Matarbari power tariff set to be Tk8.45 per unit – 60% lower than Rampal

Highlights:

• Matarbari's tariff will be over 40% lower than that of Payra and SS power plants
• The agreed-upon tariff is awaiting approval from the govt purchase committee
• Power from other coal-based plants currently costs Tk12-14 per unit
• Govt now planning to revise tariffs with other coal-based plants 

In a major breakthrough in bulk power tariff restructuring, the Bangladesh Power Development Board (BPDB) has managed to bring down the per-unit cost of electricity from the 1,200MW Matarbari Ultra Super Critical Coal-Fired Power Plant by around 60.60% compared to that of the 1,320MW Rampal Power Plant.

Through negotiation, the BPDB finalised the tariff structure with the Coal Power Generation Company of Bangladesh Ltd (CPGCBL), the parent company of the Matarbari plant, setting the per-unit electricity cost at Tk8.45 — which is Tk5.12 lower than the Rampal power plant's rate of Tk13.57.

In the 2022–23 fiscal year, BPDB reported that electricity from the 1,320MW Payra power plant cost Tk12 per unit. In comparison, power from the Matarbari power plant is 42% cheaper than that from both the Payra and SS power plants.

To finalise the tariff for the Matarbari power plant, the Power Division has sent the proposal to the Cabinet Committee on Government Purchase (CCGP) and is now awaiting its review at the upcoming meeting, according to officials.

Power and Energy Advisor Muhammad Fouzul Kabir Khan told TBS, "We have set the tariff for the Matarbari power plant at Tk8.45, which is significantly lower than other coal-based power plants. The new tariff structure is expected to be approved soon."

Govt mulls tariff renegotiation with other coal-based plants

With the Matarbari power plant now serving as a benchmark in the coal-fired power plant category, the Power Division is preparing to renegotiate tariffs with other coal-based plants, including SS Power (owned by S Alam Group), Rampal, Payra, India's Adani, and others.

Officials say the key argument for renegotiation is: if Matarbari can produce electricity at a cost of Tk8.45 per unit, why can't other plants do the same?

"The tariff structure of the Matarbari plant will serve as the benchmark for discussions," said Fouzul Kabir Khan. "Without a clear reference point, we can't properly address the need for restructuring. We don't want to appear as though we're arbitrarily imposing decisions," he added.

Electricity purchased from other coal-based plants currently costs between Tk12 and Tk14 per unit, according to Power Division officials.

In the meantime, due to the absence of an approved tariff structure for Matarbari, the BPDB is only making payments to the CPGCBL to cover coal import expenses. Once the tariff is approved by the purchase committee, the BPDB will clear its dues to CPGCBL for electricity supplied from the Matarbari plant.

When asked about the tariff, BPDB Chairman Md Rezual Karim said, "We are currently providing a lump-sum amount to cover coal imports for the Matarbari power plant. Once the tariff is approved, we will settle CPGCBL's outstanding bills at the agreed rate."

He added, "What we are paying now is lower than the fixed tariff. The payments are solely to cover coal import costs and keep the plant operational. We will settle the dues after calculating the amount of electricity we've received from the plant so far."

During the Engineering, Procurement, and Construction (EPC) contract phase, many had raised concerns that the Matarbari tariff might reach as high as Tk13 per unit due to repeated project delays.

"We adopted a cost-effective approach in the power sector," said Karim. "We analysed the actual costs of the Matarbari plant and designed a tariff structure based on those findings, keeping government subsidies to a minimum."

Rampal rejoinder and our reply 

The Bangladesh-India Friendship Power Company (Pvt) Limited, the parent company of the 1,320MW Rampal power plant, has issued a three-page rejoinder in response to a report published by The Business Standard on 20 April, titled "Matarbari power tariff set to be Tk8.45 per unit – 60% lower than Rampal."

In the rejoinder, the Rampal authority described the tariff comparison between the Rampal and 1,200MW Matarbari power plants as "misleading" and accused the report of "repeatedly targeting" the Rampal facility. 

It further alleged that the article aimed to "sensationalise" the issue and reflected a "grossly flawed and irresponsible analysis" of Bangladesh's power sector. The rejoinder also claimed the report could "misinform the public" and "undermine investor confidence" in a sector critical to the country's development.

Our response: We respectfully disagree with these claims. The report was based on the facts and figures from power division and BPDB which clearly shows that power cost from Rampal power plant was Tk13.57 per unit which is even higher than SS Power and Payra power plant in FY23

In our report we drew the comparison between the newly determined tariff of Matarbari with each of the mentioned power plants as the government wants to renegotiate tariffs of other coal based power plants highlighting Matarbari as a benchmark.

The Rampal authority did not refute the tariff mentioned in the report on Rampal power plant. In the report, we didn't write about the project cost and the determinant of high power cost as it was not our report angel. 

In the rejoinder, there are so many things we see invented by the Rampal authority which are completely non-existent in our report. TBS stands by its report.