Bangladesh Awards Quick Rental Power Fast Track Plant Contracts to Tackle Acute Power Deficit

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Bangladesh Power Development Board (BPDB) (Dhaka, Bangladesh) recently signed agreements with two quick-rental power companies, whereby the latter will supply the national grid with 100 megawatts (MW) of electricity over the next three years. One of the 50-MW power plants will be set up in about four months by DPA Power Generation International Limited, a power company floated by the Bangladesh Army, at the Pagla Army Camp in the Narayanganj district. The second 50-MW furnace oil-based power plant will be set up during the next nine months by Sinha Power Generation Company Limited (Dhaka, Bangladesh), near the Amnura Railway Station in the Chapainawabganj district.

DPA is a joint venture formed by the army operated Bangladesh Diesel Plant (BDP) Limited (Gazipur, Bangladesh), Primordial Energy Limited, and Germany's largest manufacturer of emergency diesel generator sets, Aggretech AG (Ruhstorf, Germany). Sinha Power Generation Company is part of the Sinha Group of Industries (Dhaka). While DPA will be paid 20 U.S. cents per kWh of power generated, Sinha Power Generation Company will be paid 11 U.S. cents per kWh during the three-year period.

According to Abul Kalam Azad, Secretary to the Power Division of the Ministry of Power, Energy and Mineral Resources, the Bangladesh government has signed 1,117 MW worth of agreements with different rental power companies as part of its plan to purchase 1,200 MW of power from quick-rental power plants. All the plants are expected to be ready within three to nine months. Azad said that about 175 MW of electricity is already being fed to the national grid and another 100 MW is expected to be ready by August 15.

BPDB Chairman A.S.M. Alamgir Kabir said that the government has completed the signing of 11 of the 13 planned agreements with various rental power companies. The remaining agreements are expected to be signed within this month. All the agreements have been signed under the government's ongoing fast-track plan, under which rental plant contracts are to be awarded to qualified companies without any tendering process. The government had taken the decision to award contracts for quick-rental power plants on the grounds that the tender procedures take a long time, while the nation's acute power shortage needed to be dealt with immediately. In March 2010, Prime Minister Sheikh Hasina modified the nation's procurement policy to accommodate high cost rental deals on an urgent basis. Azad is currently heading the high-level committee handling the quick-rental power plants deals.

Certain BPDB officials, however, have alleged that some of the tender processes were delayed on purpose so that the unsolicited deals could be pushed through quickly. There have been other allegations of unfair practices while signing the quick-rental power plant agreements.

The government currently sells power at an average price of 5 U.S. cents per kWh. However, the cost of purchasing power from QRPPs is going to be much higher, and the government will either have to give a subsidy of more than $718 million per year to BPDB, or the consumers will have to pay higher power prices. Bangladesh currently faces power deficits of 1,500 to 2,000 MW every day, leading to long periods of power outages. While the nation's power demands are about 5,000 to 6,000 MW, BPDB generates about 4,000 MW of electricity. The government plans to ramp up the country's power generation capacity to 9,426 MW by 2015.

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