• Wednesday, Jan 22, 2020
  • Last Update : 02:25 pm

Govt plans to unlock investment scope for pvt sector in power transmission

  • Published at 01:13 am December 18th, 2018
File photo of Power transmission line Mehedi Hasan/Dhaka Tribune

Out of total power generation capacity of 20,343 MW, the private sector's contribution stands at 11,057 MW representing 54% of the total, while the public sector with 9,286 MW contributes the remaining 46%

The government is moving ahead with a plan to open a $35 billion investment opportunity for private investors in the country's power transmission sector.

According to official sources  at the Power Division, the private sector’s enormous contribution in power generation—private companies now contribute over half the country's installed generation capacity—has encouraged the government to involve them in the transmission segment of the sector.

The latest government statistics show that out of total power generation capacity of 20,343 MW, the private sector's contribution stands at 11,057 MW representing 54% of the total, while the public sector with 9,286 MW contributes the remaining 46%.

Power Division officials claim this substantial growth was only possible due to the favourable climate for investment in power generation facilitated by the government over the Awami League's decade in power, as it sought to put an end to the era of countrywide heavy load-shedding.

"Seeing this great success, the government has now moved to unlock the investment scope for the private sector in the transmission segment as well," Director General (DG) of the Power Cell Mohammad Hossain told UNB.

Power Cell, a technical wing of the Power Division added by the Awami League-led government, is responsible for implementing reforms in the power sector. Accordingly it has already started framing the proposed guidelines for the private sector's involvement based on a number of models being followed by different countries.

"We hope the guideline will be ready by January next," said the Power Cell DG.

Official sources said as part of the Power System Master Plan drawn up in 2016, the Power Division identified a $35-billion investment potential in the transmission segment up to 2041.

As per the plan, the power transmission lines will be expanded to 36,870 km across the country by 2041.

Of the total grid transmission lines, 16,655 km will be of 132 kV, while 9,717 km of 230 kV, 1,740 km of 400 kV, and 796 km of 765 kV, according to officials at the Power Division.

If seen through to the end, that would over three times the total length of transmission lines at present: 11,123 km. Of this, 132 kV transmission lines are 7,082 km while 230 kV 3,343 km and 400 kV lines are 698 km. At the moment, there is no 765 kV line (greater capacity) anywhere in the country.

Power Division officials informed that a good number of foreign and local firms lined up with the government by placing their offers to express their intention to invest in the transmission segment.

The transmission segment is coming into focus because of the government's strategy to maintain the growth momentum in the power sector till at least 2041, when electricity generation capacity is planned to reach about 60,000 MW.

Power Division sources said the government envisions a total investment of $216 billion in the power sector spread across three segments-generation, transmission and distribution—over 25 years till 2041.

Of this, it requires $150 billion in generation, $35 billion in transmission, and $31 billion in distribution.

But the policy in place for the sector allows private investment only in generation, and there are no private sector players in the transmission and distribution segments.

With new policy guidelines coming into place, the transmission segment will be opened for private investors.

Mohammad Hossain noted that private sector’s involvement in transmission segment is "a sensitive issue" as questions of national security arise due to the countrywide network of transmission lines.

But overcoming the security concerns, many countries including neighbouring India have allowed private companies to enter the segment. "The investment could be in the form of public-private partnership (PPP) as well," Mohammad Hossain said.

Power Division additional secretary Rahmat Ullah Mohammad Dastagir in a recent presentation to a group of Chinese investors said the country needs an average of $9 billion investment in the power sector each year up to 2041.

Welcoming the government’s decision to allow the private sector in the transmission segment, Imran Karim, vice president of Bangladesh Independent Power Producers Association (BIPPA), said the new scope will definitely encourage the private investors to continue their contribution in the country’s power sector development.

"Without a strong support from the state, it was not possible for the private sector producers to reach the milestone in power generation," Karim said.

According to BIPPA, the private sector has invested about $12 billion over the last 10 years setting up more than 50 power plants.

BIPPA leaders said they have plans to invest $50 billion in the next 12 years to keep up the private sector's participation in power sector development.

The private investors want to invest as independent power producers (IPPs) as well as private partners via the public-private partnership (PPP) initiative to set up at least 55 plants to generate some 12,000 MW of power or more.