The Quantum Power System, a sister concern of Otobi Ltd, has sought an extension of the power purchase agreements by eight years for each of its two rental power plants that are powered by fuel-oils, said officials.
The Power Development Board on 4 February, 2010 signed two power purchase agreements with Quantum Power for buying electricity for three years from a diesel-fired plant at Bheramara in Kushtia and for five years from a furnace oil-fired plant at Noapara in Jessore.
The power purchase contract for the diesel-fired plant is scheduled to expire by May 2013 and for the furnace oil-fired plant by October 2015.
Quantum Power, in its proposal, also wanted to convert the diesel-fired power plant into a furnace oil-fired plant, said a PDB official.
He said that Quantum Power offered PDB supply of electricity from the plants at a price reduced by a ‘little’.
At present, PDB pays around Tk 15 for a kilowatt-hour (unit) of electricity from the furnace oil-fired plant at Bheramara and around Tk 16.50 for a unit from the diesel-fired plant at Noapara, said officials.
The prices were calculated on the basis of considering the price of furnace oil at Tk 60 per litre and price of diesel at Tk 61 per litre, though the prices were Tk 26 and Tk 44 respectively when the agreements were signed.
A PDB official said that the government was ‘sympathetic’ to the rental power producers as many of them would have to count ‘losses’ for running the business for only a short time.
A meeting on Tuesday, chaired by prime minister’s energy adviser Towfiq-e-Elahi Chowdhury, ended without a decision on Quantum Power’s proposal, said an official of the Power Division.
Towfiq on Wednesday said that the government would not extend the duration of the power purchase agreements with the rental plants that it had signed for three to five years.
Animesh Kundu, managing director of Quantum Power and Otobi Ltd, or other executives of the companies refused to comment on the issue when contacted.
Finally on Saturday Md Aikur Rahman, deputy general manager of Otobi Ltd, said that the managing director could not make any comment as he was sick.
Quantum Power sought the extension against the backdrop of huge financial damage due to delay in commissioning the two power plants and use of more fuel-oil than specified in the contract with the PDB.
PDB fined Quantum Power a total of Tk 198.03 crore in liquidated damages for delaying the commissioning of the diesel-fired plant by 218 days and the furnace oil-fired plant by 316 days.
Officials said that PDB could not realise more than Tk 136 crore in damages as the High Court issued a stay order last year in response to a writ petition filed by Quantum Power.
PDB also fined Quantum Power more than Tk 40 crore because its power plant at Bheramara consumed more diesel than specified in the contract, although the executives of the company claimed that their plant had consumed excess fuel as the government had supplied them diesel with lower calorific value.
The decision whether or not extend the agreements is pending with the Power Division as a committee, which was formed to settle the dispute, is yet to give its decision in this regard.
Ignoring the financial crisis and widespread criticism of power generation by using fuel-oil, the government continues to sign fresh agreements to buy electricity from furnace oil-fired power plants for 15 years and is also increasing the duration of the power purchase agreements with a number of short-term plants.
So far, the government has 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 by burning furnace oil for five to 15 years, according to PDB.