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Power import from India to get costlier



Thu, 30 May 24

The cost of importing electricity from India has increased. A review of the electricity import costs over the past five years shows that in the last fiscal year alone, the cost of imported electricity jumped by 2 taka 6 paisa per kilowatt-hour (unit). When questioned about this price increase, many attributed it to the start of coal power imports from Adani. The Adani Group's plant in Jharkhand was constructed solely for selling electricity to Bangladesh. It has been criticized for having slightly higher electricity prices compared to other imported coal-fired power plants in the country.

It has also been observed that another Singaporean company, after constructing a plant in India, is selling electricity to Bangladesh at high rates. Sembcorp, the company in question, has a contract to sell 250 megawatts of electricity to the Bangladesh Power Development Board. In the 2022-23 fiscal year, Sembcorp sold electricity to BPDB at a rate of 9 taka 95 paisa per unit. In contrast, Adani sold electricity at 14 taka 02 paisa per unit.

The purchase of electricity from these two plants has significantly impacted the cost of electricity from India. Since electricity prices in India are lower compared to Bangladesh, some Indian companies have started focusing on selling electricity to Bangladesh. These influential Indian companies are not only offering fossil fuel-based electricity but are also proposing to sell renewable energy to Bangladesh. The entrepreneurs of these companies have already met with high-level government officials, offering to sell electricity produced from renewable sources. In India, electricity generated from renewable energy is purchased at a rate of 3.5 rupees per unit.

They have proposed selling electricity to Bangladesh at 9 taka per unit. In the 2018-19 fiscal year, Bangladesh purchased electricity from India at 5 taka 46 paisa per unit, including transmission costs. That year, Bangladesh imported 675 crore 8 lakh 54 thousand 326 units of electricity from India, spending a total of 3702 crore 63 lakh 49 thousand 447 taka. In the following year, 2019-20, the cost of importing electricity from India rose to 6 taka 1 paisa per unit. Bangladesh imported 668 crore 92 lakh 7 thousand 555 units of electricity, with the total expenditure amounting to 4017 crore 12 lakh 96 thousand 679 taka.

In the 2020-21 fiscal year, the total cost of electricity imports from India was 4712 crore 91 lakh 44 thousand 480 taka for 812 crore 88 lakh 88 thousand 573 units, resulting in a per unit cost of 5 taka 80 paisa. In 2021-22, the import cost increased to 6 taka 11 paisa per unit, with Bangladesh importing 764 crore 43 lakh 55 thousand 365 units of electricity, costing a total of 4673 crore 20 lakh 66 thousand 500 taka.

Last fiscal year, 2022-23, the cost per unit sharply increased to 8 taka 77 paisa. Bangladesh purchased 1051 crore 54 lakh 68 thousand 206 units of electricity from India, spending a total of 9223 crore 41 lakh 15 thousand 636 taka. Last year, Bangladesh bought 250 megawatts of electricity from India's state-owned NTPC Vidyut Vyapar Nigam Limited (NVVN) at a rate of 4 taka 22 paisa per unit.

After Prime Minister Sheikh Hasina won the 2008 election and made her first visit to India, a 250 MW electricity purchase agreement was signed. With the sincere efforts of former Indian Prime Minister Manmohan Singh, India agreed to supply 250 MW of electricity to Bangladesh at the Indian central government's rates as a gesture of friendship. At that time, a back-to-back substation was constructed at Bheramara. Bangladesh also proposed to purchase an additional 250 MW of electricity from the Indian open market. Later, the capacity of this substation was increased to 1,000 MW. Additionally, 160 MW of electricity was imported from Tripura, which NVVN facilitated from the Tripura provincial government for Bangladesh.

Electricity prices in India's open market fluctuate daily, similar to Bangladesh's stock market. The prices of electricity purchased by NVVN and PTC (India) as contractors for BPDB have varied. Last year, the price of electricity from Tripura was 8 taka 45 paisa per unit. The price for 300 MW from the open market was 7 taka 15 paisa, and the price for 200 MW from PTC was 9 taka 5 paisa per unit. Sembcorp sold electricity at 9 taka 95 paisa per unit, while Adani sold at a higher rate of 14 taka 02 paisa per unit. It appears that BPDB could have benefitted more by purchasing electricity from the Indian open market rather than from Adani.

The government's integrated master plan for the development of power and energy mentions a significant amount of imports. Increasing dependence on imports rather than developing self-sufficiency could have uncertain future consequences. Bangladesh will have to rely on the policies of neighboring countries and pay any taxes they impose on electricity. Therefore, the government should consider the rising costs of importing electricity from India in all its decisions.

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