Indian power import costs to jump further

Electricity import cost from India has jumped further due to unprecedented price hike of US dollar in Bangladesh as well as energy price hike in India.

Bangladesh Power Development Board (BPDB) says per unit cost of imported electricity from the private power plants of India will exceed Tk10 by the end of this fiscal year which is now Tk8.56 per unit.

Before the recent dollar price hike Bangladesh had to spend Tk6 on purchasing per unit electricity from the same power plants.

Bangladesh also imports electricity from Indian public power plants at Tk5.5 per unit, which will, however, remain the same till 2023 as per an existing agreement signed in 2013.

This price may also increase in fresh agreement after the agreement period expires.

Sources at the BPDB said per unit import cost of electricity from Adani Group’s Godda Power Plant which is scheduled to start from December this year will exceed TK11 at the end of running fiscal year. The starting cost will be TK9.21.

Currently, BPDB’s, on average, expending is Tk8.80 in both domestic production and import which was TK6.80 in 2021. However, production cost in Bangladeshi coal-fired power plants is TK13.36 per unit, according to Bangladesh Energy Society.

But the average cost of total electricity has come down as the gas-fired power plants’ cost of per unit production is Tk3.50 and hydro power plants’ cost TK5.50.

The electricity Bangladesh imports from India is mostly generated at coal-fired plants there.

BPDB Member (Company Affairs) Nazmul Haque told The Business Post that the cost of imported electricity is still much lower than the domestic electricity.

“Indian price increased a little due to rise in global energy production and the rest is for dollar price hike,” he said.

On 05 October 2013, the import of power from India started through an experimental 170MW power import. At present 1,160MW electricity is being imported from India.

Company affairs department says Bangladesh has four agreements with the public and private sectors of India for importing electricity under four different contracts of two, four, five and ten years.

250MW of electricity is being imported under public contract and 910MW under private contract. This electricity is generated in 20 power plants in India.

According to BPDB, the price of coal in the world market has increased from $300 to $350 per tonne. As a result, the variable energy cost may increase by Tk2 by the end of this fiscal year.

Adani’s electricity cost will be Tk9.21

Adani Group has almost completed a 1,600MW coal-fired power plant in Godda, Jharkhand State, India for exporting electricity to Bangladesh. BPDB signed an agreement with Adani Group in 2017 to buy electricity.

During the Prime Minister Sheikh Hasina’s recent visit to India, India informed that Adani’s first unit electricity will start delivery from 16 December this year and the second unit from 26 March 2023.

The total power import from India will stand at 3,560MW which is 10 percent of the country’s total electricity installation capacity. BDPD says the 25-year contract with Adani Group set the electricity price at $0.861.

As the dollar price is soaring per unit cost of power will now be Tk9.21. If the escalation of price is considered the price will be Tk11-12, says a director of BPDB on condition of anonymity.

According to a recent report by Bangladesh Working Group on External Debt and India-based Growth Watch, Adani Godda Power Plant 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 power.

Debate on importing Adani’s electricity in winter

BPDB officials have a mixed reaction over Adani’s electricity imports in December.

Several officials told this correspondent that domestic electricity demand will drop to 7000-8000MW in winter. If Adani’s electricity is imported in December there will be a surplus due to gridline complications and Bangladesh will need to pay an increased capacity charge.

Mohammad Hossain, Director General of Power Cell, a policy maker organization of country’s power sector, told The Business Post that the government must stop production at the high-cost diesel and furnace oil power plants in winter when the Adani electricity will arrive.

But he hoped that Adani’s first unit would be able to use the total electricity overcoming the transmission lines complication.

But if the private power plants in Bangladesh run by diesel and furnace oil remains closed they will have to be paid capacity charges.