Bangladesh Steel Re-rolling Mill (BSRM) has obtained the country’s first merchant power plant licence to produce and sell electricity at negotiated tariffs to private-sector clients.
“We issued BSRM merchant power plant licence last week to promote further private sector’s participation in the country’s potential power sector and install new plants,” Bangladesh Energy Regulatory Commission (BERC) member Dr Selim Mahmud told the FE on Sunday.
Under the licence, BSRM will build a 150-megawatt (MW) coal-fired power plant at Mirersarai in energy-starved Chittagong, and sell electricity to its clients, said Mr Mahmud.
Chittagong Power Company Limited (CPCL), a sister concern of the steelmaker BSRM, will build and operate the first power plant of this sort.
“We have a plan to build power plants of a total of 300-MW capacity,” BSRM executive director Tapan Sen Gupta told the FE on Sunday.
In addition to the maiden 150-MW-capacity one, the company will build another 150-MW plant afterwards.
The company intends to start construction of the power plant immediately, said Mr. Sen Gupta.
BSRM, a pioneer in the country’s steel re-rolling industry, got the merchant power plant licence from the energy regulator, following a competitive bidding initiated by the state-run Power Cell in June 2011.
Power Cell director general Mohammad Hussain told the FE that the cell finally selected BSRM to build the power plant, and subsequently issued a letter of intent (LoI) last month.
Under the licensing terms, the power producer will have the responsibility to arrange buyers for selling the electricity output from its plant, he said.
The government has already offered guarantee to purchase around 30 per cent of electricity to be generated in the BSRM plant.
It can transmit electricity to buyers through the national grid at an ‘agreed’ wheeling tariff.
Before giving licence to BSRM, BERC provided licence to United Power Generation and Distribution Company Ltd (UPGDCL) to build commercial power plants, said the BERC official.
UPGDCL sells electricity to clients in Dhaka Export Processing Zone (DEPZ) and Chittagong Export Processing Zone (CEPZ) at negotiated tariff rates under the BERC licensing terms.
Energy experts said the new merchant power plant will create multi-buyer and-seller electricity trade in Bangladesh, as the new commercial power plant will be able to sell electricity to desired buyers directly.
Apart from UPGDCL’s commercial power plants, the state-owned entities currently purchase electricity from all types of suppliers in Bangladesh, such as – independent power producers (IPPs), rental power plants, quick-rental power plants, small IPPs and the state-owned plants. They sell it to end-users.
There are some captive power plants built by private entrepreneurs to meet self-requirement of their industrial units.
Buyers do not have option to purchase electricity other than from the state-owned electricity-distributing entities.
But merchant power plants are coming up as developer-driven projects, a senior official of the state-run Bangladesh Power Development Board (BPDB) said.
The commercial power plants of this genre will help diversify the country’s energy sources, Professor Ijaz Hossain of Bangladesh University of Engineering and Technology (BUET) told the FE.