360 MW Haripur unlikely to get extension despite low cost electricity: Sources

Haripur 360 MW combined cycle power plant (CCPP), which generates electricity at the lowest cost, is unlikely to get extension after completion of its 22-year initial contract period.

According to official sources, the power plant – established by a US company AES Corporation in 2001 – completed its successful operational period in November 2023. Since then, the government has not taken electricity from the plant.   

The AES Corporation developed two large base-load power plants – Haripur 360 MW CCPP in 2001 and Meghbaghat 450 MW CCPP in 2002 – with the highest efficiency, but the lowest cost.  

As per the power purchase agreement (PPA), the state-owned Bangladesh Power Development Board (BPDB) has been purchasing electricity from the two first generation independent power producer (IPP) plants.

The BPDB officials said initially, Haripur's power tariff was Tk1.56 per unit, which is the lowest not only in Bangladesh, but also in the world.

According to a World Bank document publicly disclosed on 24 June 2014 which compared the power generation cost of different IPPS, shows that when the Khulna Power Company Limited was selling electricity to the BPDB at Tk16.03 per unit in 1998, the NEPC at Tk20.20 per unit in 1999, Haripur was selling it at Tk1.56 per unit and Meghbaghat was selling power at Tk2.33 per unit.

Currently, the average generation cost is over Tk10 per unit. Through a gazette notification issued on 1 March, the government set the retail tariff of electricity at Tk8.95.

Officials said, until last year, the BPDB was buying electricity from the plant at Tk3.32 per unit which was the lowest among all other private power plants.

But in November 2023, the PPA expired and BPDB suspended purchasing electricity from the plant.

The BPDB's move surprised many as it was unlikely on the part of the government that it unilaterally stopped buying electricity from the most efficient and lowest cost power when it continued purchase of electricity from high cost plants belonging to Summit Group and other plants.

"Actually, there was no strong lobby on behalf of the Haripur plant to pursue the government to renew its contract with the BPDB. That's why the country will be deprived of the low cost electricity," a top official of the BPDB said, requesting anonymity.

He, however, said the government can offer the owner-company of the Haripur plant to buy it and operate under the BPDB management.

Sources said the USA-based AES Corporation developed the Haripur and Meghnaghat power plants, after a number of changes into their ownership. Now Malaysian Pendekar Energy Limited owns and operates the two plants.         

In 2003, the AES sold the plants to the UK company CDC Globeleq, which sold the plants to Malaysia-based Pendekar Group in 2007.

Official sources said the government had to pay Tk50-55 crore a month to purchase electricity from the Haripur power plant for its 360 MW electricity.

"But from November 2022, the operator of the plant has not been receiving any bills from the BPDB for which it lost interest to continue its operation", said another source.

He also mentioned that the BPDB is also not interested to extend its operation as it has  contractual obligation to buy electricity from newly established plants like Summit Group's Meghnaghat Plant, Unique Group's Meghnaghat plant and also some coal – fired power plants which electricity cost is between Tk6.50 to Tk30 per unit.