PM endorses RPP contract renewal until 2020Manjurul Ahsan
Prime minister Sheikh Hasina has approved a proposal from the power division to renew the contracts for the procurement of electricity from the ‘efficient’ rental suppliers in the private sector until 2020, officials said.
The proposal got the PM’s nod last week, they said.
The contract winners would, under this dispensation, get paid for the electricity they supply.
It would also entitle them to get the rental of their plants when the government, represented by Power Development Board, does not buy electricity from them at intervals during the contract period for one reason or another.
While lending her approval to the proposal, Hasina asked the power division to extend the contracts with short-term power suppliers to meet the shortage until 2020, they said.
The approval of the proposal meets the demand of the rental power suppliers in the private sector, said officials.
The prime minister holds the portfolio of the ministry for power, energy and mineral resources.
The rental-contracts require PDB to pay the capacity charge of plants, when it does not buy electricity from particular suppliers.
On October 6, the power division will hold a meeting with the interested rental power suppliers to settle the tariff issue, an official told New Age.
Earlier, the power division had tried to pursue the rental power suppliers to agree to contract renewals on ‘no electricity no payment’ basis on existing tariff, he said.
But the suppliers, for renewing the contracts, wanted guarantees that PDB would pay rentals of their plants for the periods it does not buy electricity from them.
The solution to the rental charge issue depended on policy decision from the minister.
They also demanded unchanged price of electricity for the extended periods of supply saying otherwise they would incur losses, officials said.
But this demand was not justifiable since the power suppliers recovered their investment on plants during the first contract period, varying from three to five years, they said.
On August 26, the power division held the first round of negotiations with five rental power plant owners: RZ Power, Precision Energy Ltd, Energies Power Corporation, DPA Power Generation Company and Khulna Power Company Ltd.
The government has decided to invite other rental power suppliers for negotiations, said PDB officials.
Suppliers agreeable to supply power on long term basis at low-cost are not available as yet, they said.
The government has, therefore, decided to renew the existing contracts under a law the government enacted in 2010 and extended for two years in 2012.
The law is entitled Speedy Supply of Power and Energy (Special Provision) Act, (Amendment) 2012.
From August 2010 to December 2011, the government allowed at least 15 private companies to set up 20 plants with a combined capacity to produce 1,653MW of electricity.
The government also signed contracts with them to buy the produce for three to five years on condition that they would get the rentals for their plants mostly run by liquid fuel.
PDB bought electricity from plants run by fuel oil at Tk 22 per unit or kilowatt-hour.
Until 2010, the average cost production per unit from PDB’s own facilities stood at Tk 2.62.
In 2012, the government renewed contracts with the owners of six gas-fired rental power plants for up to one year and a half.
Officials said that the government’s dependence on short-term power suppliers would continue for its failure to find out long-term and low-cost alternative since January 2009.
Fund crunch, short supply of gas together with half hearted approach made setting up of several low-cost power plants uncertain by public and private sectors for to generating about 5,000MW by 2017, said experts.
Now, about 20 per cent of power supplies from fuel oil fired rental plants in the summer months, said PDB officials.
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