Vol. 5 Num 926 Sat. January 06, 2007  
Front Page

PDB Rental Plan for 15 Years
6 out of 7 power deals set to go to pro-BNP men

The Power Development Board (PDB) plans to sign by the middle of this month seven small power rental deals for 15 years which were pushed by the immediate past BNP-led alliance government risking a 15-year projected financial loss of about Tk 2,000 crore.

Of the seven deals involving 260 megawatt (MW) power generation, two with Ornate and GBB for Fenchuganj and Bogra power plants have already been signed. And five are now undergoing negotiations and fine-tuning.

Except for one deal with the Summit Group on a 20 MW skid-mount plant in Kumargaon, all the six other deals are set to go to people involved with the BNP.

These seven deals concern Shahjibazar 80 MW Tk 2.63 per kilowatt hour (per unit) power rental by United Group, Fenchuganj 50 MW (Tk 2.83 per unit) by Ornate, Kumargaon 20 MW (Tk 2.79 per unit) by Summit Group, Bogra 20 MW (Tk 3.16 per unit) by GBB and Feni 20 MW (Tk 2.73), Sikalbaha 50 MW (Tk 2.64) and Barabkundu 20 MW (Tk 2.86 per unit) by Hosaf.

Industry insiders say the deal with Summit was offered to create one kind of 'balance' as six of the deals are being backed by influential BNP men, including a former minister.

Back in March, on scrutiny of some of the small power rental offers, the PDB made a financial interpretation of the deals. One such deal was for 80 MW Shahjibazar scheme that initially offered a price of Tk 3.30 per unit to the PDB which it (PDB) would sell to the Rural Electrification Board (REB) at Tk 1.9, incurring a net annual loss of Tk 96 crore.

But Shahjibazar deal ultimately came down to Tk 2.63 per unit. Now, the projected loss from this plant has come down to Tk 50 crore.

When all the seven deals will be made effective, the PDB will incur a loss of about Tk 120 crore to 150 crore annually. In other words, the PDB in the next 15 years will incur a total loss of between Tk 1,800 crore and Tk 2,200 crore in the present price structure.

"On the brighter side, payment for the new small power schemes will be done in Bangladeshi taka. Plus, the PDB will have flexibility about buying their power as there will be lesser compulsion for buying certain percentage of power," noted a PDB source. "Besides, these companies are expected to start power generation from June-July next."

"On the negative side, the rental deals for these projects are being signed for a 15-year term as an emergency measure. How can a 15-year deal be an emergency? This is a wrong policy focus that will not have any positive impact on reducing power crisis in the country," he pointed out.

"If the PDB must sign a 15-year deal, that should be done with large plants ensuring stability and quality," said the source. " Our experience shows that a large private power plant can supply power at a much cheaper rate. Smaller plants, even if implemented without any favouritism or corruption will always be costlier."

A senior official said, "Small power plants -- government-owned or private -- have always been costly. In the past, the Awami League government had implemented the 110 MW oil-fired barge-mount Khulna power plant. Since it is oil fired, the average power price for this plant in 2005-06 swung up to Tk 8.49 per unit because oil price is globally very high. Besides, in 2004-05, it sold power for Tk 5.92 per unit as oil price was lower."

Similarly, the average power tariff of the NEPC barge-mount 90 MW plant and Westmont 90 MW barge-mount plant hovered around Tk 3.80 and Tk 3.68 per unit in 2005-06, though these are gas-fired. The official explains, "These deals were made in terms of dollars, and have become costly because of high rate of dollars."

The country's power load shedding has exceeded 2,200 MW and next year this might reach 2,500 MW as the BNP-led alliance government miserably failed to pursue adequate power schemes. Despite a serious crisis situation, the alliance government last year initiated more than 40 small power projects as 'rewards' to various BNP men. Ultimately that bid fell off due to serious pressure from the World Bank and the government resorted to a smaller scale scheme.