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21 March, 2017 00:00 00 AM / LAST MODIFIED: 21 March, 2017 08:43:43 AM

Costly electricity from Jharkhand

Bangladesh to buy power from Adani Group
Costly electricity from Jharkhand

The government has agreed to buy power from the Adani Group at 8.7 US cents per unit from its 1,600-MW mega plant, to be set up in Jharkhand  in  India. This is a dedicated project for exporting power to Bangladesh at a rate much higher than the price proposed by local companies with coal-based plants.
According to the Sheikh Hasina government’s decision, the Indian giant will get 3.9 US cents out of 8.7 US cents per unit as a ‘levelised capacity payment’ of the plant that will incur extra cost for the country.
Officials said, as per the rate fixed for Adani, the country will have to pay an additional Tk 300 crore to the Indian company every year, compared to the deal with Orion Group’s coal based power plant. In the 20 years of contract period, Bangladesh will have to pay extra Tk 6000 crore in total.   
Sources said the Adani Group has agreed to the price and will submit its proposal to its board of directors for approval. After that, it will send representatives who will ink the final deal with the Bangladesh government.
The price was fixed for the next 20 years at negotiations held at a meeting between the high-level governmental team, led by power secretary Dr Ahmad Kaikaus, and representatives of Adani Power Limited last Sunday.
A Bangladesh Power Development Board (BPDB) official said Bangladesh would have to pay billions of dollars extra over the 20-year contract period to import the power from the Adani Group. Because the dedicated power plants would be set up in Jharkhand, Bangladesh would have to pay massive amounts of taxes to the government of the Indian state, which would make it expensive for the country’s people.
The proposed S Alam Group’s 1,320-MW coal-based power plant, to be set up in Chittagong, would supply power to the BPDB at 8.25 US cents per unit while the Orion Group would sell its power from its 635-MW coal-fired power plant in Gazaria, Munshiganj at 8.37 US cents per unit. Even the controversial coal-based 1,320-MW Rampal plants would be able to generate power at 8 cents per unit. A difference of 10 to 20 US cents per unit makes a huge difference over the period of the contract, officials involved in the deal disclosed to The Independent.
“I do agree with the view that the cost of the Adani power is higher. That is because it has to pay huge amounts as taxes to the Indian government. It also has to pay other fees, which do not exist in our country. For example, our private power plants enjoy tax- and duty-free imports of equipment and facilities, which it does not have in India. Not only that, it has to bear some other costs. We have verified the documents and, therefore, agreed to the price of 8.7 cents per unit,” said BPDB chairman Khaled Mahmud.
Not only that, the power generated from Jharkhand would require 100km of transmission lines to transport the power to Bangladesh’s Bagura border, which would make it even more expensive for the country.
“Usually, the Power Grid Company of Bangladesh (PGCB) builds the line to evacuate the power from any new plant. Hence, the private investor does not have to make any big investment in building the line,” he added.
“The Jharkhand plants need more than 3 billion US dollars. Not only that, the 1,600-MW plant would generate massive employment and create an economy on which we would lose out, as the plant would be set up abroad,” pointed out a member of the negotiations committee.
On June 6, 2015, the day Indian premier Narendra Modi arrived in Dhaka on a two-day visit, the BPDB and Adani Group signed a memorandum of understanding (MoU) to allow the Indian company to build-own-and-operate a 1,600MW coal-fired power plant in Bangladesh.
Later, Adani decided to set up the power plant in India and export the output to Bangladesh.
On August 11, the Power Board and the Adani Group signed another MoU on the issue.
After the MoU, the government officials held meetings several times with representatives of the Adani Group to finalise the deal. At the meeting, in which the negotiations were held, the Adani Group demanded 9.287 US cents (equivalent to Tk. 7.43) for each unit or kilowatt-hour of electricity, considering imported coal at USD 112.59 per tonne with port charges, freight, inland transportation and taxes and duties. 
The price—9.287 US cents—includes 4.476 US cents in levelised capacity charges, 4.3612 US cents in energy charges and 0.45 US cents in levelised transmission charges and losses.
Last week, the committee for negotiations also held a meeting with another Indian giant, Reliance Power, to finalise the power purchase price from Reliance’s 750 MW LNG-based plant, to be set up in Megnaghat. But the price was not finalised as both parties did not agree to any proposal.
The committee also held discussions with the Baraka Power Company to fix a price for the Karnafully 110-MW power plant. But the price has not been fixed. The PM recently signed a proposal of Baraka to set up the 110-MW plant in Chittagong. The plant has been named the Karnafully Power Plant.
An official of the power ministry said all three unsolicited proposals require more meetings with the parties.




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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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