Loss-making BPDB finds cross-border power import a low-cost option

After gas-fired power generation, the import of electricity from neighbouring India appears to be the second cheapest option for Bangladesh.

Indian electricity that Bangladesh has been importing through its eastern and western borders is around 38.27% cheaper than what local independent power producers charge per unit on an average. 

When compared with the local liquid fuel-based electricity cost, the cross-border traded electricity is around 107% cheaper.

Thus, the neighbouring country's electricity has become a low-cost alternative for Bangladesh Power Development Board (BPDB) that has been bearing a heavy burden of operational losses owing to costly purchase of electricity from liquid oil-based and coal-fired stations.  

As per the latest information of the power development board, the state-owned lone entity, which purchases electricity from different sources to supply to distribution companies, the average cost of locally-sourced electricity, which includes gas, coal and liquid fuel-based production, was a little over Tk8 per unit in FY21. 

On the other hand, per unit cost of the imported electricity was Tk5.80 in the same period.

Besides, the average cost of diesel- and furnace oil-based electricity was above Tk12 per unit, even the coal-fired electricity cost from the country's largest plant was Tk8.60 per unit.

"Compared to liquid fuel and coal-fired power, imported electricity is still a cheaper source for Bangladesh," said Engineer Mohammad Hossain, director general of Power Cell, a policy research wing of Power Division.  

"Cross-border electricity trade is a win-win solution. The system enables each member country to sell its surplus electricity to a neighbouring country when the latter faces a crisis," he said.

At present, Bangladesh imports a total of 1,160 megawatts of electricity from Indian through Berhampore of West Bengal to Bheramara and Tripura of Assam to Comilla lines, which is 5.37% of the country's total power generation capacity.

In FY21, however, the share of imported electricity was around 10.08% of Bangladesh's total consumption, which was 80,423 million kilowatts/hour. 

More cross-border power import planned 

Because of the limitation of the primary fuel resources (gas, coal, oil and hydro), Bangladesh has decided to diversify its power generation capacity to ensure supply security. 

Regional energy import is a big part of that diversity and in the power sector master plan 2016, it is set to be around 15% of the total energy mix.   

As part of the energy mix policy up to 2041, Dhaka has planned to import around 9,000 megawatts of electricity from neighbouring countries under cross-border cooperation. 

Because of its cost competitiveness, Bangladesh is now eying to import more power from its land-locked neighbour.

The country is going to import another 1,600 megawatts of electricity from Jharkhand at the end of this year, said officials at the power division.

Another purchase agreement is in the final stage to import 500 megawatts of electricity from Nepal's 900 megawatts hydroelectric power plant, which is due to be developed by India's GMR Group. 

As per the schedule, Bangladesh will get the electricity from the Upper Karnali Hydropower Project by 2026.  

Bangladesh also wants power exchange with neighbours 

Along with imports, Bangladesh also aims at exporting its surplus electricity to neighbouring countries, especially India, Nepal and Bhutan, through Indian Energy Exchange, a platform that facilitates power trade.

Recently, high officials from Bangladesh reached out to their Indian counterparts to get the process formalised, which is now under negotiation.

"If the process is formalised, Bangladesh will be able to export its surplus electricity in the winter season when demand falls due to cold weather," said Habibur Rahman, secretary of Power Division of the ministry of Power Energy and Mineral Resources.  

Normally, around 55-60% of power generation capacity remains unused in the winter period as demand drops to nearly 8,000-8,500 megawatts.  

Because of keeping a huge capacity unused, the BPDB has been incurring operation losses. In FY21, its losses reached Tk11,509.12 crore, up by 54.5% from Tk7,450.24 crore of the preceding fiscal year. 

This article has been prepared as part of a BEI media fellowship with support of SARI/El Project Secretariat under IRADe and USAID