Rental power cannot be a substitute for our own generating capacity. We made mistakes in the past by not increasing our generating capacity. Let us learn from our mistakes and use our meagre resources judiciously.***

IT is reported that the cabinet purchase committee in its meeting on April 29 approved two rental deals for 300 MW of power to ease the present power crisis by August. The power ministry had earlier initialled contracts with British Aggreko for installing 200 MW power units in Khulna and Ashuganj, and with local Desh Energy for a 100 MW unit in Siddhirganj. The plants would operate on diesel.

When the contracts were initialled, the purchase price of electricity was not announced and, as a result, there was a lot of speculation on the matter in the local press. Now we have more information available, not only on the purchase price but also on the monthly subsidy the government will pay to Power Development Board (PDB) to cover the loss. This will stop further speculation on prices but will raise more serious questions on the wisdom of signing of three-year deals with the rental companies.

Aggreko will sell power to the PDB at Tk.14.4 per kWh and Desh Energy at Tk. 13.32 per kWh. The PDB will sell it at a rate of only Tk.2.37 per kWh, incurring a loss of Tk.10.95 to Tk.12.03 per kWh. To make up the loss, the purchase committee in principle decided to provide the PDB a monthly subsidy of Tk.200 crore. During the contract period of three years, the total amount of subsidy will thus be Tk.7,200 crore for the two deals.

After three years, the rental companies will take back their power plants and PDB will be obliged to replace them by building additional 300 MW of generating capacity that will cost approximately Tk.2,200 crore more.

Bangladesh is facing a serious power crisis now. The shortfall in the supply of electricity during the peak period is estimated to be 2,000 MW, which is about one-half of the present available generating capacity. As a result, we are experiencing several hours of load-shedding everyday. The crisis had been created by the past successive governments, which committed a series of mistakes by delaying the much needed power projects.

As it takes 3-4 years to build a conventional steam power plant or a combined-cycle power plant, the government has decided to buy electricity from foreign and local rental power companies who have readily available diesel power generators, which can be installed within a matter of months at any location. It is reported that PDB may buy 500-1,000 MW of rental power to overcome the present crisis.

Normally, rental power is used for short periods only during an emergency or as a stand-by facility for any big sporting event, international conference, exhibition etc. Use of high cost rental power for years by a utility appears to be a rare and expensive luxury.

There is nothing wrong in buying rental power for a short period and at a

reasonable cost.

It is understood that the government has taken this step out of desperation, even though there were cheaper alternative methods of solving the present power crisis, for example, by utilising the captive (in-house) power plants in various industries by subsidising the extra cost of fuel they would thus incur. What worries us most is the high purchase price and the duration of the contracts for the rental power.

Recently, I came across some interesting information on modern diesel power plants. The two-stroke slow-speed diesel generator sets now available in the market have very high fuel efficiency, around 50 percent, compared to combined-cycle plants. These plants can operate on any fluid fuel like natural gas, fuel oil or diesel, and are available in sizes up to 70 MW at an estimated cost of Tk.100,000/ per kW, including buildings, transmission line, substation etc. Unlike other plants, these generating sets, which are designed for continuous base-load operation, can be built in 12 months and have a life expectancy of25 years.

Why should the government go for a three-year contract for 300 MW of rental power, paying a subsidy of Tk2,400 crore per year, whereas we can buy three diesel sets with a total generating capacity of 210 MW with the same amount of money? Instead of going for a three-year contract, it would be wiser and more advantageous to go for a one-year contract only.

With the amount of subsidy that will thus be saved by not continuing with the deal for two more years, i.e. Tk. 4,800 crore, the PDB will be able to buy and install six units of 70 MW diesel generating sets with a total capacity 420 MW within a period of 12 months, if ordered now. If furnace oil is used instead of costly

diesel, these plants can generate electricity at a much cheaper rate because of their high efficiency.

As a matter of fact, the government could have taken such a decision a year ago, and have the plants delivered by now. They could thus avoid buying power from rental companies and save Tk.2,400 crore annually. Having been practically indecisive for the first year in

office, the government is now rushing for contracts for power plants.

Whatever the government does, it must do so prudently and in the best interest of the country. After all they are dealing with public money. No government has the right to waste public money by paying subsidies for high-cost rental power for three years when better and cheaper alternatives are

available.

Rental power cannot be a substitute for our own generating capacity. We made mistakes in the past by not increasing our generating capacity. Let us learn from our mistakes and use our meagre resources judiciously.

Dr. Abdul Matin is former Chief Engineer of Bangladesh Atomic Energy Commission.