Bangladesh plans to import as much as 9,000 megawatts (MW) of power from its four neighbours— India, Nepal, Bhutan and Myanmar by 2041 and the underlying reason for it is it costs less than the power produced in its plants.
Power generation capacity has grown by two and a half times in the last eight years, but the country is yet to bring its entire population under electricity coverage.
With efforts to raise investment, both local and foreign, through setting up more than 100 economic zones, Bangladesh’s electricity demand will shoot up in the coming years.
Bangladesh is interested in investing in hydropower projects in the neighbouring countries of Nepal and India, with Prime Minister Sheikh Hasina already approving a fund of $1 billion for it.
“Since the price is lower we go for import. The production cost is higher here due to fuel prices,” Mizanur Rahman, a member of the Bangladesh Energy Regulatory Commission, told Bangla Tribune.
Some 660MW power is now currently imported from India with a deal pending for another 500 MW.
Bangladesh Power Development Board (BPDB), however, hopes the import will start soon.
“We are waiting for the National Board of Revenue’s clearance for signing a deal,” said BPDB Chairman Khaled Mahmud.
Most of the power plants commissioned in the last eight years use fossil fuel as inputs, which have pushed the production cost up.
According to BPDB, furnace oil-fired Independent Power Plants sold per unit power to government at Tk 11.23 in the last 2016-17 fiscal while the Quick Rental Plants sold at Tk 9.64. In case of, diesel-run plants the price was a staggering Tk 27.27.
Meanwhile, the power imported from India cost the state Tk 5.52.
However, gas-fired power plants sell at a lower price — Tk 3.75 in 2016-17 fiscal.
The average price of power from local producers is way higher than the rate fixed for the additional 500MW power to be brought from India.
NTPC Vidyut Vyapar Nigam (NVVN), a wholly-owned subsidiary of India’s biggest power producer, will supply 300MW while Power Trading Corporation (PTC) India Ltd will supply the remaining 200MW.
The firms won contracts to supply power for 15 years in two phases — short term (Jun 1, 2018 to Dec 31, 2019) and long-term (Jan 1, 2020 to May 31, 2033).
According to people familiar with the matter, Bangladesh will buy power from NTPC at Tk 4.71 per unit for short-term and Tk 6.48 from January 2020 to May 2033.
PTC India will sell at Tk 4.86 per until December next year and at Tk 6.54 from 2020.
According to BPDB, the power generation capacity by furnace oil-based plants will rise by another 500MW next year, pushing the prices further higher.