The government is set to finalise a merchant power plant policy today (Wednesday) allowing new private enterprises in electricity business directly with the consumers, besides setting up power plants, officials said.
The ministry of energy would hold a meeting today (Wednesday) with different state-owned power sector agencies to finalise the updated policy under which their monopoly business particularly in distribution will go, the power division officials said.
"The new merchant plant holders will be able to sell 70 per cent of electricity generated by them directly to consumers," director general of the Power Cell Mahbub Sarwar-E-Kainat told the FE.
He said the government would purchase the rest 30 per cent of their 'generated' electricity from the power plants under the proposed purchase deals for 15 years.
The proposed policy will not, however, be applicable in the case with those enterprises in power sector which have already been approved for setting up rental power plants or power units under Independent Power Producer (IPP) deals with whom separate power purchase arrangements were signed beforehand by the Power Development Board (PDB).
Explaining the features of the proposed merchant power policy, a senior power division official said: "Breaking the government's monopoly electricity business, the new policy will enable the private sponsors to make own arrangements for fuel and select their own customers."
He said once the policy is adopted, the power ministry would not have to struggle for arranging fuel for the power plants against the backdrop of mounting energy supply crunch, especially of natural gas.
Mr. Kainat said there is large potential of commercial power business in Bangladesh as many private entrepreneurs want to set up plants and sell electricity to consumers against the booming energy demand in Bangladesh.
The power division official said they are expecting some 3000-megwatt of electricity generation within next three years, once the policy is updated.
Bangladesh is one of the energy-hungry countries where the electricity demand growth is nearly 10 pert cent per year. The government can supply nearly 4000mw of power against the demand for more than 5500mw a day.
The Power Cell chief Mr. Kainat said as the demand is increasing every year, allowing the private sector in the power business for reaching the consumers directly will facilitate smooth supply for the growing consumers.
Under the proposed updated policy, a committee will be formed by the government which will supervise the merchant power plant business. The Bangladesh Energy Regulatory Commission (BERC) will have the authority to give licence to an investor.
The BERC has already announced indicative prices for the power, to be generated at the proposed merchant power plant.
The government will allow the private sector to set up plant, based on coal and oil, to help reduce pressure on the country's depleting natural gas.
The private investors will sell power to any category of consumers including the industries and they will be allowed to use the state-owned power transmission and distribution systems, paying wheeling charges to market their electricity to consumers.
The past caretaker administration formulated the policy in 2008 to encourage the private entrepreneurs which did not click as no entrepreneur came forward in the absence of guarantee about power purchase by the government.
The entrepreneurs feared that the industrial units might not be able to buy the entire electricity they would produce.
Under the proposed policy, the private sector will set up power plants and manage the fuel itself where the government will not take any responsibility of supplying fuel, the power division official said.
News Source: The Financial Express