MW electricity by 2021 to implement the government’s Power System Master Plan 2010, it will have to wait until 2018 to implement the coal-based Load Power Plants in the country.
“Against this backdrop, the government has decided in principle to extend the agreements with the private sector power plants.”
In sharp contrast to the expected agreements, Finance Minister AMA Muhith, about two years ago, said, “Most of the rental and quick power plants would be phased out at the end of the fiscal year 2016-17.”
In 2015, the World Bank also recommended phasing out the quick rental power plants and stopping payment to firms out of production to ease the government’s subsidy burden.
According to the Bangladesh Development Update 2015, to date some contracts have been renewed on a ‘no power no payment’ basis, while some rental prices have come down, more should be done to reduce the cost of rental power and eventually phase it out.
Besides, the government is going to increase capacity and tenure of 116 MW Independent Power Plant Precision Energy Ltd at Potia in Chittagong for 15 years more.