Ignoring financial crisis and widespread criticism against power generation using fuel-oil, the government had decided to allow installation of more power plants fired by diesel or furnace oil.
The decision would further hit the consumers. The government already increased the price of electricity five times since February 2011 due to soaring cost of generation using diesel or furnace oil.
Experts consider it a controversial decision when the government is reluctant to increase its already high subsidy bill for electricity generation using fuel-oil and keen on realising the costs from the poor consumers.
Bangladesh Power Development Board on Wednesday signed a deal with local firm Orion Group for buying
electricity to be produced by its furnace oil-run plant with an installed capacity to generate 102 megawatts of power.
The contract signing ceremony was attended by prime minister’s energy adviser Towfiq-e-Elahi Chowdhury, state minister for power and energy ministry Md Enamul Huq, power division secretary Md Abul Kalam Azad and PDB officials.
PDB will have to spend Tk 14.39 a kilowatt-hour (unit) — Tk 13.20 on fuel cost considering furnace oil price of Tk 60 per litre and Tk 1.19 as capacity charge, officials said.
According to the contract, PDB will buy electricity from Orion’s plant from August 1, 2013 for 15 years.
The plant is yet to be installed at Narayanganj.
PDB selected Orion Group for the project bypassing tender process, under the Speedy Supply of Power and Energy (Special Provision) Act 2010.
So far, the government signed 57 contracts for buying electricity from 59 plants to be installed by both public and private sector companies.
Out of the 57 projects 43 have a combined capacity to generate 4,995MW of electricity mainly from furnace oil for five to 15 years, according to PDB.
Towfiq said that the government was opting for the fuel-oil run power projects in accordance with its master plan for bringing fuel diversity in power generation.
According to PDB master plan, around 17 per cent of total generation would come from fuel-oil run plants.
Now around 30 per cent of total generation comes from fuel-oil run plants which pushed up the average generation cost by around 2.5 times from Tk 2.63 a unit in fiscal year 2009-10.
Replying to a question Towfiq told New Age that a number of ‘Quick Rental’ power plants would be phased out gradually to be replaced by fuel-oil fired power plants.
Asked why the government extended the power purchase agreements with a number of the quick rental power producers, he said ‘Everything does not go precisely according to the plan.’
Bangladesh Energy Regulatory Commission has been increasing electricity prices on the ground that the PDB’s average expenditure has shot up due to its dependence on fuel-oil run plants.
Since February 2011, BERC increased the bulk power prices, in five phases, by 69.6 per cent on an average — from Tk 2.37 a unit to Tk 2.63 with effect from February, 2011, then to Tk 2.80 a unit with effect from August, then to Tk 3.27 with effect from December 2011 and then to Tk 3.74 a unit with effect from February 2012, and again to Tk 4.02 a unit with effect from March.
BERC has also increased the retail prices by 33 per cent on an average — from Tk 4.0 a unit to Tk 5.32 in 14 months.
The government has been keeping BERC under pressure to increase the bulk power price by at least 60 per cent and adjust the retail price as well at one go to avoid any further hike at the fag end of its five-year tenure.