PDB gets 1,400MW coal power from Dec at double the cost

Infographic: TBS

After suffering from months of power cuts caused by global hike in fuel oil prices and a dollar crisis, Bangladesh is set to add more than 1,400 megawatts of coal power from December, according to the Bangladesh Power Development Board (BPDB).

The addition to the grid will come from the newly-built Rampal 1,320 MW and Indian Adani Group's Godda 1,600MW coal power plants but both plants would supply half of their capacity in the beginning. Electricity from the Godda plant will be imported through a transboundary transmission line.

Due to the high cost of coal in the international market, the power cost from both plants will be much higher than estimated earlier.

Whereas Rampal's per kilowatt hour (or a unit) was originally estimated to be Tk7.7, it will now cost Tk14. Similarly, the Godda power will cost Tk15 per unit instead of the original estimation of Tk8.71.

Currently, furnace oil-based power costs around Tk15 per unit.

The government turned to coal-based power to increase energy security and save costs.

The new addition is equal to the peak load-shedding of last summer when the government had to shut down diesel oil-based power plants to save dollars in the wake of a steep hike in oil and liquid gas prices in the international market.

Sources said if the government refrained from taking power from the Godda power plant when it goes to full production, it would cost the state coffers Tk300 crore in monthly capacity charges.

Similarly, the capacity payment for the Rampal plant at full capacity would be Tk250 crore.  

Capacity charge is a penalty paid to the plant owner for failure to buy a certain portion of power readily available.

BPDB sources said while the Adani power supply and the Rampal plant will start operation in December, neither would be fully utilised before March when power demand – down during winter – shoots up again.

"Both the plants will supply power from next year when we will have demand due to irrigation and the summer season. Then this electricity would have a positive effect on the demand-supply management rather than any negative impact," said Mohammad Hossain, director general of the power cell of the policy formation wing of the Power Division.

Imran Karim, president of the Bangladesh Independent Power Producers Association (BIPPA), said the commissioning of large coal-based power plants would be a cost-saving option as a whole.

"If the spot LNG price remains at $30 per MMBtu [one million British thermal units], the cost of per unit electricity generation would be Tk30. Whereas the generation cost per unit of coal and furnace oil-based electricity is only Tk14kWh. Overall, the coal-based power plants are going to be a cost-saving option for the country," said Imran Karim.

The BPDB this year has been facing a lot of financial challenges amid energy price hikes, rendering it unable to clear dues to private power companies.

The BPDB owes around Tk20,000 crore to these power producers, a sum amassed over five months.

The decision to turn to two new plants has also raised the question of whether this would be a further burden to the BPDB.

SK Aktar Hossain, member (Finance) at BPDB, said the down-trending fuel price and regular subsidy disbursement from the Finance Division are helping the organisation to normalise the fund crunch.

"The recent bulk price hike is also going to be another big support for meeting the IPP [independent power producer] bill pressure even after the commissioning of the large coal-fired power plants," he said.

Coal-fired plants have become a hot button issue at a time of increased focus on the impact of climate change.

In a report in April, the Global Energy Monitor said that even after ditching coal projects of 10.4 gigawatts (GW) capacity in 2021, ongoing projects would nearly quadruple the 1.8GW coal power capacity in Bangladesh.

"In Bangladesh, a combination of high coal prices and guaranteed purchase agreement are putting consumers and the Bangladesh Power Development Board in a tough situation," Flora Champenois of Global Energy Monitor had said at the time.

"The false promise of coal being easy and cheap has turned out not to be true, and the country's dependence on coal is becoming an increasing drag on its economy."

Adani plant's electricity cost

Like other IPPs, the cost of power from Adani's Godda power plant is going to be determined based on the coal price in the international market. The capacity charge will remain a fixed cost.

As per the New Castle index, high-quality thermal coal with a calorific value of 6322kCal/kg now costs $350 per tonne. Using these, the fuel cost would be around Tk17-18 per unit.

But Adani Godda power plant will use a comparatively lower quality, cheaper coal at a cost of around Tk12 per unit, said sources at the BPDB.

On the other hand, Adani Godda will receive Tk3.26 as the capacity charge per unit, as per the contract.

Altogether, the overall generation cost of per unit electricity from the Adani Godda power plant will stand at over Tk15 kWh.

According to the contract inked in 2017, Adani Power was supposed to supply 1,496 MW of electricity for 25 years from December 2021.

Due to the pandemic, however, the project completion was delayed and rescheduled for December 2022.

Rampal plant to start production on limited scale

The much criticised Maitree Super 1320 MW Coal-fired Power Plant has started generating electricity on a test basis from its location at the edge of the World Heritage site of the Sundarban mangrove forest.

The plant is scheduled to start commercial operation in the last week of December, said officials at the BPDB.

"At present, we are getting limited amounts of electricity from the Rampal plant as part of its test run. The first unit of the plant is likely to commence commercial operation next month," said BPDB's spokesperson Shameem Hasan.

Last September, Prime Minister Sheikh Hasina and her Indian counterpart Narendra Modi jointly inaugurated Unit-1 of the 1320-megawatt Maitree Super Thermal Power Project in Bagerhat's Rampal.

The plant was proposed by the Bangladesh-India Friendship Power Company Limited (BIFPCL) as a joint venture of the BPDB and Indian National Thermal Power Corporation Limited (NTPC).

The first unit of the plant was scheduled to commence power generation from February 2021 and the second unit from  August 2021.

Later, the dates shifted to March 2022 (Unit-I) and July 2022 (Unit-II).

In February 2022, the dates were extended to June 2022 and November 2022.

The announcement of the plant was met with heavy protest by environmentalists, who said the plant was a threat not only to the Sundarbans but also the greater south and southwestern region.

IPPs yet to receive June bill for producing electricity

There are around 50 private power companies in the country today, many of which are still owed money by the BPDB.

As per the power purchase agreement with the private power producers, the BPDB is supposed to pay the bill for electricity to the producers within two months of the purchase date.

But the BPDB is failing to do so since fuel price volatility was seen in the global market after the Russia-Ukraine war broke out. The subsequent devaluation of the local currency against the dollar only served to exacerbate the situation.

Currently, the BPDB owes five months' electricity bills – around Tk20,000 crore – to the IPPs.

On the matter, Imran Karim said the arrears are neither increasing nor decreasing.

"But the government is working to solve the issue by next month," he said.