Govt plans to resume construction of high-cost Nilphamari power plant

The government is planning to resume construction work of a simple cycle power plant at Syedpur in Nilphamari, a move that contradicts its own decision to back away from high-cost power plants.

A Project Evaluation Committee (PEC) meeting is due to be held soon to discuss restarting the 150 MW simple cycle power plant construction project in Nilphamari, according to officials familiar with the matter. Work of the power plant was closed during the Covid-19 pandemic.

The meeting will discuss a revision of the project, which if approved, will be implemented by the Bangladesh Power Development Board (BPDB), said sources at the Ministry of Energy, Power and Mineral Resources.

According to BPDB sources, the project cost as per the Main Development Project Proposal (DPP) was estimated at Tk 1000.99 crore. In the revision, the cost has been estimated to increase by Tk 248.92 crore. Of the total expenditure, the government will provide Tk 309.31 crore, BPDB Tk 376.50 crore, and Tk 564.10 crore will be funded through loans.

The project aims to increase the power generation capacity to meet the growing demand of electricity and to balance the electricity generation.

However, the project goes against the government decision of not building high-cost diesel-fired simple cycle power plants, and moving towards constructing cost-effective combined cycle power plants.

“The government is prioritising cost-effective and sustainable options for the country’s energy sources. It has decided to completely stop power generation from diesel powered power plants in the country as it is one of the most expensive methods of generating electricity,” State Minister for Power, Energy and Mineral Resources Nasrul Hamid told a seminar on December 3 last.

According to sources, 100 MW of electricity can be obtained from a simple cycle power plant, while 150 MW of electricity can be obtained from combined cycle power plants with the same amount of fuel.

A proposal regarding appointment of an EPC contractor for the Syedpur power plant project was passed by the Cabinet Committee on Public Procurement in 2018 for the construction of this power plant on 18 acres of land.

China’s Dongfang Electric International Corporation, the lowest bidder, was awarded the job through an international tender. In January 2019, the BPDB finalised a construction contract with Dongfang. The power plant was scheduled to go into production in June 2021, but its work failed to progress due to the Covid-19 pandemic.

At the construction agreement signing ceremony, State Minister Nasrul Hamid said, “This power plant will directly receive the oil that will be imported from India’s Numaligarh through a pipeline. As a result, there will be no crisis of fuel.”

This year oil has started coming from India’s Numaligarh through the pipeline. But due to the dollar crisis, oil imports are suffering, leading many to question the benefits of constructing the high-cost power plant.

Contacted, Energy adviser to Consumers Association of Bangladesh Professor Dr Shamsul Islam told The Businress Post, “Their (government officials) words do not match the reality. We should construct plants that will reduce the cost and increase the production.”

According to PDB data, the production cost for furnace oil-based power plant is Tk 17 per unit, for diesel-based plant Tk 37, and for gas-based plant Tk 3 to Tk 3.5.