If it does not add value, it is a waste, said American industrialist Henry Ford. And the quote best describes the situation of the Bangladesh Power Development Board in relation to Adani Power India.
Engineered during Indian Prime Minister Narendra Modi’s inaugural visit to Bangladesh in 2015, Adani Power has set up a 1,600MW thermal power plant in Jharkhand’s Godda to supply most of the power generated to BPDB through a dedicated transmission line.
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The power plant will be generating from August but delivery will not be ready until at least December, meaning electricity will be wasted.
However, BPDB had to pay $141.1 million, or Tk 1,219.1 crore, in capacity charges for the four months to December, according to the report “Adani Godda Coal Power Plant: An Achilles Heel of the Power Sector of Bangladesh”.
A capacity charge is a penalty paid to plant owners for failing to purchase a portion of the available power.
According to the agreement signed in 2017, Adani Power will supply 1,496 MW of electricity for 25 years from December 2021.
Due to the pandemic, the Adani Group subsidiary pushed the start date by six months. The power plant is ready to start commercial operations in August.
But the Power Grid Company of Bangladesh (PGCB) said more time is needed to prepare the infrastructure to import electricity. It will take at least December this year.
According to the agreement, Adani Power will install a 106 kilometer long 400 kV transmission line from Godda to the interconnection point.
To transmit power from the point, PGCB took up a Tk 225.2 crore project to build a 28 km transmission line from Indo-Bangladesh border to Rohanpur substation in Bangladesh.
The main substation has not been built because the materials have not arrived, Md. Mizanur Rahman Sarkar, project director of the transmission line, told The Daily Star.
“We will be able to import electricity from about 800 MW in the early months of next year,” he said.
BPDB has agreed to pay Adani Godda power plant Tk 3.26 as capacity charge per unit. For a similar plant in Bangladesh, the capacity charge is Tk 2.83.
Nasrul Hamid, the minister of state for power, energy and mineral resources, is not sure yet why BPDB should pay the capacity charge for four months that the power is not imported from Adani Power, which was founded by Gautam Adani, the fifth world. the richest person.
“But if we build it by ourselves and don’t use power, we still have to pay for the capacity.”
The government’s policy of ‘no electricity, no payment’ does not apply to such large-scale independent power producers, he told The Daily Star.
“If we implement it, no one will agree to build the plant. Adani will invest and we will have to pay a minimum return to them. If we don’t take electricity, they will be in trouble,” said Hamid.
To remove electricity from the Godda coal-fired power plant, BPDB will do away with the usual ‘merit order dispatch’ method and use ‘priority-based dispatch’.
In the ‘merit order dispatch’ method, power plants that provide cheaper electricity are given the first opportunity to generate.
But under the ‘priority-based delivery’ method, imported power will be delivered first keeping domestic power plants idle even those that produce electricity at cheaper rates.
So the power from Adani Godda will be 56.2 percent more expensive than other imported power, 36.9 percent more than imported coal power and 4.3 percent more than domestic coal electricity, according to a study by the Bangladesh Working Group on External Debt and India-based. Growthwatch.
Bangladesh will have to pay more than Tk 1 lakh crore to coal-fired power plant Adani as capacity charge over the 25-year life of the agreement, which is equivalent to enough to build three Padma bridges, said a study published on Monday.
In the worst-case scenario, BPDB will have to pay $423.3 million (Tk 3,657.2 crore), annual capacity charges, and $11.01 billion (Tk 108,360.6 crore) over the 25-year operational life of the plant.
The Padma bridge was built at $3.87 billion, the Dhaka metro rail at $2.59 billion and the Karnaphuli river tunnel at $1.22 billion, the report added.
In the best case scenario, the annual capacity cost paid to the Adani Godda power plant will be $331.66 million (Tk 2,865.55 crore), while the lifetime capacity cost will reach $8.62 billion (Tk 84,903.7 crore).
Adani Power will have its investment return in a maximum of six years and a minimum of 4.67 years, according to the report.
“The load capacity will depend on the availability of the power plant. If the power plant runs with 85 percent plant load factor (PLF), it will be the highest scenario and the power plant can drop its PLF at 53 percent, which is the lowest. average in India,” he said. Hasan Mehedi, one of the authors of the report.