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Bangladesh Energy Campaign
The Government of Bangladesh has extended the PPA period of RPP and QRPPs up to two and a half times more than their recommended safe operating lifetime. These old and outdated rentals will create an additional burden of BDT 2,726 crore (USD 317 million) annually, with BDT 594 crore coming from capacity charges. As a result of the Russian war on Ukraine, oil prices rose significantly to $140 per barrel on March 7. Prior to this price increase, it was estimated that the cost of electricity would increase at least 17% and 67% for DFG and HFO based power plants respectively due to their higher cost of fuel and additional capacity charges. With soaring oil prices resulting from the Russian war on Ukraine, these costs are now projected to be much higher. Obsolete Rental power plants have sought further extension of their PPA period which will create a double negative impact on the Bangladesh economy and environment.
As per latest Annual Report of Bangladesh Power Development Board (BPDB), installed capacity reached 22,031 MW in FY 2020-21 which was 8.1% higher than the previous year. Still 8,239 MW of capacity remains unused this year. The generation of electricity was also increased to 80,422.54 gWh in FY 2020-21 which was 12.6% higher than FY 2019-20. The maximum demand of power was 13,792 MW which was 8.3% higher than FY 2019-20. However due to the additional demand of power , the rate of idle power plants decreased only 0.1% from last year — virtually unchanged. Similarly, the plant load factor (PLF) of the power sector reached 41.88% in FY 2020-21 from 40.91% in FY 2019-20. The PLF increased marginally, only 0.97% from the earlier year. Bangladesh power plants ran for only 153 days while they sat idle and unutilized for 212 days in FY 2020-21. BPDB paid BDT 51,878.96 crore (USD 6.10 billion) to buy electricity in FY 2020-21 which was 25.92% higher than BDT 41,198.80 crore (USD 4.84 billion) spent in the earlier year. As a result, the generation cost increased 11.8% higher to BDT 6.61 per kWh from BDT 5.91 in FY 2019-20. BPDB paid BDT 13,155.21 crore (USD 1.55 billion) to 37 private companies as Capacity Charges in FY 2020-21. The amount was 21.2% higher than last year. As a result, BPDB’s annual loss reached BDT 11,509.12 crore (USD 1.35 billion) in FY 2020-21 — a single year rate increase of 54.5% from BDT 7,450.24 crore in FY 2019-20. Subsequently, the GOB had to provide BDT 11,777.91 crore (USD 1.39 billion) as repayable subsidy to BPDB which was whooping 58.3% higher than the earlier year. Two consecutive years with annual losses of around BDT 10 thousand crore (USD 1.2 billion) is an alarming trend that caused BPDB to become a heavy burden on the Bangladesh economy at a time when resources were needed to address the unexpected health care emergency caused by Covid 19 pandemic. The top 12 companies, with installed capacity of 6,551.66 MW, received BDT 8,730.14 crore (USD 1,027.08 million) as capacity charge which is 66.4% of total capacity charge paid in FY 2020-21. Summit Group topped the list followed by United Group, Bangla Trac, China National Machinery Import and Export Corporation (CMC) and Orion Group. The top 12 power plants, with installed capacity of 4,763 MW, received BDT 65.02 billion (USD 764.95 million) as capacity charge in FY 2020-21 which is 49.4% of total capacity charge. Payra Coal Power Plant topped the list followed by Sirajganj 410 MW Dual Fuel Power Plant, Keraniganj 300 MW HSD Power Plant and Meghnaghat 337 MW Dual Fuel Power Plant. Six power plants did not generate any electricity and consumed 3.15 gWh of electricity from the national grid creating a negative drag on power production. Five power plants didn’t generate any electricity. The 10 most expensive power plants generated 184.52 gWh (1.76% of their capacity) of electricity at an average cost of BDT 106.94 per unit. The GOB approved 46 