BD needs to reconsider power with Adani
Mahfuja Mukul: A total of 1,160 MW electricity is now being imported from India. In the last fiscal year 2021-22, the amount of electricity purchased from India has cost per unit Tk 6.11; Which is relatively affordable considering the upward fuel market conditions. However, if the Adani Group starts importing electricity, the price of electricity purchased from the center will increase the average import cost, industry stakeholders believe.
Adani Group has constructed a 1,600 MW coal-fired power plant at Godda in the state of Jharkhand, India, to export electricity to Bangladesh. Considering the energy market in the global market, if this electricity is connected to the country’s grid on a commercial basis, the cost per unit will be Tk 12 to Tk 16. Although it is difficult to accurately determine the price of electricity until the production starts, officials of the Bangladesh Power Development Board (BPDB) said.
Why prices rising?
BPDB imported a total of 764 crore 43 lakh 55 thousand kilowatt hours of electricity from India in the last financial year. The average cost of electricity per kilowatt has fallen to Tk 6.11, which is half of the cost per unit compared to local private power plants, rent-based power plants.
Currently, 1,160 MW of electricity is being imported from India. Out of this, 1,000 MW comes from West Bengal and 160 MW from the eastern state of Tripura.
Research institute ‘Institute for Energy Economics and Financial Analysis’ (IEEFA) has published a report on Adani’s electricity import costs from India. According to the report published last December, BPDB will spend $150 per megawatt hour to buy Adani Group’s electricity in Godda. The company’s price analysis showed that Adani’s electricity price fell by about $0.11 cents per kilowatt hour.
If the interbank dollar exchange rate is calculated at Tk 107 (January 25), the price of electricity per unit falls to Tk 16.5.
The IEEFA report also said that Jharkhand is best known as the coal mining state of India. However, the Adani Group plans to import the power plant’s fuel from its own coal mines in Australia. A 700 km railway line has been constructed from the port to the power plant for this coal transport.
The report mentions that Bangladesh will also have to bear the construction cost of this railway line. Besides, when commercial production starts, Adani will have to pay a capacity payment of US$ 30 million per month even if the power plant is not used.
Talking to the energy related parties, it is known that BPDB has got some advantage considering the energy situation and context in the world market. However, there is a downside to this advantage. The amount of electricity imported from India, power plants of that capacity have to be installed in the country. BPDB has to calculate the capacity charge for that capacity.
Energy expert and BUET professor Ijaz Hossain told that it is not always possible to get benefits in importing electricity. In context, we may have had an advantage. However, if the power purchase agreement is strategic, Bangladesh can benefit from such a crisis in the future. We now have more power generation capacity. A plan should be taken on how to save power sector by using own power plants.
BPDB had to struggle to generate electricity when the price of energy products increased in the world market in March last year. Despite rationing, the company could not reduce fuel consumption in power generation. On top of this, if the electricity of the Indian private company is imported to Bangladesh, then the cost of BPDB will increase further.
According to a source in the power department, Adani plans to connect electricity to the country’s grid in March this year. When the summer and irrigation season is in full swing, electricity can be brought in from Adani’s center to meet the power shortage. BPDB has already received an estimate of how much electricity will be brought from Adani. About 300 crore kilowatt hours of electricity is likely to be imported from the center in the current financial year. For this, the company will have to pay Tk 4,000 crore.
Meanwhile, BPDB fears a major shortfall in electricity production due to the increase in the cost of electricity fuel at an abnormal rate. In a recent public hearing, BPDB said that their revenue deficit may be as much as Tk 40,000 crore in the current financial year. Amid such fears of BPDB, electricity prices have been increased at the wholesale and retail levels. In this, wholesale electricity prices have been increased by 19.92 percent and retail electricity prices by 5 percent.
Due to the increase in the price of gas, there are indications of another increase in the price of electricity.
When asked about the issue of long-term electricity import contracts, the Director General of Power Cell, an electricity research organization, Engineer Mohammad Hossain said, “It will never be beneficial for us if there are more long-term contracts for electricity import.” Because if there is such a contract, we have to buy a certain amount of electricity.
In that case, if the price of fuel decreases, there will be a risk of increasing the financial loss in purchasing electricity. Because we have to pay capacity charge even if we don’t buy electricity. Bangladesh now has a lot of power generation capacity. As a result, the electricity department is working with the aim of utilizing the imported electricity as per the plan along with its own capacity.
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