An industry’s own power generation system, known as a captive power plant, planned to be established in economic zones of the Economic Zones Authority (BEZA), is being viewed as a threat to the Bangladesh Power Development Board (BPDB).
Once the off-grid or commercial power plants are established, consumers of economic zones would buy electricity from them instead of from the national grid. As a result, the BPDB may face huge financial loss and also face uncertainty in implementation of the power system master plan (PSMP) 2016, an official said.
PSMP was prepared aimed at formulating an extensive energy and power development plan up to the year 2041, covering energy balance, power balance, and tariff strategies.
According to BPDB, the country’s power generation capacity has increased as per the plan. However, the demand has not increased as per the forecast. The current grid electricity generation capacity stands at 20,282MW against the maximum demand of 14,000MW.
The power plant capacity under construction in the pipeline for grid supply may remain unutilised. The BPDB has already been under serious pressure for payments to idle power generation plants.
They have already been facing trouble for over 40 percent of unused electricity, which is encouraging captive power users to use grid electricity through the introduction of reliable distribution systems.
The government has been facing growing demands for subsidy payments as well for the energy and power sector every year.
Following the facts, the BPDB in a letter to the Power Division requested the BEZA to submit term-based required electricity to ensure optimum utilization of power.
Consequently, optimum utilization of both public and private power plants under BPDB in line with PSMP-2016 would not be possible, it added saying that the plan also includes consumption capacity of economic zones under BEZA.
BPDB has already inked power purchase agreement as a single buyer with the power project implementation companies at both public and private sector levels.
Under the power purchase agreement, PDB has to pay monthly capacity payment to the companies. Besides, payment of loan and interest is involved in the public power plants.
Top officials said the subsidy on costly electricity prices and MNG would also increase if there is no coordination between the BPDB and Economic Zones Authority over using electricity from power grids.
As the country is now capable of generating sufficient electricity and the captive power plant efficiency is very low, the government is likely to restrict captive power plants. To this end, it has taken initiatives to reduce gas consumption in the captive power plants in phases and diverting to national power plants, the energy division official said.
The energy division made the decision in light of the country’s increased capacity to generate surplus electricity and less efficiency of the captive power plants. On the contrary, the power division is going to supply uninterrupted electricity, and is also considering reducing electricity tariff in the industry.
Sources said that earlier Prime Minister Sheikh Hasina had instructed to gradually reduce giving gas connection to captive power plants and to divert the saved gas resources to national power plants.
Based on the PM’s directives, gas consumption in captive power plants has dropped to 15.12 percent now from 17.10 percent in 2015. However, the government has also increased gas unit prices to discourage captive power plants in the last few years.
Earlier, State Minister for Power, Energy and Mineral Resources, Nasrul Hamid, said ‘the captive power plant efficiency is only 15 percent, whereas national power plant efficiency is 55 percent. That’s why we are discouraging industrialists to use gas in captive power by increasing gas price.’
Nasrul Hamid further said “We have sufficient electricity. The government will ensure uninterrupted electricity for all at an affordable price. No need to use gas in captive power.”
Currently, there are around 3,000 captive power plants having capacity of producing 2800MW of electricity in different factories. Of these, around 2500MW are gas-based and gas consumption is 480mmcfd. The government is supplying gas at low cost to the captive power plants, but efficiency is 40 percent lower than that of the national power plants.
A Power Division official said, “The government is now more concentrated on energy saving. Gas to captive power plants is being wasted. So, the government wants to use the gas in national power plants and reduce gas supply to captive power plants and gradually close it.
According to the ministry, in those industrial areas where uninterrupted power supply is possible, gas supply for captive power plants will be cut off. To this end Power distribution companies have been directed to prepare a list of such areas expeditiously. However, captive power plants will be available in areas where there is a shortage of power distribution systems.
An additional secretary of the power division said that according to the plan, the power generation capacity will be 40,000 MW by 2030. Now if captive power is encouraged in industries, grid electricity will not be used properly. This will cause huge financial loss to the government.’
