Govt to revise Power Sector Master Plan

The government is set to revise the Power Sector Master Plan (PSMP) - 2016 to match with the coronavirus pandemic that has lowered the power demand significantly and increased financial stress on Bangladesh Development Board (BPDB).
The country's current power generation capacity is 22,000MW while maximum demand is 12,000-13,000MW leaving an idle capacity of between 9,000MW and 10,000MW every day.
According to the study done by the Institute of Energy Economics and Financial Analysis (IEEFA), Bangladesh will have 58 percent surplus power in 2029-30 if it keeps adhering to the existing power system Master Plan - 2016.
"The coronavirus pandemic is currently lowering power demand significantly and obviously increasing the financial stress on BPDB by reducing revenue whilst capacity payments to idle plants have to be maintained. The pandemic is also delaying China-backed Belt and Road Coal Power projects here,"      Power Cell DG Hossain Mohammad told the daily observer on Monday.
A recent research found that demand for power in 2030 will only require 29,619MW but PSMP targeted to produce 46,000MW of electricity by this time.
"We are aware of the future impact of Covid-19 and we engaged Price water House Coopers (PwC) to conduct a thorough study to ascertain the economic impact of Covid-19 on the power sector," Power Cell DG Mohammad Hossain told the Daily Observer on Monday.
He said, "COVID-19's impact will mean long-term power demand and that is why we need to revise it to match with the new situation."
Significant capacity payments to idle power plants are helping drive the need for increasing government subsidies to the state-owned BPDB to cover its financial losses. In fiscal year 2018-19, the government subsidy to the BPDB was US$936m. It was US$530m in the previous financial year.
"Bangladesh will be stuck in a vicious circle of an obligation for making 'capacity payment' to private power plant owners without receiving their electricity," the IEEFA study said.  
If all the plants planned within the Revisited Power System Master Plant (PSMP) were built, the IEEFA said, the reality is that overcapacity would lead to significantly lower capacity utilisation of the new plants.
Data showed that the overall power capacity utilisation in Bangladesh for 2018-19 was only 43 percent, while capacity payments to idle plants reached US$1.1bn in 2018-19.
BPDB assess that the subsidy required in 2019-20 rose again to $1.1bn because the fall in electricity demand as a result of Covid-19.
Moreover, in the fiscal year 2018-2019, coal imports rose 70 percent year-on-year to 5.754 million tonnes, equivalent to at least $520 million, contributing to the $15.49 billion trade deficit.
IEEFA research said, "It is clear from the tariff structure in the PPAs that tax revenue or consumers end up paying for the poor economics of fossil fuel plants as either government or consumers guarantee payments for underperformance in the form of capacity payments and reimbursable cost payments stipulated in the power supply agreements."
Not doing so means unused power will continue to be guaranteed through government subsidies and the electricity bills of families and small businesses who can ill afford it.
Current and future PPAs should promote equitable risk sharing while protecting consumers and the Bangladesh government from high electricity prices and increased subsidies, it added.
"We are going to start the job from October, 2020. JICA will do the job as usual," Power Cell DG told the daily Observer.