Dhaka, Bangladesh (BBN) – International Chamber of Commerce, Bangladesh (ICCB) has advocated for setting up domestic coal and gas-based power plants to end the growing power and energy crisis.
“Businesses would like to reiterate its earlier recommendation for setting up domestic coal and gas-based power plants to meet the power crisis under a more realistic and achievable target,” the ICCB said in the editorial of the latest issue of ICCB News Bulletin.
According to the World Bank, the fuel subsidy during the last fiscal year (FY12) ranged between BDT 52 billion to BDT 56 billion, about 0.6-0.7 per cent of GDP.
Experts suggest that the government could have increased installed capacity by about 700 MW. In order to avoid monumental expenditure on subsidy, there is no alternative to go for gas and coal as fuel for power generation.
The ICCB said some steps like rental, quick rental and peaking plants were undertaken on a fast-track basis to address the growing power crisis.
“But these steps apparently did not produce desired result. Moreover, due to high per unit cost of rental power plants, the government has to bear huge burden for buying electricity and selling at a subsidized rate,” the ICCB said.
According to experts, the age-old power plants should be totally replaced in phases instead of spending money for repair and renovation on an ad-hoc basis as these can no longer operate at desired level and thus remaining a constant headache.
It is well known that gas is the ideal fuel for Bangladesh. Currently, the country is producing around 2,100 million cubic feet (mmcfd) a day against demand of 2,600 mmcfd, having a shortages of around 500 mmcfd. Emphasis, should, therefore, be given on further exploration of gas from the un-tapped reserves, modernization and expansion of distribution channel on a war footing to meet the shortages as well as for establishing gas based power plants and supply to the industries.
The other alternative and most in-expensive fuel for Bangladesh is coal. The country till now discovered 2800 MMTPA capacity extractable high quality bituminous coal in 5 coalmines spread over an area of 100 SqKm in Rangpur and Dinajpur. If mined through applying modern technology as used elsewhere, the country can ensure generation of in-expensive power. According to Power Sector Master Plan (PSMP), local coal is considered as 60% of the total energy source for generating 20,000MW coal-fired electricity by 2030 for 50 years or so.
Countries that have coal use it for power generation. India produces 64% by using coal, China 81%, Australia 76%, USA 49% and South Africa 94%. Bangladesh is a rare example of a country that does not use its excellent coal for power generation. It is not known why?
The FY13 Budget of BDT 1.91 trillion having a deficit of BDT 520.68 billion or 5% of GDP, which the government plans to meet either from external resources or from bank borrowing; is going to be extremely troublesome.
In FY13, bank borrowing is targeted at BDT 230 billion, which is likely to increase manifold should the government ultimately go for local resources for construction of Padma Bridge; causing serious strain in productive economic activity.
Bangladesh faces an alarming situation in meeting the increasing demand for credit facilities by the private sector as well as energy to achieve the targeted growth rate of 7.2 percent in FY13. However, to achieve a respectable level of growth, if not 7.2%, power has to be ensured without any further delay.
In FY13 Budget, government has allocated BDT 95.44 billion for power and energy sector. The Finance Minister, in his budget speech, mentioned that due to increase in demand the government has revised the additional electricity production target to 8,294 MW from FY10 target of 5,000 MW by 2013, against which the installed capacity has been increased by about 2750 MW over a period of 22 months ending April this year. In other words, installed capacity has to be increased by 5,544 MW within the next 20 months to achieve the revised target.
“The question, therefore, arises as to how it is possible to achieve this production against the back drop of increasing installed capacity by 3161 MW in last three years or about 1000 MW per year,” the ICCB noted.
BBN/SSR/SI-20July12-8:44 pm (BST)