Failing to manage required investments, the Power Division is now faced with serious problems in implementing its 13,000 megawatt power project, in the next three years. The state-owned power generation companies undertook 13 big power projects to produce 3,210 megawatt electricity, but most of these projects have been delayed due to the current crisis of funds. Besides, under a joint venture and private sector investment, the government also took up five larger power generation projects (totalling 3,700 megawatt electricity), but they are also facing an uncertain future, according to the Power Division.
According to the ministry of power, it needs USD 17 billion, to implement the 13,000 megawatt power projects.
“Fourteen independent power plants have not been getting loans from banks, as the banks are suffering from a liquidity crisis and the project proposals are not in order,” a finance ministry official said. The Power Division was not getting a necessary Tk. 1,600-crore support from the Bangladesh Infrastructure Finance Fund (BIFF), he added.
The government formed the BIFF two years ago, to finance top priority projects in the infrastructure sector including power.
The struggling power generation schemes include Siddhirganj (450 megawatt), Bheramara (360 megawatt), Sikalbaha (225 megawatt), Bhola (225 megawatt), and Barapukuria (250 megawatt) plants.
Besides, the Sylhet (150 megawatt), Chandpur (150 megawatt), Sirajganj (150 megawatt) and Khulna (150 megawatt) plants had already missed their deadline for production, adding to their installation costs, he further said. The Executive Committee of the National Economic Council (ECNEC), in 2001, approved the Sylhet (150 megawatt) power project at a cost of about Tk. 350 crore, which has now escalated to Tk. 879 crore, due to implementation delay. Similarly, the Chandpur (150 megawatt) project was also approved by the ECNEC in 2001, but its project cost has soared to Tk. 1,201 crore. Another large ECNEC-approved project, the Bheramara (360 megawatt) plant, has also faced a big blow as its Japanese financier is now unwilling to disburse the committed loan, due to inadequate gas supply to the proposed plant site.
“To overcome the situation the finance ministry and the Power Division last month sat with the Prime Minister. The Bangladesh Bank governor, who was also there, apprised the PM that the projects would not get any foreign finance, as all the projects were unsolicited and the local banks were unwilling to provide loan to these projects, because the project documents were not done properly,” a finance ministry official said, preferring anonymity.
To encourage private sector investment initiatives, the Power Division, two years back, awarded a contract to Summit Power, an independent power producer (IPP), and its consortium, for building each of the 341 megawatt, gas-based power stations at Bibiyana-1, Bibiyana-2, and Meghnaghat-3. In December last year, the Power Division also awarded contracts to two private-sector firms for installing 1100 megawatt coal-based power stations.
According to sources, the Summit Group, country’s single largest power producer in the private sector, is also facing serious fund crunch as the World Bank has refused to offer performance risk guarantee (PRG) against its three IPP projects.
As a result, the fate of the three IPP projects also remain uncertain and throws an axe at the government plan to add 2,000 megawatt more electricity, into the grid by 2014.“We won’t create any obstruction in the Bibiyana power project, if there is any other investor willing to implement the project as per schedule,” Aziz Khan, chairman of the Summit Group, told The Independent. The Power Division was yet to handover the proposed land to them to install the power plant, he added.
According to estimates by the ministry of power, expected fund requirements for the generation, transmission and distribution sectors stand at about USD 18 billion, USD 2 billion and USD 4 billion, respectively.
However, to tackle a fund crisis in the power sector, the government has recently formed an apex committee headed by the finance minister.“The government was busy installing small and costly power plants, instead of base-load and long-lasting planned stations, in its last three years’ tenure, causing extra pressure on the country’s fiscal management,” Dr Ijaz Hossain, a BUET professor, said.He said that it had been more than a decade, since the government implemented any big, foolproof project in the power sector.The Power Division official also said that they were trying to use the Export Credit Agency (ECA) funds, but, since most of the projects were unsolicited, it would not be of much help to the state-run power companies.
Source: The Independent