Rental power plants find new conditions 'hard to accept'

Rental power plants find new conditions ‘hard to accept’


The government move to extend contracts with some rental power plants

may suffer a setback as sponsors have found the new conditions tougher
than earlier.

According to sources, the government recently decided to extend its
power purchase agreements (PPAs) with four rental power plants as
their contracts have either expired or are going to expire soon.

The plants are RZ Power’s 47 MW diesel-fired plant in Thakurgaon,
Precision Energy’s 55MW gas-fired plant in Ashuganj, Energies Power’s
55MW furnace oil-fired plant at Shikalbaha and KPCLs 40MW plant in

Sources said the Power Division officials held a series of negotiation
meetings with the sponsors of the rental power plants over the last
two months.

At the final stage of the negotiation, the officials last week
informed the sponsors of the rental plants that the government would
extend deals with them only if they agree to reduce both the tariff
and the supply capacity of their plants and accept some other

These newly-imposed conditions pushed them into a great dilemma as
they found the conditions unviable to run their plants and sell
electricity to the government.

“We may renegotiate the issue of tariff to some extent, but some other
conditions will be hard to accept as those will make our business
commercially unviable and lead to financial losses,” said a rental
power plant sponsor wishing not to be named.

“We’re examining the new conditions. If we find those unsuitable for
our business, nobody will be willing to extend deals with the
government,” he said.

Referring to the country’s inflation spillover effect, another sponsor
said it has already pushed up their operational costs. New conditions
will increase the operational costs further, he added.

Contacted, Additional Secretary of the Power Division Mofazzal
Hossain, who is leading negotiation from the government site,
refrained from making any comment on the issue.

“The negotiation is still on. So, no comment should be made at this
stage,” he told UNB.

Another official at the Power Division said the government hopes the
sponsors will agree to extend their deals accepting the new
conditions. “Because, the operational costs of those conditions have
been lesser than earlier,” he claimed.

Meanwhile, a recent study by The Bangladesh Institute of Development
Studies (BIDS), a state-run research organisation, recommended the
government to extend the power purchase agreements with the rental
plants which run on ‘good’ operational conditions.

According to the research findings, the electricity generated by the
rental power plants made a contribution to the national GDP between Tk
52,093 and Tk 121,168 crore in the last three years.


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