power plants with an installed capacity of 49,392 MW to be constructed by 2030. Many of these are gas plants even though Petrobangla can only supply only 55.3% of current demand of fossil gas for power generation. LNG costs reached record high levels in 2021 forcing BPDB to pay much higher fuel costs. The excessive dependency on costly LNG will not only emit increased GHGs but also create unbearable pressure on the national economy. The total installed capacity will reach 37,731 MW in 2025 and 49,392 MW in 2030 against demand of 19,900 MW and 27,400 MW respectively. As a result, 17,831 MW and 21,992 MW of power will become stranded assets by 2025 and 2030 creating more weight dragging down the Bangladesh economy. To compensate the improvident installation plan in the power sector, BPDB could face loss of BDT 26,533 crore (USD 3.12 billion) in FY 2021-22, BDT 50,000 crore (USD 5.81 billion) in FY 2024-25 and BDT 63,000 crore (USD 7.33 billion) in FY 2029-30 which will further increase the price of power at consumers’ end. Immediately halt the construction of new fossil fuel power plants (including ones based on coal and LNG) and cancel all approvals of new LNG based power plants which have not achieved financial closure. Shift those resources to investments in renewable energy to come online much more quickly and meet any new generation demand that might be needed in 2027. No more extension of the tenure of expensive fossil fuel based RPPs, QRPPs and IPPs. There is simply no economic justification for their continuation due to the overcapacity of power. No more extension of the tenure of expensive fossil fuel based RPPs, QRPPs and IPPs. There is simply no economic justification for their continuation due to the overcapacity of power (page ###). Shutting down the loss making power plants to avoid further record setting losses is also crucially important. Implement rapid installation of RE Projects at both distributed and utility scale on unused lands at the power hubs. To fulfil this target, significant allocation for RE should be made in the Annual Development Programme (ADP) of the national budget. Increase Energy Efficiency at internationally accepted levels to supply cheaper and more reliable electricity consistent with recommendations in the 8th Five Year Plan, Perspective Plan 2041 and in the NDC 2021. Immediately implement massive T&D projects on an urgent basis to supply the generated electricity to the consumers so that the overcapacity could be reduced at a significant level. Endorse the Clean Air Act and impose Green Tax immediately to control emissions and penalise the power plants which emit excessive CO2, SOx and NOx than permitted under the act. Reduce the staff of public power plants and decentralise BPDB through decommissioning power plants and regional distribution systems to newly formed public sector power generating and distribution companies. More than one-third of Bangladesh power generation capacity is not being used creating stranded generation assets that are paid to sit idle. If Bangladesh continues spending millions constructing new fossil fuel power plants that are not needed, it will drive power costs up even more and weigh down the Bangladesh economy. A target plant load factor should be established at minimum 70% before any new power plants are allowed to begin or continue construction. Loans to build fossil fuel plants were based on 80% load factors. Unutilized power generation with current plant load factors of only 41.88% provides no benefit to Bangladesh consumers, only increased costs. It is much more sound fiscal management to retire unutilized plants, adopt a No Electricity No Payment (NENP) policy and stop the costly construction of new fossil fuel plants that are not needed. This will allow electricity usage to catch up to capacity and more efficiently utilise existing assets and stop an ever increasing weight on the Bangladesh economy caused by the power sector.
