Power Industry Development Plan of Bangladesh

The Bangladesh govt. vision to provide electricity to most of the residents at a logical price and to accomplish overall socio-economic development of the country, the government of Bangladesh has initiated a Power and Energy Sector Development Roadmap (2010-2021) which targeted to produce 8,500 MW by 2013, 11,500 MW by 2015 and 20,000 MW by 2021. However, to guarantee overall and balanced development of this sector, government has taken different plans in terms of duration. The plans have been developed based on a techno-economic study and a least-cost option. These plans include balanced development in generation, transmission and the supply system to achieve a desired level of reliability of supply. A brief summary of the development plan is given as follows: 

Short Term Plan

According to the short-term plan of the govt., liquid fuel based 12-24 months of implementable power stations will be established. However, government has initiated to put into action a power station with a capacity of 920 MW in 2011. But the plan has not fully achieved.

Mid Term Plan

Under this plan, within 2012-2015, government has taken into account to establish 3 to 5 years of implementable coil based power stations with a capacity of 2,600 MW to the total capacity of 7,714 MW. This plans implementation is running.

Long Term Plan

As of the Power and Energy Development Roadmap (2010-2021), government expects to meet the goal of 20,000 MW by the year 2021 through the increase of 10% production per year towards accomplishment the per capita consumption to 600 Kw.

Bangladesh is gradually climbing up the development ladder. Energy and power needs to act as a key mechanism in helping Bangladesh in this Endeavour. Industries are being mechanized and the country is gradually moving from a labor-intensive economy to a capital intensive one. Electricity and power are critical to the nation at such a stage. Bangladesh has a vast market as far as power and electricity is concerned and good prospects for constructing power generation plants exist in the country in terms of resources available and government policies. 

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Energy Shortage and its facing plan of Bangladesh Government

Petrobangla started extensive exploration and drilling activities to increase gas reserves, given that natural gas was used to produce commercial energy in Bangladesh. The government predicts that currently known natural gas reserves would be depleted by 2015 at current demand; in 2009, demand exceed supply which means frequent energy shortage. A total of 23 gas field had been discovered in Bangladesh and the estimated reserves were about 200 plus billion cubic meters.

Under Petrobangla five companies carried out gas transmission and distribution in Bangladesh. The companies constructed new distribution pipeline to the total pipeline network of the country. The companies provided gas to power stations of Bangladesh Power development Board, private power stations, and fertilizer factories.

Though Cairn energy plc of the United Kingdom announced that the Sangu Plant in Chittagong able to produce 4.8 million cubic meters per day, but by December 2008, production had decreased to 1.4 million cubic meters per day.

The government of Bangladesh awarded three offshore blocks in the Bay of Bengal to two international companies, which would then be awarded production-sharing contracts for hydrocarbon exploration with a provision to export ConocoPhillips Co. of the United States, and one block was awarded to Tullow Oil plc of Ireland.

Tullow Oil also had operations in Bangladesh’s offshore interest. In October, the Bangora-3 well was added into the 120 million cubic feet per day from 100 million cubic feet per day. In September, Chevron Corp. discovered gas in its Bibiyana of 6.6 trillion cubic feet of gas, which was an increase from the previously estimated 3.4 trillion cubic feet of gas.

In future, cement, coal, and crushed stone demand will be increase because of government planning of building bridges and other improvements to the country’s infrastructure. Cement production capacity could increase as local producers continue to improve their facility’s annual capacity.

The government is expected to continue to set up joint ventures with worldwide companies, mainly for exploration in the mineral fuels sector. Once the ultimate review of the coal policy fulfilled and the new policy is in place, the government of Bangladesh would be able to move toward the goal of having the entire country with a steady power supply by 2020.

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Summit Power Limited: Past, Present & Future

Summit Power Limited (SPL), sponsored by Summit Group, is the first Bangladeshi Independent Power Producer (IPP) in Bangladesh in private sector providing power to national grid. SPL was incorporated in Bangladesh on March 30, 1997 as a Private Limited Company. On June 7, 2004 the Company was converted to Public Limited Company under the Companies Act 1994.

In private sector power generation ‘Summit Power Limited’ is the pioneering Bangladeshi company. It started power generation from 2000 and has over the years gained experience in project implementation and operation & maintenance of power plants. This has given Summit Power Limited an edge over others in becoming the leading Bangladeshi company with eleven operating plants of its own and two operating plants with co-ownership. Summit’s portfolio in present power generation is 317 MW. In addition, Summit Power Limited has acquired 18.7% of Khulna Power Company Limited (KPCL). The total installed capacity under Summit Power Limited is 367 MW.

