Overcapacity in electric power sector an evergrowing concern: CPD

Overcapacity in electric power sector an evergrowing concern: CPD
Overcapacity is an evergrowing concern for the energy sector as it is creating fiscal and financial burdens for the united states, said the Centre for Insurance policy Dialogue (CPD) yesterday.

The power division has confronted rising fiscal and financial burden as a result of overcapacity related problems, which aggravated further during the Covid-19 period and would deepen in the post-COVID period, the think-tank said.

Payment of capacity expenses to power crops is a growing expenditure for Bangladesh Ability Development Plank (BPDB), particularly for rising unused and under-utilisation of capability, said Khondaker Golam Moazzem, exploration director of the CPD, in a paper.

The paper was presented at a virtual dialogue on "Covid-19 - Vitality Sector in National Budget for FY2020-21: Allocative Priorities and Alternate Proposals" organised by the CPD.

The power sector is one of the major regions of success of the federal government over the last 10 years, the CPD said. However the transmission and distribution systems didn't make considerable progress in commensurate with that of vitality generation.

The amount of overcapacity on June 16 of FY18, FY19 and FY20 was 9,437 megawatts, 8,806MW, and 10,216MW respectively. Through the same period, the rates of overcapacity was as 59 per cent, 46 % and 49.8 per cent respectively.

Such a higher amount of reserve capacity is against the 25 % target set in the energy Sector Master Plan and significantly higher than the 10 per cent reserve capacity maintained in growing countries, the CPD paper said.

The capability payment has considerably increased through the years: from Tk 1,790 crore in FY10 to Tk 8,929 crore in FY19, up 398 per cent.

The CPD needed reprioritisation of finances allocation of the energy division, particularly towards promoting clean energy by discouraging new investment in coal or fuel-based power plants in addition to retiring private sector quick rental power plants on a priority basis.

The Covid-19 has provided an chance to revisit existing approaches, operations, operations, cost and return of the ongoing power generation, distribution, transmission and related activities, the CPD said.

"It is a good period to rethink the energy sector development strategies because of redirecting the energy sector towards clean strength led sector by 2030 and 2041."

The power division must follow 'go-slow' policy in power generation-related projects both under public and private sector given the huge amount of overcapacity currently exists, the CPD said.

The government should get a clear exit plan for the quick rental power plants and really should slowly but surely phase out those projects, it said.

Nasrul Hamid, state minister for power, however, said there is absolutely no overcapacity.

Of the 23,500MW installed power generation capacity, 4,000MW is produced by industries through captive generation.

There is 10 per cent of de-rated potential. There are old vegetation with combined capacity of just one 1,500MW that are not used but have been put on standby and these plants would retire quickly, according to Hamid.

Therefore, the installed generation potential involves 16,000MW, he said. But the demand rose to 12,000MW even through the Covid-period, he said.

"I would have been around in trouble if there have been no Covid-19. Consequently, it isn't overcapacity."

"We have to put in place a maximum capability, whether it is used or not."

There is merely 19 per cent in excess capacity today in Bangladesh whereas it is 100 per cent in India and the US, he said.

Japan has programs to get $6 billion found in the power sector in Bangladesh, said the talk about minister. "We have received assurance for another $2 billion worth of investment."

"Why are they investing in Bangladesh? Because they're going for big manufacturing industries in Bangladesh. They are establishing ports in Matarbari."

So, the energy generation potential is increasing remember the future demand scenario, he said.

Of the energy plants, 35 % derive from liquid fuel and the government wants to get rid of them, according to the state minister.

"But we need to generate base-load and better power plants. We will work on them," he said, adding that power crops with capacity of 2,000MW would retire within the next three years.

On coal, he stated the federal government is reviewing its ideas on coal-based power crops because of falling rates of liquified gas.

"We will be keeping the 3 coal-based power plants," he said, discussing the plant life in Paira, Rampal and Matarbari.

He talked about the federal government plan on issuing bonds in Singapore or perhaps other big marketplaces to improve funds for power assignments together with enlisting public power assignments in the stock markets.

Bangladesh would require an investment value $30 billion if it wants to have a stable electricity within the next five years, he said.

The government is rightfully investing in distribution and transmission systems as the coronavirus pandemic has shown that modernisation of the systems is essential, said M Tamim, a professor of petroleum and mineral resources engineering of the Buet.

"The more reputable and efficient something is, the less reserve power a nation would need. Let's give attention to efficiency to ensure that we don't have huge reserve capacity."

The latest power sector get better at plan is very ambitious to start with and it requires to be looked into, he said.

"We have to have an authentic demand forecast. We don't want to under-provide. But if we undertake way too many projects and they are certainly not used properly, then they would affect the whole system and the overall economy."

The energy expert also discussed the Bangladesh Strength Regulatory Commission (Amendment) Costs, 2020, which was put in the Parliament to empower the BERC to make change in tariff more often than once per financial year.

It must be explained categorically how many situations the BERC can make alterations to the energy tariff, he said.

"The tariffs shouldn't be revised a lot more than twice as a way to protect the buyers. The conditions where it might be revised ought to be clearly defined."

It would not end up being possible to bankroll long-term projects if capability payment isn't given, said Imran Karim, president of the Bangladesh Independent Electric power Producers' Association.

Rehman Sobhan, chairman of the CPD; Fahmida Khatun, executive director; Mustafizur Rahman, a distinguished fellow; Mohammad Hossain, director standard of the energy Cell, and Siddique Zobair, a former person in the Sustainable Renewable Strength Development Authority, also spoke.
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