Bangladesh will pay U.S. $240 million over 20 years to buy electricity from a private Sino-Bangladeshi wind energy project, according to a proposal approved by a government committee here Wednesday, cabinet and power-ministry officials said.
The wind plant in southwestern Bangladesh will generate 55 megawatts of electricity daily once it goes into production, said Abu Saleh Mostafa Kamal, an additional secretary in the cabinet division. Under the approved deal, the government will pay 10.56 taka, or 13 U.S. cents, per kilowatt hour of electricity generated by the plant.
“The Cabinet Committee on Government Purchase at today’s meeting approved the project to set up a 55-megawatt wind-power plant in Mongla,” Mostafa Kamal told reporters.
The plant will be set up by a consortium made up of Envision Energy (Jiangsu) Co Ltd, a Chinese firm, Envision Renewable Energy Ltd, a Hong Kong firm, and SQ Trading and Engineering, a Bangladeshi firm, he said.
“The government’s expenditure will be 2,035.12 crore taka ($240 million). The tariff is fixed at 13.2 U.S. cents or 10.56 taka for per kilo watt per hour electricity,” the cabinet official said.
He was referring to how much the government would pay for power from the plant, which will be set up in Bagerhat district.
At present, Bangladeshi consumers pay about 7 cents for a unit of electricity.
The consortium’s companies will set up the plant at their own expense, and the Bangladesh Power Development Board will buy electricity from it, Habibur Rahman, secretary of the Power Division of the Ministry of Power, told BenarNews, an RFA-affiliated online news service.
“The companies will set up the wind power plant and the government will procure the electricity once they go into production,” Rahman said. “We have not set any time frame for this project.”
Renewable energy sources
The potential of wind power has yet to be exploited, Rahman said, adding that when the wind project is built it would be the first such commercial plant in Bangladesh.
Bangladesh wants to migrate to renewable sources of electricity, like wind and solar energy, Saiful Hasan Chowdhury, a spokesman of Bangladesh Power Development Board, told BenarNews.
“In 2009, the government set a target of producing 10 percent of the total power production from renewable sources by 2020. Currently, the contribution of renewable energy is 382 megawatts,” Chowdhury said.
Last month, the cabinet accepted a bid from a Chinese state-owned company to build the country’s first waste-to-electricity plant, which energy officials said would generate 42 MW daily while helping clean Dhaka’s rivers and tackle its waste-management problems.
“So the government has been trying to increase the contribution of renewable sources,” Chowdhury said.
As with the wind-power plant, the cost of building and running the waste-to-energy plant would be fully covered by the developer, state-owned China Machinery Engineering Corp. (CMEC). But Bangladesh will pay almost $2 billion for the power it generates over 25 years, government officials said.
Still, Bangladesh in September approved the construction of a $2.06 billion coal-fired power plant with majority Chinese funding, despite a government commitment to reduce reliance on the carbon-based energy source because of environmental concerns.
The coal-fired plant is being built in Payra in coastal Patuakhali district, about 334 km (207 miles) south of the capital, Dhaka. The Bangladesh government and Chinese investors are also constructing homes, roads, and a deep sea port in Payra.
Bangladesh would not build any more coal-fired plants because of environmental and cost reasons, but the Payra plant would continue operations as planned, Nasrul Hamid, Bangladesh’s state minister for power, told BenarNews at that time.
Meanwhile, the current capacity for electricity generation in Bangladesh is at nearly 21,000 MW per day, higher than the maximum demand of 13,000 MW per day, Chowdhury said.
Despite the overcapacity, the government approved the Bangladeshi-Chinese wind project so the country would have a 25 percent reserve of electricity, Mohammad Hossain, director general of a government cell that plans electricity generation, told BenarNews.
“So, we have been keeping a reserve of power with the expectation that there will be an increase in power demand once the COVID-19 crisis is over,” Hossain said.
Rate ‘is too high’
One energy expert told BenarNews that the wind power project isn’t viable despite what power secretary Rahman believes.
“Different studies show that Bangladesh has no viable potential for wind electricity generation because wind speed fluctuates in a single day or even within hours,” said Mohammad Tamim, a former energy adviser to the government.
He said sustained strong winds generate more electricity, which lowers the price of electricity per unit. Lower wind speeds generate very little power and push up the cost per unit.
“The power development board earlier set up two small wind-electricity generation projects as a pilot – one in Feni and the other in Chittagong. But the projects failed for this reason,” Tamim said.
“I do not know why the Chinese are investing in a wind power project in Bangladesh.”
Tamim also has a problem with the rate at which Bangladesh will buy electricity from the Bangladeshi-Chinese wind project.
“The procurement rate of 13 U.S. cents per kilo watt hour is too high for wind power. It is generally accepted that one unit of wind electricity should cost a maximum of 8 U.S. cents per kilo watt hour. If the price goes higher than eight cents, it turns economically unviable,” Tamim said.
Rahman, the power secretary, told BenarNews that it wasn’t a high price to pay for wind energy.
The process of approval for this wind power plant – and other electricity projects – needs to be more open, according to Anu Muhammad, a member of a civil society movement called the National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports.
The Bangladeshi-Chinese consortium was the sole participant in the tender process for the project, local media reported, citing a power development board official who wasn’t named. BenarNews could not confirm the accuracy of this statement.
“There is no transparency in Bangladesh’s power sector. The power ministry or any of its agencies are not accountable to anyone,” he told BenarNews.
Reported by BenarNews, an RFA-affiliated online news service.