None of the private entrepreneurs who won contracts from the present government to build long-term power plants have yet succeeded in installing them.
Since coming to power in 2009, the government awarded contracts to private entrepreneurs for the installation of 28 long-term plants which were expected to have started generating a total of 3,017MW of power by August 2013.
Now there are 26 contracts which had been due to provide electricity from last month — the government having scrapped two contracts due to the sponsors’ failure to arrange finance, according to the government reports.
The delay in setting up of the long-term plants has also had other knock-on consequences, forcing the government to extend the contracts with the expensive short-term rental plants.
The government has so far extended six contracts with private entrepreneurs by up to one and a half years and is now negotiating with five other rental power producers to extend the power purchase contracts by up to four years.
The long-term plants were part of the government’s plan to provide power generation for the next 15 to 22 years and were meant to mainly run either on furnace oil or natural gas.
Power Development Board officials, however, told New Age that after they were awarded the projects, most of these companies delayed signing electricity sales contracts for many months.
They claimed that this allowed the companies to avoid incurring financial penalties which the companies would otherwise have had to pay if they did not supply electricity within a particular time period after signing the contracts.
Sponsors involved in 10 projects have still not put their signatures to these contracts with the Power Development Board or the Rural Electrification Board.
In addition, sponsors concerning 10 out of the 18 projects for which contracts have been signed, have failed to submit papers to the authorities setting out the sources of financing for their projects (known as ‘financial closure’).
Four other projects, where the contracts have been signed, are delayed due to problems in allocating land for the power plants.
Regent Energy and Power Ltd’s 108MW plant at Ghorashal, Midland Power Company’s 51MW plant at Ashuganj and Summit’s 335MW plant at Meghanghat in Narayanganj are expected to be the first of the delayed projects to come into operation.
Summit Group’s chairman Aziz Khan said that the plant would supply electricity from October, 2013.
Aziz claimed that Summit was on schedule to implement two of its plants, Meghnaghat 335MW one and Bibiyana 341MW plant (2nd unit).
He said that the company was expecting that the government would extend the deadlines for implementation of the two plants because of the number of days which were wasted due to hartals.
The government, when it came to office in early 2009, gave priority to encouraging the involvement of private investment in the power sector saying that it was not possible for the state-run agencies to arrange the huge investment required.
Till July this year, it has signed contracts to set up 69 plants which would be able to generate a total of 9,857MW of power — with 28 plants set to be built by the public sector and 41 (including short term plants) by the private sector.
So far, however, only 15 public sector long-term plants with a combined generation capacity of 1,223MW of power and 20 private short-term rental plants with a combined generation capacity of 1,653MW of power have come into operation.
The sponsors of plants where contracts have been signed, but the plants have not yet come into operation include: Barkatullah Dynamic at Patenga, Regent Energy and Power Ltd, Midland Power Company Ltd, ECPV Chittagong Ltd, Sinha People’s Energy Ltd, Digital Power and Associates, Power Pac Mutiara Consortium, some companies owned by Awami League’s parliamentarian Aslamul Huq, Sinha Energy Ltd, Raj-Lanka Power Ltd, Dhaka Northern Power Generation Ltd, Dhaka Southern Power Generation Ltd, Lanco Infratech Limited and Solarium Power.
In addition to the 27 awarded contracts to the private sector, the government has awarded two further contracts for coal-based power plants, which are due to start from 2015.