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Dhaka Tuesday,  Jul 23, 2024

Bangladesh’s Overcapacity In Power To Hit 70pc Soon

Emran Hossain

Some of Bangladesh’s largest power plants are set to begin operation by 2024, increasing the country’s installed capacity by nearly a third or over 7,300 MW.

But this addition of new electricity does not look like a good development to economists and power experts worried about most of the electricity remaining unused due to the lack of transmission and distribution networks.

Bangladesh’s power overcapacity could reach 70 per cent soon, power experts predicted, against the fact that the average annual per capita electricity consumption in the country is one of the lowest even among the South Asian nations.

‘It seems that the power overcapacity burden will keep growing until it triggers a total economic collapse,’ said economist Anu Muhammad.

Over 6,500 MW of the new capacity to be added over the next two and half years would come from four power plants — 1320MW Rampal power plant, 1600MW Adani Godda power plant, 1224MW Banshkhali power plant and 2400MW Ruppur Nuclear Power Plant.

The coal-based Rampal and Adani Godda power plants were scheduled to come into operation by August 2022 but their transmission lines would not be ready until December, official sources said.

The 1320 MW Payra power plant has been only half-used since coming into operation in 2020 also because of the lack of transmission line.

Bangladesh’s current installed capacity is 25,560 MW, which is scheduled to become 32,888 MW in 2024.

The highest electricity generation so far was 14,782 MW, recorded on April 16, according to Power Development Board data.

The average peak electricity consumption during summer, however, is about 12,000 MW, which falls below 10,000 MW in winter.

‘Bangladesh invested more than three times in expanding the generation capacity than what it spent on transmission and distribution over the past decade,’ said Bangladesh Working Group on External Debt member secretary Hasan Mehedi.

The investment in transmission and distribution should have been 1.5 times of the investment in generation, he said, referring to the plans laid out in the power sector master plan formulated in 2016.

The payment for the unused power capacity, known as capacity charge, in the outgoing financial year would stand at an estimated Tk 26,533 crore, according to a report released in March, a 101 per cent rise in the country’s expenditure for unused power compared with the previous financial year.

The spending on unused power would reach Tk 31,600 crore in FY23, with forecasts of it rising even further thereafter, especially with the beginning of the Ruppur plant in 2024.

The capacity payment has increased by an overall 372 per cent in the past decade what economists blamed for the increase in power price by 98 per cent over the period.

In April, the Bangladesh Energy Regulatory Commission recommended for yet another round of increase in power price, this time by 58 per cent in a go.

The 1,320MW Rampal power plant, a Bangladesh-India joint venture, is likely to start operating around July, according to Sayeed Akram Ullah, managing director, Bangladesh India Friendship Power Company Limited.

‘The transmission line for evacuating power from the Rampal plant will be ready before December,’ said Golam Kibria, managing director, Power Grid Company of Bangladesh Limited.

The power plant is entitled to a capacity payment of Tk 2,000 crore a year once it is ready for operation.

Authorities talked about plans of using electricity generated by the Rampal plant in Khulna but the plan seemed unrealistic because of lack of demand.

The peak electricity demand in Khulna region, according to PDB data, is 1,388 MW against an installed capacity of 2,388 MW.

At least eight power plants, receiving roughly Tk 1,000 crore in capacity payment, located in Khulna region would have to be put out of operation to use electricity from the Rampal power plant.

Khulna region even could not use electricity produced by the 1,320MW Payra power plant, which was paid Tk 1,996 crore in capacity payment in FY21 for its unused capacity.

A BWGED study listed the Payra plant as the most expensive power plant in FY21, the financial year when the capacity payment rose by a fourth compared with FY20.

The BWGED in its report observed that the power sector became a tool for transferring public money into private pockets.

The 1,600MW Adani Godda power plant is scheduled to come into operation in August.

Located in Jharkhand, India, the power plant requires a long cross-border transmission network for supplying electricity, which will not be ready before January 2023, according to the PGCB.

The yearly capacity payment for the Adani Godda plant has been estimated at Tk 3,657 crore.

The government is also liable to pay 4–6 per cent interest on millions of dollars borrowed for building these power plants.

‘Electricity price will rise even more frequently in the coming days,’ said Consumers Association of Bangladesh energy adviser M Shamsul Alam.

‘People will continue to pay for corruption and commission business in the power sector,’ he said.

The BERC has already recommended for raising the bulk power price to Tk 8.16 from the existing Tk 5.17 per unit. The retail unit power price is Tk 7.13.

A final decision on this proposed increase is likely by August.

The increase in power price would render electricity produced in Bangladesh far more expensive than electricity produced in countries such as India, Nepal and Bhutan – where per unit electricity is produced at less than Tk 5.

In 2021, the average annual per capita electricity consumption in Bangladesh was 488 kwh, lower than Bhutan with 11,599 kwh, India with 1,218 kwh, Sri Lanka with 734 kwh, and Pakistan with 579 kwh, according to Our World in Data, an UK-based online publication.

Bangladesh is only ahead of Nepal with 106 kwh per capita electricity consumption.

The average annual per capita electricity use in the USA is 12,487 kwh and the UK 4,479 kwh.

Power Division secretary Habibur Rahman justified the overcapacity on the grounds of diversifying the energy mix for electricity production and security.

‘Rental and quick rental power plants are also being abandoned for decreasing capacity payment,’ he said.


Emran Hossain, NewAge

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