Payra power plant idly swallows subsidies

The Patuakhali-based Payra 1320 MW Thermal Power Plant–Bangladesh’s largest power plant–remains partially idle because the transmission line to the national grid is not complete. It consumes power sector subsidies in the name of 'capacity charge'.

According to officials concerned, the Payra plant’s 660MW unit (1st phase) started power generation in May last year, and after six months, another unit with the same capacity was commissioned. Currently, the two units are not operated simultaneously as installation of the Aminbazar-Mawa-Gopalganj-Mongla transmission line is not complete yet.

Nasrul Hamid, state minister for the power, energy and mineral resources ministry, told Prothom Alo, “We hope the transmission line would be set up next year. The coronavirus situation hampered the work. Until can we transmit power through the line, we have to pay the capacity charge.”

He added that the under-contract firm delayed setting up transmission line. In a fresh move, the China Machineries Company will complete the remaining work.

So far, only the Payra plant among the government’s mega power projects has commenced power generation. In 2014, state-owned North-West Power Generation Company Limited (NWPGCL) and China Machineries Company (CMC) inked a deal to build the Payra plant. In this regard, a joint venture Bangladesh-China Power Company Limited (BCPCL) was established to operate the Payra plant.

On 14 October 2016, construction of the Tk 210 billion-worth Payra power plant project started.

Before the Payra plant, the 450MW Meghna Power Limited in Narayanganj was the biggest plant in the country. The under-construction Rampal plant in Bagerhat would generate 1320MW electricity. Besides, construction of the 1200MW Matarbari plant is underway in Cox’s Bazar.

The terms for construction of the power plants bind the contract-awarding party (government) to pay capacity charges for the months the constructed power plant lays idle.

As the Payra plant is still incapable to utilise its full capacity, the Bangladesh Power Development Board (BPDB) has been paying Tk one billion as capacity charge to the BCPCL.

BPDB chairman Belayet Hossain told Prothom Alo that Power Grid Company Limited (PGCB) has been paying one-fifth of the capacity charge as it fails to set up the transmission line in due time.

Paying capacity charge is not new in the country. For the last couple of years, power generation capacity remains high compared to the electricity demand in Bangladesh. As a result, plants with unused generation capacity are receiving subsidy.

The US-based Institute for Energy Economics Financial Analysis (IEEEFA) published a report last year, saying only 43 per cent of the total power generation capacity was utilised in Bangladesh. The report added that the government was subsidising idle power plants with Tk 90 million as capacity charge every year.

According a power division estimation till 10 June this year, there are 149 power plants: 57 state-owned, 91 independent and one joint venture, in Bangladesh. In total, the power generation capacity is a bit more than 22,000MW (excluding captive and off-grid renewables). In contrast, every day around 13,000MW power is generated.

The non-government Centre for Policy Dialogue (CPD) published a report in June citing that 60 per cent of the country’s power generation capacity remained unused. The price of electricity was going high because of subsidising idle plants.

For the 2021-22 fiscal, the government has allocated Tk 490 billion in the national budget as subsidy, stimulus and for loans to different organisations. The power sector is the second largest (after agriculture) receiver of the government subsidy. This sector is subsidised with Tk 90 billion in the current fiscal.

According to the power division, electricity generated by one certain unit of the Payra plant directly transmits to Gopalganj and then is distributed among the sub-stations around Madaripur, Gopalganj, Barishal, Shariatpur, Faridpur, Rajbari and Bheramara (Kushtia).

Payra plant’s project director Golam Mawla told Prothom Alo that two units of the plant are not generating power simultaneously. “These machines should not lie indefinitely. The more these are operated, the more their efficiency increases.”

Power generated at the Payra plant will be supplied to Dhaka after installation of the Aminbazar-Mawa-Gopalganj-Mongla transmission line. According to the planning commission, installation of the transmission line—scheduled to be completed by December 2020--was started in 2016. The estimated cost of the installation project was Tk 25.05 billion.

However, the field report says otherwise. The installation work is facing challenges while setting seven transmission towers in the Padma River. The towers are being set within two kilometres of the Padma bridge. The bridge division is constructing 11 transmission towers in total along the Padma bridge.

PGCB project director for the Aminbazar-Mawa-Gopalganj-Mongla transmission line, Morshed Alam Khan told Prothom Alo that the installation project will progress further soon after the bridge division hands over the towers to them. “The second wave of coronavirus infection slowed pace of the works. That is why, installation of the transmission line by the next December is still uncertain,” he said.

Planning ministry’s implementation monitoring and evaluation division (IMED) officials also expressed their doubt over conclusion of the work by December. A IMED report published in June said progress of the installation works over the Padma river seemed slow.

The Payra plant project director Golam Mawla mentioned another problem. He told Prothom Alo that coal import for the plant from Indonesia is facing problems as coal-laden lighter vessels cannot navigate the Payra River smoothly.

According to the power division, the fraction of the national power generation capacity follows: gas-fired thermal power plants cover 52 per cent (highest), furnace oil-fired 27 per cent, diesel-fired 6 per cent and coal-fired 8 per cent. The rest of the electricity demands are met by hydropower and import. Single unit generation cost of power at the gas-burn plants is less than Tk 3. The oil-fired and coal-fired plants generate single unit of power at Tk 20 (highest) and Tk 7 respectively.

Sector related people have said that the Payra plant in full capacity would help reduce the average cost of power generation.

Consumers Association of Bangladesh energy adviser Professor M Shamsul Alam told Prothom Alo that the government has been facilitating power generation without adjusting the demand and supply. He termed the Payra plant case as wastage of taxpayers’ money. “Such wastage is not acceptable by any means,” he said.

*The original report appeared in the print and online editions of Prothom Alo, has been rewritten in English by Sadiqur Rahman.