The Asian Infrastructure Investment Bank’s (AIIB) investments in Bangladesh reached USD 2,391.98 million in August 2021 from USD 165 million in 2016, rising at an average rate of 32% per year. The consequence is that in effect, AIIB loans are entrapping the people of Bangladesh and our economy with an onerous debt burden in the midst of the COVID-19 pandemic and attempts to move forward into a post pandemic recovery period. So far, the AIIB has invested USD 605 million in the energy sector of Bangladesh, with investments increasing at an average rate of 23% each year. In spite of this level of financing, significantly the AIIB has yet to invest in any RE options (wind, solar) in the country, exposing the bank as an influential financier directly undermining global efforts to protect the climate and community resilience. Among the first flagship investments of the AIIB in Bangladesh was a private sector stand-alone USD 60 million loan approved in 2018 for the Bhola Independent Power Plant (Bhola IPP) - a greenfield gas power project. To this day, three years later, the communities in Bhola are still awaiting information as to how and when they will be compensated for their losses due to unjust land acquisition and canal grabbing by the operator company, Nutan Bidyut Bangladesh Limited (NBBL) which is a subsidiary of Indian conglomerate Shapoorji Pallonji Infrastructure Capital Company Limited (SPICCPL). Due to the lack of appropriate management and disposal of sand and debris from the construction site, the local canal, Mandartoli Shakha Khal, has been filled and blocked on several occasions, causing flooding and damage to crops. Finally, after the filing of several petitions by local people, the operator company temporarily repaired the canal by re-excavation or dredging. In absence of proper and consistent dredging, the betel leaf (paan) farmers have been suffering from water logging every year. Meanwhile, SPICCPL has entered into a deal to sell off the power plant to Mauritius and UK-based Actis Energy for USD 270 million. Before this transfer of ownership is sealed, it is incumbent upon the AIIB as a key investment partner, to compel the borrowing company to pay adequate compensation to the landowners and betel leaf (paan) farmers for the losses and damages they have been subjected to over the last three years as a direct result of the project. The company must also be held accountable for fully rehabilitating the Mandartoli Shakha Khal to its pre-project state. Another stand-alone project financed by the AIIB exposes the role of the AIIB in facilitating fossil fuel-dependent power generation in Bangladesh. In 2019, the AIIB approved a USD120 million loan for the “Power System Upgrade and Expansion Project” (PSUEP), which aims to upgrade and expand the power transmission system in Chattogram. Although the rationale sounds benign, the project in fact directly connects the coal power plants of the Chattogram-Cox’s Bazaar Zone with the national grid through constructing 27-km overhead and underground high voltage transmission lines. Indeed, the actual realities on the ground illustrate the questionable practices of the AIIB project staff in ensuring communities are informed, let alone able to raise concerns without fear of reprisals. For example, though the scant project data made publicly available claims the number of beneficiary families of the PSUEP is 287,000, consultation meetings were organized for only 93 persons (i.e. a mere 0.03 percentage of the population claimed by the bank as beneficiaries). Crucially, administrative and political persons were also included in the consultation with affected communities. As a result, the affected communities were in forced into a position of silence, unable to raise their concerns properly due to fear of potential retaliation and intimidation. According to AIIB policies, the Environmental and Social Management Plan (ESMP) and Resettlement Planning Framework (RPF) must be translated into local languages so that the affected communities can understand the proposed project and its impacts easily. Revealingly, the RPF for this project has been translated into the wrong language and some sections of the texts fail to even be coherent. This situation directly means that the AIIB has failed to uphold the ‘right to know’ of locally affected communities. At this time, it is incumbent upon the AIIB to put an end to its investments in fossil fuel projects and supporting infrastructure. Instead, the bank must take its role as a multilateral development bank with a global footprint seriously, shifting gears towards promoting RE in Bangladesh and beyond; unequivocally supporting the CVF target to achieve reliance on 100% RE by 2050 ─ in line with the Paris Agreement and most up to date scientific recommendations on climate.
From the very beginning, Bangladesh is a part of Bangladesh-China-India-Myanmar (BCIM) Economic Corridor. Under the BCIM Economic Corridor of BRI, Bangladesh and China signed 27 Memorandum of Understandings (MOU) worth 40 billion dollars to build several large infrastructure projects including 7 coal fired power plants.Role of Chinese companies in Bangladesh reached 10.421 billion dollar in 2020 from of 3.147 billion dollar in 2016. So, it is important now for the campaigners to know about Chinese Financial Institutes for effective advocacy with the executing agencies and the authorities.
The State Minister for the Ministry of Power, Energy and Mineral Resources declared cancellation of 10 approved coal power projects on 27 June 2021.