Idle power plants paid Tk 90b: study
A new study released on Monday by the US-based Institute for Energy Economics and Financial Analysis said that Bangladesh paid idle power plants Tk 90 billion in 2018–19 for it could use only 43 per cent of the generation capacity.
The economic downturn due to the COVID-19 crisis will cause a fall in the power demand pushing the already subsidised state-owned Power Development Board winto even deeper financial crisis, said the study.
‘Based on our own forecast of power demand growth, which takes the economic impact of COVID-19 into account, we calculate that Bangladesh is on course to have capacity that can generate 58% more power than the nation needs by 2030,’ said a press release quoting Simon Nicholas of IEEFA, the lead author of the study report.
The report published online misforecasts from Bangladesh’s power sector master plan that aimed at developing power capacity-based expensive fuels such as imported coal and LNG responsible for throwing the country into such a situation.
The state minister for power, energy and mineral resources Nasrul Hamid said that Bangladesh’s generation capacity was greater than required due to technical reasons.
‘The power demand changes cosiderably because of high seasonal variation in the country,’ said Nasrul.
He said that it is normal to have the capacity to generate 22,000 MW when the demand is about 12,000 MW.
He also said that Bangladesh could not afford to switch to renewable energy because of establishment costs and lack of available land needed for running solar power plants.
The report said that Indonesia followed a similar power sector development plan and saw a 75 per cent increase in subsidy that rose to $5 billion in 2018.
The IEEFA predicted that the Indonesian government’s subsidy would likely rise to $7.2 billion next year.
The study said that if Bangladesh continued pursuing the misleading power sector development plan with the establishment of all the planned coal-based power plants the resulting overcapacity would require the government and the consumers spend more on power.
The study said that a part of the impending power sector disorder already got manifested in the 1,320 MW Payra Power Plant, which is set to count Tk 160 crore a month as capacity payment for half its capacity not used.
The ideal reserve power margin is 10 to 20 per cent but the power sector master plan of Bangladesh has decided to keep it at 25 per cent, the study added.
Still, the master plan said, the reserve power margin would reach as high as 69 per cent in 2020, noted the study.
The study said that Bangladesh failed to achieve the power growth as forecasted in the power sector master plan and the coronavirus crisis only worsened the situation by slowing down the economic growth.
The state-owned power company of Indonesia, PLN, already predicted a 15 per cent fall in its annual revenue income because of the coronavirus crisis while Bangladesh is also faced with revenue crisis, said the study.
The IEEFA study said that in 2015–16 the power sector subsidy stood at $28 billion in Bangladesh and it kept rising ever since.
The PDB estimated that it would lose Tk 90 billion in 2020–21. Bangladesh increased power tariff eight times in last decade.
The IEEFA said that the coronavirus crisis slowing down the construction of coal-based power plants offered Bangladesh an opportunity to look back at its power policy and re-evaluate it.
It said that overcapacity became a problem in countries such as Pakistan, India, Indonesia and Egypt where the governments were showing growing interest in clean energy.
‘The COVID-19 induced delay to coal power projects gives Bangladesh an opportunity to reset energy development policy and redirect resources to support economic fundamentals and energy price stability to enable the realization of ‘Vision 2041’, said the study.
News Courtesy: www.newagebd.net
