Update August 6, 2015

Dhaka 11-44 pm, 29-May, 2020

Cabinet body okays 4 proposals

Sumel Sarker

Cabinet66

Cabinet body okays 4 proposals

06 August 2015, Nirapad News: The Cabinet body okays 4 proposals on Wednesday approved four proposals, including a Singaporean company’s unsolicited offer for setting up a 400 MW dual-fuel power plant on build-own-operate (BOO) basis and importing of 30-50 MW power from India in addition to existing 500 MW.

The committee approved the proposals at a meeting with Finance Minister AMA Muhith in the chair. Senior ministers, who are members of the Cabinet body, attended the meeting.

As per the proposal placed by the Power Division, Singaporean firm Sembcorp will implement the scheme as independent power producer (IPP) project under a joint venture with the North-West Power Generation Company Ltd (NWPGCL).

The plant would be set up on the same site in Sirajganj where the government terminated a letter of intent (LoI) issued to an Indian company, Lanco, that failed to provide the necessary performance security deposit (PSD).

As per the proposal, Singaporean firm Sembcorp Utilities Pte Ltd will have 71 percent shareholding in the joint venture, while state-owned NWPGCL will hold the remaining 29 percent.

The Cabinet Purchase body approved the proposal under the Speedy Power and Energy Supply (Special Provision) Act 2010.

The Sembcorp offered to implement the project with the same tariff, and under the same terms and conditions agreed with Lanco.

As offered, the tariff would be Tk 3.19 per kilowatt hour for gas-fired operation and Tk 13.56 per kilowatt hour for diesel-fired (HSD) operation.

The state-owned Power Development Board (PDB) would purchase the electricity for the first 22 years.

The government would have to pay Tk 21,507 crore over 22 years to purchase electricity from the plant when it runs by gas considering minimum 84.6 percent plant factor.

In case of HSD operation, the government would have to pay Tk 34,835 crore considering minimum 40 percent plant factor over a 22-year period.

After scrutinising the offer, the PDB observed that once the proposal is approved by the government, it will require annually paying about Tk 2,757 crore as subsidy for purchase of electricity from the plant when it is running on diesel (HSD), meaning the total subsidy amount over 22 years would be Tk 60,654 crore.

Otherwise, to offset the subsidy, the government would have to raise the power tariff for consumers, said the PDB, observing that the Singaporean company has offered a higher heat rate for gas-fired operation although it assured use of efficient equipment for diesel-fired operation.

Sembcorp is offering to implement the simple cycle plant within 24 months and combined cycle plant within 30 months from the effective date of contract. The project’s debt-to-equity ratio was offered at more-or-less 3:1.

The Cabinet body approved the Power Division’s another proposal to import 30-50 MW power from the Indian companies NVVN and PTC in addition to its current import of 500 MW.

The proposal says though the government has been importing 500 MW power from India, it has to incur about 30-50 MW technical loss in the power transmission. As a result, the government has to import this power.

Cabinet body approved the Power Division’s new proposal to import the 30-50 MW power from the two companies under bilateral agreement through limited tendering which will replace the current system of import power from open market through Indian Energy Exchange (IEX) in compliance with Indian central energy regulatory commission (CERC).

The existing system to import the additional 30-50 MW was approved by the Cabinet body on January 14 this year. But that decision could not be implemented due to a litigation in Indian court which made the import uncertain.

The Cabinet body approved a proposal of the Ministry of Shipping for awarding contract for dredging work by cutter suction dredger for improving navigability of Gaglagor – Mohanganj portion of the capital dredging project undertaken by Bangladesh Inland Water Transport Authority (BIWTA).

A private joint venture firm AMDL-ADL won the contract of the work.

The Roads and Highways Department’s proposal received approval of the Cabinet body to award contract for the upgrading to four-lane from two-lane of 70 km roads of the Joydevpur- Chandra-Tangail-Elenga portion.

The project is being implemented under the South Asia Sub-regional Economic Cooperation (SASEC) under which separate lanes for slow-moving vehicles, five flyovers, 26 bridges, and 60 culverts will be constructed.

Three firms obtained the works in three lots at a total contract value of Tk 2050 crore.

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