No more oil-fired power plants for now : BPDB

M Azizur Rahman

The government has stepped back from awarding fresh oil-fired power plants due to higher generation costs and the volatile international oil market, a top government official said.

"We have no plan to award more oil-fired power plants at least for now," Bangladesh Power Development Board Chairman ASM Alamgir Kabir told the FE Saturday.

He, however, said the already awarded oil-fired power plants will continue operation until completion of their respective tenures.

Amid fast-depleting natural gas resources, the government had launched a drive to increase oil-based power plants from mid-2010, commissioning nearly three dozen new oil-based power plants to be built by 2012, he said. "With the commissioning of new oil-fired power plants the electricity crisis across the country has been eased significantly," said the BPDB top boss.

"We have now moved to generate electricity by the less expensive coal, nuclear and natural gas-fired power plants," he said.

Electricity generation from renewable energy and dual-fuel power plants is also in our long-term planning, said Mr Kabir.

The country currently has 19 new privately owned rental and quick rental oil-fired power plants, with a combined capacity of around 1,800 mw.

Of the new plants nine are diesel-fired and the remaining are furnace oil-fired.

By mid-2012 nine more oil-based power plants -- both private and state-owned -- are set to come online, with a total capacity of 630 mw, and six more will come up by the year-end, he added elaborating the plan.

The oil-fired power plants have different tenures - three years, five years and fifteen years - depending on their contracts.

To run the new oil-fired power plants, Bangladesh's oil product import rose significantly resulting in immense fiscal pressure on the country's overall economy.

The state-run Bangladesh Petroleum Corporation (BPC) projected that it will require around Tk 460 billion in the current fiscal year (FY 2011-12), up 53 per cent from that of the previous fiscal year, to import 6.50 million tonnes of oil products.

In FY 2010-11, BPC imported 5.10 million tonnes and in FY 2009-10 it imported 3.75 million tonnes of oil products.

BPC estimates that around 2.0 million tonnes of oil products -- 1.2 million tonnes of furnace oil and 800,000 tonnes of diesel -- will be required only to run the private oil-fired power plants in 2012.

Bangladesh's overall electricity generation is now hovering around 5,000 mw against the demand for over 6,500 mw.

With the commissioning of new oil-fired power plants, contribution of such plants now rose to around 27 per cent of the total output from around 7.0 per cent, Mr Kabir said.

To facilitate import of the increased quantity of oil products from the international market BPC had to arrange 37.93 per cent more loan worth US$ 2.0 billion from the International Islamic Trade Finance Corporation (ITFC), the lending arm of Islamic Development Bank (IDB). In the previous year the amount was $ 1.45 billion.

BPC had to enter into its first-ever deferred payment scheme with Malaysia's state-owned Petronas and the Philippine National Oil Company for its refined oil product purchases for one year until September 2012.

The interest rate for the first six months of the deferred payment scheme for October 2011 to March 2012 deliveries was set at around 5.05 per cent per annum.

Recently Bangladesh also allowed the privately owned power companies to import oil products independently to fuel their power plants under a new provision to ease extra load on BPC.

The government had to raise the petroleum prices by up to 42.85 per cent only in last calendar year (2011) in four separate hikes to offset the mounting losses of the BPC out of the increased oil demand.

BPDB's electricity supply costs also soared due to implementation of the oil-fired power plants.

BPDB, the lone buyer of electricity from power companies, purchases electricity from furnace-oil fired power plants at around Tk 7.0-8.0 per unit (1-kilowatt-hour) and from diesel-fired power plants at around Tk 13-14 per unit.

While purchasing, the costs of electricity from gas-fired and hydro power plants are below Tk 3.0 per unit.

With the rising purchasing costs, the bulk electricity supply cost will increase to Tk 4.86 per unit by the end of FY 2011-12, BPDB projected earlier.

The bulk electricity supply cost of the BPDB was only Tk 2.62 per unit during FY 2009-10, BPDB said.

The energy regulator increased power tariff for bulk and retail consumers several times to reduce losses of the state-owned power entities.

Source: http://www.thefinancialexpress-bd.com/more.php?news_id=121377&date=2012-02-26

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