Extension for two more rental power plants likely

The government may decide in favour of two more gas-fired rental power plants allowing them to get another extension by two years.

Power Division of the government has moved proposals in this regard before the Cabinet Committee on Public Purchase for its approval.

Cabinet Committee is likely to approve the proposals when it sits on Wednesday next.

UNB says the two plants are Kumargaon 50 MW in Sylhet and Shahjibazar 50 MW in Habiganj. Both the plants are owned by Energy Prima Ltd, a local business house.

The government few months ago extended similar deals of a number of rental and quick rental power plants whose power purchase rates are higher compared to other independent power producer (PPP) plants.

The officials said if the plants of Energy Prima get the Cabinet body’s nod it will be third extension of their contracts with the government to purchase electricity by state-owned Power Development Board (PDB).

Of the two gas-fired power plants, Kumargaon started commercial operation on July 23 in 2008 while Shahjibazar began its commercial operation on November 13 of the same year under a three-year deal for each, according to Power Division documents obtained by UNB.

On expiry of the deals, each of them again got six years' extension on two occasions -- each time by three years - with the extension period being already expired.

Again Energy Prima moved its proposals for extension of the power purchase agreement (PPA) with the government by another five years for each of the plants keeping its tariff unchanged.

But a proposal processing committee of the Power Division recommended extending the existing deals with a little slide in the existing tariff.

Sources said the committee proposed US Cents 3.2739 per kilowatt hour (Tk 2.6191 per unit) for Kumargaon plant against its exiting tariff of US Cents 3.61 9 (equivalent to Tk 2.89).

It also proposed US Cents 3.3908 per kilowatt hour (Tk 2.7126 per unit) for Shahjibazar plant against its existing tariff of US Cents 3.7332 (equivalent to Tk 2.7126 per unit).

The officials said once the extension proposals are approved by the Cabinet body, the government has to pay about Tk 1.95 billion in the next two years for purchasing electricity from the Kumargaon plant and about Tk 2.04 billion from the Shahjibazar plant.

However, the government can save Tk 19.20 from each deal because of the reduced tariff, said the Power Division documents.

Many experts in the power sector believe the government could have saved more money from such extended deals had there been better negotiations as the existing plants do not need capital investment and some other expenses.

They said it is unexpected that the government continues to extend the deals of costly rental power plants even after 10 years of their installation.