Govt mulls ditching rental, quick rental power projects

The government is finally set to take a decision to scrape the Rental and Quick Rental Power Projects, a long-standing demand of the common people as the projects increased power tariff time and again in the last one decade.
"We are examining all the issues, we got an investigative report in this regard done by the Power Division. We will sit soon and take a decision in this connection," State Minister for Power, Energy and Mineral Resources Nasrul Hamid told the Daily Observer on Thursday.
The Finance Minister AHM Mustofa Kamal also hinted in this regard saying, "We will allow the efficient low cost projects in power sector."
"It is fact that at one stage it was a requirement but later we have seen that Bangladesh has been working to ensure profit for a few. While consequent governments of Bangladesh have been pursuing corporate controlled, private profit centric, debt dependent and environmentally disastrous energy and power policy, a strong democratic people's movement has also emerged to resist this. But it counted losses only to feed some well-fated people under political shelter," Professor M Tamim, former energy adviser to the caretaker government told the Daily Observer.
In 2008-2009, severe power crisis compelled the government to enter into contractual agreements for high-cost temporary solution, such as rental power and small independent power producers (IPPs, mostly diesel or liquid-fuel based) on an emergency basis. We made changes in our Power System Master Plan 2010 and decided to use the quick rental power plants (QRPPs) as its major strategic tool to reduce power shortage in the short run. Under the plan,      a total of 20 QRPPs was commissioned by 2012 with a total capacity of more than 1,000 MW, Bangladesh Institute of Development Studies report said.
 "Following enactment of the Private Sector Power Generation Policy, the government started allowing the private players in the power sector but unfortunately it failed to make the check and balance here; thus a group of traders came here to plunder the sector as per as whish, Dr Tamim said.
Nowadays, a significant portion of the additional electricity generation has come from liquid fuel based power plants which has raised the total contribution of liquid fuels in power generation to about 20 per cent in 2019, 17 percent in 2012 from 13 percent in 2011 and 5 percent in 2010, a senior official of PDB said.
"We paid Tk 16,000 crore in 2018-2019 fiscal year as capacity payment to the rental, quick rental and IPPs and had to pay Tk 20,000 crore in 2020 fiscal year for the same cause," the official added.
Congratulating the government move, CAB energy expert Professor Shamsul Alam said, "If the government really does that I would be happiest one. These power projects are the curse for the government."
However, most of the liquid fuel- based electricity has come from rental, quick rental, and peaking plants which were undertaken on a fast-track basis to address the nagging power crisis.  
BADC comparison of per unit cost of electricity under different modes shows that the public sector units have the lowest per unit cost mostly due to fuel advantage. Between the rentals and the quick rentals, the average per unit cost of gas based electricity generation is more than 75 percent higher for QRPPs than the rental units, while, in the case of furnace oil, the rental units are 21 percent costlier than the QRPPs. The per unit fixed cost in the case of gas based generation units for the QRPPs is nearly two-and-a half times higher than that of the rentals but, for the furnace oil based units the per unit cost of the rentals is more than twice that of the QRPPs. The per unit fuel cost is not very different between the two in the case of gas but, in the case of furnace oil, the cost of QRPPs is nearly 14 percent higher.
Due to these causes, the government support to BPDB which amounted to Tk. 1,007 crore in 2008-09 increased to Tk. 6,357 crore in 2011-12 and is projected to rise to Tk. 13,758 in 2012-13, PDB official said.
Considering the rising supply cost of electricity, the bulk electricity tariff rate has recently been increased to reduce BPDB's losses. As a result, the bulk price of per unit electricity increased from Tk. 2.37 to Tk. 2.61 in February 2011 and further to Tk. 4.02 in October 2012. 7. According to the BPDB, fuel consumption is expected to rise to 7 million tonnes in 2012-13, up from an average of 3 million tonnes in the last decade and 5.4 million tonnes in 2010-11 and 2.6 million tonnes in 2009-10. Of the total, more than 30 percent is expected to be consumed by the power plants. In 2011-12, the country imported 4.8 million tonnes at a cost of Tk. 29,000 crore; while the cost is likely to reach Tk. 49,000 crore during 2012-13.
The main factor contributing to soaring fuel consumption is the introduction of the liquid fuel based QRPPs as well as a rise in captive power plants in industrial and commercial establishments, the BADC report further said.