Summit power plant contracts likely to be extended

After selling electricity to the Bangladesh Rural Electrification Board for 15 years, three power plants of Summit Power Limited are likely to get an extension of another five years.  

All processes are almost complete except for approval from the Cabinet Committee on Government Purchase.

The Rural Electrification Board is expected to buy electricity from these plants in the next five years under the "no electricity no payment" method. 

Levelized tariff for these plants is Tk2.54 per kilowatt for one year and was Tk2.95 for the last four years, whereas the average tariff of the gas-based private plants was Tk2.47 per kilowatt in the 2018-19 fiscal year. 

To finalise the contract, the Power Division has already prepared a summary report for the Cabinet Committee on Government Purchase. If it gets the go-ahead, the division will spend Tk279 crore to purchase electricity in the next five years. 

However, the process has come to a halt due to the ongoing nationwide shutdown to curb the spread of coronavirus.  

"The issue is still under consideration. The Cabinet Division will decide if we will renew the contract or not," Power Division Secretary Dr Sultan Ahmed said. 

The three private power plants are Ashulia Power Plant Unit I, Chandana Power Plant Unit I and Madhabdi Power Plant Unit I. These gas-based power plants have a total capacity of 33 megawatts, each with a capacity to generate 11 megawatts of power. 

Under Summit's first contract with the Rural Electrification Board, the plants came into operation in 2003 and the contract expired on September 1, 2018. 

Even after that, these plants continued to supply power to the board's distribution area, based on the "no electricity no payment" method.

Speaking to The Business Standard, Rural Electrification Board Chairman Major General (retd) Moin Uddin said, "These plants are going to be cost-effective for us as their primary source of energy is natural gas." 

However, experts criticised the contract renewal as the country has surplus electricity now.

Professor Dr M Shamsul Alam, energy advisor to the Consumers Association of Bangladesh, said there is no reason for renewing the contract for these plants as the public power plants are shut now due to a gas crisis.

"These plants have been in operation for 15 years. Hiring them for another five years will never be cost-effective."

The power generation capacity of the country – including captive power – is around 22,000 megawatts now, while consumption has been fluctuating between 11,000-12,000 megawatts this summer. 

The Bangladesh Power Development Board even faced loses as electricity consumption often dropped to 7,500-8,000 megawatts during winter. 

However, as per the Power System Master Plan 2016, the country has a target to increase its power generation capacity to 24,000 megawatts.