Bangladesh cancels five coal-power plant projects

The Financial Express July 28, 2012

M Azizur Rahman

The government has cancelled the tenders submitted for all five coal-fired power plants, planned to generate up to 2,500 megawatts (MW) of electricity, at pre-qualification stage, which is seen as a major setback to generating low-cost electricity from base-load power plants, a top official said.

The state-owned Bangladesh Power Development Board (BPDB) cancelled the tenders in its board meeting Thursday due to ‘non responsiveness’ of the bidders, he said.

The coal-fired power plant projects are Dhaka 600-800-MW plant, Dhaka 100-300-MW plant, Chittagong 600-800-MW plant, Chittagong 100-300-MW plant and Barisal 100-300 MW plant.

The bidders submitted bids at the end of the bid submission deadline on June 7. Earlier, the BPDB extended the deadline for these five coal-fired power plants several times, citing ‘bidders’ requests’ as the reason.

The BPDB floated tender for building these power plants on build, own and operate (BOO) basis on January 22, and the initial bid submission deadline was March 22.

The BPDB was supposed to purchase electricity from the successful bidders and supply to the national grid for nationwide consumption.

The power plants were set to be operated on BOO basis for 25 years. The selected project sponsors were set to arrange and own suitable sites for the projects in greater Dhaka, Chittagong and Barisal areas. They were also required to arrange necessary funds for the projects.

All these power plants were planned to be run by imported coal. However, local coal was also planned to be utilised once the country starts extracting coal significantly from mines, BPDB Chairman A S M Alamgir Kabir had said previously.

The country currently has five discovered coalmines, having the reserve of around 3.0 billion metric tonnes. But coal production is limited to only one coalmine, having the extraction capacity of around 1.0 million tonne per year.

The new coal-fired power plants were planned to be implemented as part of the government’s move to augment electricity generation and ensure future power supply at an affordable cost.

The government has already awarded around three dozens of high-cost oil-fired power plants under its short-term plan to enhance electricity generation.

As a result, the country’s average electricity generation cost has soared to Tk 6.50 per unit (1 kilowatt-hour), said a BPDB official.

On the other hand, despite repeated hikes in electricity tariff its averageselling price still stands at Tk 4.02 per unit, he said.

The coal-fired power plants were planned to be built under the government’s mid-term planning to ramp up electricity generation at low cost.

The BPDB earlier awarded contracts and inked deals on June 27 to build three coal-fired power plants on BOO basis to generate a total of 1,087.34 MW of electricity.

A consortium of local Orion Group and Chinese Long King has been awardedall the three coal-fired power plant projects, to be commissioned by 2016.

Bangladesh’s overall electricity generation is now hovering around 6000 MW against the demand for over 7,500 MW. The government has a target to enhance electricity generation to 20,000 MW by 2021.