Separate entity needed to deal with matters relating to coal

Labourers unload coal from a cargo vehicleFile photo

It has become essential to form a separate entity to deal with matters related to importing coal for both public and private power plants.

Some recent scams in coal price fixing made it even more necessary in order to protect the interests of the state, as there are various allegations against the coal-fired power plant operators.

Energy experts are of the view that only a separate and strong state agency can work effectively in this regard.

Officials of the state-owned Bangladesh Power Development Board (BPDB) would also prefer a separate entity to be responsible for both import of coal and also work as a monitoring body to check any untoward practices in coal purchase for the power plants.

“Since coal is a pass-through item in power generation and the BPDB has to ultimately pay the bills, there should be a state-owned entity which will import the coal directly and monitor the price of coal to be imported by any private power plant operator,” a top official of the organisation told UNB, preferring not to be named.

Supporting the idea of forming a state-owned separate entity for importing coal and supervising any coal import by the private sector, eminent energy expert Dr M Tamim said such a body for coal is essential for Bangladesh, just like the Bangladesh Petroleum Corporation (BPC) exists for hydrocarbons.

“We can form a body like Coal Bangladesh like Coal India in our neighbouring nation,” he told UNB.

He noted the reality that Bangladesh does not have any experience in coal import.

So if any company manipulates coal prices through underhanded dealing with suppliers, it will be difficult to identify such unfair means for non-experienced officials, he added. 

The coal price issue came into the forefront in recent days following the unearthing of the Indian Adani Group’s power purchase agreement (PPA) with the BPDB, and controversies surrounding the steep purchasing price for coal quoted to BPDB by Adani Power.

Adani Power recently sent a request for BPDB to issue the demand note, where the coal price was quoted at $400 per metric ton (MT) - far above what BPDB officials believe it should be given the present state of the international market.

“In our view, the coal price they have quoted ($400/MT) was excessive - it should be less than $250/MT, which is what we are paying for the imported coal at our other thermal power plants,” the official said.

They mentioned that the price of coal is coming down in the international market.

To adjust the coal price,  the BPDB sought a revision to the PPA it signed with Adani Power Ltd for importing electricity from its 1600 MW thermal power plant in Jharkhand, India.

Against the backdrop of a heated debate over the issue, the government formed a review committee, headed by Power secretary Habibur Rahman, to analyse the existing deals signed by the public, private and joint venture power companies, including the one with Adani, to import coal for use in power generation.

The nine-member high level committee was formed on 23 January and its first meeting was held on 20 February.

Besides the Power secretary, the committee also includes the chairman of Bangladesh Power Development Board (BPDB), additional secretary of Power Division (coordination), representatives from the Prime Minister’s Office, finance ministry, and commerce ministry; the chief engineer (power generation) of BPDB, managing directors of the power generation companies, and the deputy secretary (development) of the Power Division, who will also act as member secretary of the committee.

About the outcomes of the review committee meeting, Power secretary Habibur Rahman said the committee needs to sit in more meetings.

“It’s too early to give any substantial outcomes right at this moment…We need to hold more meetings”, he told UNB.

Official sources said the review committee was formed following the report that Bangladesh will incur a financial loss of Tk 700 crore per month and Tk 8,400 crore annually due to the “faulty deal” signed with Adani Power to import electricity from its coal-fired 1600 MW Godda plant in Jharkhand state of India, first reported by UNB in January.

The BPDB sent a letter to the Adani Group seeking a revision to the existing PPA following the request it received in relation to opening LCs (in India) to import the coal that will be used as fuel for the 1,600 MW plant in Jharkhand.

The BPDB sent the letter date 23 January referring to state minister-led delegation’s recent visit to the Adani plant mentioned, “During the discussion your side also opined that suitable mechanism will be devised to reduce this inconsistency of coal price by adjusting/changing the coal pricing mechanism of the power purchase agreement (PPA)”.

BPDB officials alleged that the price of coal for the Payra power plant was set at 15-16 per cent higher than the market price in connivance with corrupt officials.