Out of all the awarded contracts by BPDB for construction of HFO fired quick rental power plants, Summit Power Limited is the only company that has completed, within the scheduled 270 days time, its 102 MW Summit Narayanganj Power Plant (SNPL) and for which it has received international gold award on September 28, 2011 as “The Best Fast Track” project in asia.

This is indeed a great recognition of the ability of the country in general and Summit in particular, to construct in world standard, a medium size power plant. Summit Narayanganj Power Limited has achieved financial close by receiving a foreign currency term loan of USD 45 million from DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH and FMO - Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V.

Summit Power Limited has also been awarded ICAB National awards for best published accounts and reports of 2010 as well as Best Presented accounts and Corporate Governance Disclosures awards 2010 by South Asian Federation of accountants (SAFA – an apex body of SAARC) for its Transparency, accountability & Governance.

Summit Power Limited has always used brand new highly efficient engines/turbines and other auxiliaries of best international standard. The aim is to spend bare minimum fuel for per unit of generation of electricity which is provided by the State. The new and quality machine allows for Summit Power Limited to maintain its guaranteed contractual availability and Heat Rate (fuel consumption for generation of one unit of electricity) ensuring efficient use of fuel and gas. Furthermore the company has already taken initiatives for implementation of Integrated Management System (IMS), which includes - ISO 9001 : 2008 – Quality Management System (QMS), ISO 14001 : 2004 – Environmental Management System (EMS), ISO 18001 : 2007 – Occupational Health & Safety (OH&S).  Summit Power Limited and its subsidiaries at present operate 11 power plants. The Generation Capacity of these power plants is 317 MW (approximately). In 2011, all these power plants were made available to the extent required as per the Power Purchase agreement (PPa), indicating excellent operational performance of the company. as a result these plants could deliver electrical energy to the national grid totaling to 1,803 million units (Kwh) approximately, which is 23% higher than that in 2010.

Electricity is one of the main driving forces of the economy and it has a diversified use and multiplier effect on the economy. This year Summit Power Limited Company added 1,803 million units (Kwh) of electricity to the national grid. This addition has contributed significantly in enhancing industrial productions and providing more job opportunities in the country. The Company is now set to continuously increase and enhance its contribution to national economy in the years to come. The company has full tax exemption on its revenue, but it has contributed a significant amount to the national exchequer in the form of different duties, taxes and VAT while importing spare parts for the power plants’ maintenance work and at investment in capital and money market. The estimated amount of contribution was of Taka 94 million in 2011.

Summit Power Limited, the first Bangladeshi Independent Power Producer (IPP) has been awarded “AA” Credit Rating in the long term and ST–2 rating in the short term by an internationally linked joint venture rating agency Credit Rating Information & Services Limited (CRISL) in collaboration with Rating Agency Bernhard, Malaysia and JCR-VIS Rating Company Limited, Pakistan. The rating is a unique distinction for a Bangladeshi company in private sector power generation to receive such an internationally recognized credit rating. Entities rated in this category are adjudged to be high quality, offer higher safety and have high credit quality. This level of rating indicates a corporate entity with a sound profile and without significant problems. Risks are modest and may vary slightly from time to time because of economic conditions. The short term rating indicates high certainty of timely payment. Liquidity factors are strong and supported by good fundamental protection factors. Risk factors are very small.

Summit’s Power plants are operated and maintained wholly by Bangladeshi engineers and technicians setting an example of growing entrepreneurial and technical sufficiency of Bangladeshi industrial enterprises. The company has also received ISO 9001:2000 certification in 2002 for its quality management and for the maintenance of high environmental standard.

Summit Power Limited in 2001, has successfully established three power plants of 11 MW capacity each, for sale of electricity to Rural Electrification Board (REB) on Build, Own and Operate basis at Savar, Narsingdi and Comilla. During 2006 and 2007 in each of the above three places, 2nd unit was commissioned enhancing the capacity of SPL to 105 MW. In 2009 SPL with its 99% owned two subsidiaries has established 4 new power plants raising its capacity to 215 MW. In 2011 SPL has commissioned another power plant of 102 MW capacities at Narayanganj under Summit Narayanganj Power Limited, where SPL has 55% ownership. 

In the year 2011 Summit Power Limited has consolidated its position further by acquiring 53,955,326 numbers of ordinary shares of Khulna Power Company Limited (KPCL). It gives SPL the status of 18.7% of the ownership of KPCL and with that status an additional capacity of 50 MW (approximately) has been added with that of SPL being the total capacity of 367 MW.  Considering the immense opportunities, the company is striving to establish more power plants around the country. The fast-growing company has set a mission to expand the company with a power generation capacity to the tune of 1000 MW, which is a modest 20% of the electricity requirement in Bangladesh.

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