01 Jun 2023
Bangladesh’s largest power plant, which China built and which opened a year ago, is expected to go offline in early June because it will run out of coal as the South Asian nation faces blackouts linked to a heat wave, officials said.
They said the government owes hundreds of millions of dollars to the China National Machinery Import and Export Co. (CMC), which has refused to supply coal to the joint venture that owns the Payra thermal plant, unless the government pays off that outstanding debt.
To much fanfare in March 2022, the government of Prime Minister Sheikh Hasina inaugurated the 1,320-megawatt plant, which cost about U.S. $2 billion to build and was hailed as designed to power the entire country.
“One unit of the Payra power plant … has already ceased operation because of the coal shortage. The other unit will close beginning June 2 when the coal supplies run out,” Shamim Hasan, director of the public relations wing at the Bangladesh Power Development Board, told BenarNews.
“The ongoing dollar crisis has caused the coal shortage. Bangladesh Bank [the central bank] is not supplying dollars. The company asked for U.S. $400 million in outstanding payments. Without this payment, the supplier CMC will not provide coal,” he said.
Bangladesh relies mainly on China and India for its coal imports.
“The southcentral Barishal division and the southwestern division of Khulna will experience acute power shortages after total closure of the Payra power plant,” Hasan said, adding the government must pay the company an investment charge even if the power plant sits idle.
He did not provide the investment charge rate.
Hasan said another 1,320-megawatt coal-fired power plant, Rampal, had ceased production because of the coal shortage. After receiving a shipment, it is supplying 400 megawatts of electricity.
The Payra power plant is one of many projects that Chinese companies are building in Bangladesh as part of the Belt and Road Initiative, Beijing’s ambitious plan to build roads, bridges, ports and other infrastructure across the globe, according to a report by the state-run Xinhua news agency.
Hasan said the nation’s power plants have been able to generate 13,000 megawatts.
“Owing to the ongoing heat wave, the power demand crossed 14,000 megawatts on Tuesday. The demand is likely to escalate to 15,000 megawatts if the heat wave continues,” he said.
“Therefore, we see power outages across the country.”
The Bangladesh Meteorological Department said the ongoing heat wave was likely to continue for the next four to five days.
“With the rise in temperature, the demand for electricity for cooling such as running fans and air conditioners increases, forcing the authorities to go for power cuts,” Ijaz Hossain, an energy expert and professor at the Bangladesh University of Engineering and Technology (BUET), told BenarNews.
“We knew that Bangladesh is going to face a crisis in the energy sector. We alerted the government about it. But proper actions were not taken,” he said, blaming a “wrong policy.”
“The government has invited the private sectors to invest in the power sector to enhance the country’s production capacity, expecting higher economic growth. The private sectors have set up power plants and get money from the government no matter whether they produce electricity or not,” he said.
Those efforts mean Bangladesh has 153 power-generating plants, according to the Power Development Board. The public and private sectors each contribute 42% of electricity production while the rest is created by foreign companies and through imports.
All told, Bangladesh could produce 24,143 megawatts of power each day, but Hossain said not all plants are operational because of the lack of demand.
“We have ensured 100% electricity coverage. Look at the pattern of electricity usage: 50% demand comes from the households. If we cannot increase the demands from the industrial sectors, we cannot create big demands,” he said.
Mohammad Hossain, director general of the government’s power cell, blamed the outages on currency issues along with higher liquefied natural gas prices caused by Russia’s invasion of Ukraine.
“The prices of coal and LNG in the international market have gone up several times. We have to think twice before purchasing LNG and coal at increased rates,” he told BenarNews.
“We are facing the problems like a family with needs: When we manage one sector, we see problems in another sector. Hopefully, the situation will be over soon,” he said.