#1CENTRE FOR POLICY DIALOGUE Draft CPD Power and Energy Study Towards Carbon Neutral Economy CPD Webinar on The Power Sector in the National Budget for FY2022: Perspectives on Allocative Priorities & Reform Agenda Presentation by Dr Khondaker Golam Moazzem Centre for Policy Dialogue (CPD) 20 June, 2021#2Study team Dr Khondaker Golam Moazzem Research Director Centre for Policy Dialogue (CPD) ASM Shamim Alam Shibly Research Associate Centre for Policy Dialogue (CPD) Helen Mashiyat Preoty Programme Associate Centre for Policy Dialogue (CPD)#3Discussion points 1. Introduction 2. State of the Power Sector during FY2021 3. The Power Sector in the National Budget for the FY2022 4. National Budget for FY2022 targeting the Clean Energy 5. Addressing Reform Issues in the Power Sector 6. Conclusion 3#41. Introduction#5• 1. Introduction • CPD has been organising a series of events on the National Budget for FY2021-22 concerning different macro and sectoral issues • • The power and energy sector is one of the priority sectors in the national budget This study put focus on power sector related issues from allocative priorities and reform points of view The ongoing year (FY2021) is an eventful year for the power sector of Bangladesh Government has publicly announced abandoning coal-based power generation In different international platforms, the Prime Minister announced • Bangladesh's commitment in shifting from fossil-fuel based power generation towards clean power generation The 8th Five Year Plan (FY2021-25) has been officially made public in December, 2020 where the power and energy sector has got attention • Although the document does not properly reflect the stance on shifting from coal and promoting renewable energy led power generation The National Budget for FY2022 would be one of the first official documents which is supposed to reflect government's political stance and policy commitments • To be reflected in policy stances and fiscal & budgetary measures The present budget analysis has been carried out from two dimensions ● Efficiency-based analysis . Power sector reform analysis 5#62. State of the Power Sector during FY2021 6#72. State of the Power Sector during FY2021 2.1 Overall state of the power sector in FY21 . The success of the power sector has been described with basic facts on installed capacity, per capita generation, access to electricity and system loss etc • Grid sub-station Power sector in 2021& Its target for 2030 2021 2030 Installed capacity (MW) 25227 40000 Consumers (mil.) 40 Trans. Lines (ckt km) 12744 28320 Dist. Lines (km) 612000 660000 26000 59000 (2024) 8.73% 514 kwh 99.5% Source: Power Cell, MoPEMR Baseline Target Target Target Target Target (FY2020) (2021) (2022) (2023) (2024) (2025) 23,548 24,000 26,000 28,000 29,000 30,000 Considerable progress has been made in ensuring access to electricity Installed capacity increased to 25227mw, p/c generation 514kwh and access to electricity reached 99.5% Following that trend, 8th FYP put focus on further enhancement of generation capacity mainly based on fossil-fuel Installed Generation Capacity (MW) RE-based power generation Dis. loss Per capita generation Access to electricity Power sector in the 8th FYP Solar 127 542 895 400 50 2,014 Wind 60 230 10 300 Waste to Energy 6 42 48 Total 127 608 1,167 400 60 2,362#82. State of the Power Sector during FY2021 2.2 Power generation during FY2021: Efficiency analysis • ● The power sector needs to describe its success based on efficiency-led performance analysis The power generation capacity has been continued to rise at a considerable rate during FY2021 despite having a huge surplus generation capacity (37%) • Per capita generation has increased by 20% in FY2021 Coal, gas and HFO based power generation has increased although number of plants has reduced in case of coal and gas-based power generation RE based power generation though increased in FY21, but it has yet to get attention Power generation in FY2020 and FY2021 Energy mix in power generation: FY20 & FY21 Actual (MW) %▲ %▲ between Energy- 2020 2021 mix MW No of 2021 between FY19 FY20 and FY21 No of plants genera plants generate MW ted d (upto May, and (upto Determinant Generation 2019 2020 21) FY20 May) Coal 4 1146 3 1768 8.04 Gas 71 10979 67 11402 Capacity 18610 20383 22023 9.5 HFO 56 5540 61 6044 Maximum HSD 10 1290 10 1290 Demand 12,100 13,300 9.9 Maximum 8.2 Hydro 1 230 1 230 Generation 12,893 12,738 13,792 -1.2 Solar 4 38 7 129 Per capita 20.1 (0.35% (0.5%) generation ) (kWh) (grid) 426.05 426.23 512 0.04 Power 0 1160 0 1160 Per capita Consumption Import (kWh) (grid) 375 378 0.8 Total 146 20383 149 8 22023 Source: BPDB#92. State of the Power Sector during FY2021 2.2 Power generation during FY2021: Efficiency analysis • . • Over generation capacity remains a concerning issue With the rise in generation capacity and slow rise of T&D access, the over generation capacity is likely to increase further Different types of power plants are being used for power generation despite having excess capacity . • • Rental PP operate with a capacity of 1300 MW A number of dated and inefficient power plants operate in public PP and private PP These plants have been targeted to be phased out Without creating scope by phasing out plants, private investment in the RE based power generation would be unviable Over generation capacity % of share of over capacity of installed capacity 24.27% Total installed capacity Over capacity (as per max. Year (MW) generation) 2000-01 4005 972 2010-11 7264 2374 32.68% 2015-16 12365 3329 26.92% 2018-19 18610 6068 32.60% 2019-20 20383 7645 37.51% 2020-21 22023 8231 37.37% Source: Author's calculation based on BPDB data Power plants under different ownership Ownership 2021 2020 No of plants Electricity generation No of plants Electricity generation Public PP 76 9568 57 10146 Joint venture 1 771 1 1244 IPP 49 7583 71 8172 Rental PP 21 1301 20 1301 Imported 1160 1160 Total 147 20383 149 22023 Source: BPDB#102. State of the Power Sector during FY2021 • • 2.3 Progress of transmission and distribution of electricity Transmission and distribution lines have increased during FY2021 The length of transmission and distribution lines has increased at a slower pace compared to that of generation (3.7% and 5.9% respectively vis-à-vis 8%) during FY2021 Dearth of transmission and distribution lines are mentioned as a major reasons for load shedding Surprisingly, official data indicates no load-shedding in the country (between July, 2019 and June, 2021) Transmission and distribution of electricity in FY2021 Load-shed of 01/07/2019 Load-shed of 16/06/2021 Changes FY2019 FY2020 FY2021 between 2019 and 2020 Changes between FY2020 and FY2021 Area Load Shedding Load Area Shedding Dhaka 0 Dhaka 0 Chittagong 0 Chittagong 0 Transmis sion line Khulna 0 Khulna 0 Rajshahi 0 Rajshahi 0 (ckt km) 11,650 12,283 12,744 633 (5.4%) 461 (3.7%) Comilla 0 Comilla 0 Distributi Mymensingh 0 Mymensingh 0 on line (km) 5,24,000 5,77,479 612000 Source: Author's calculation from the data of BPDB annual reports 53,479 (10.2%) 34,521 Sylhet 0 Sylhet 0 (5.98%) Barisal 0 Barisal 0 Rangpur 0 Rangpur 0 Total 0 Total 0 10#112. State of the Power Sector during FY2021 2.4 Cost of Electricity during FY2020 • • BPDB's total cost of electricity was almost at the same level in FY2020 with that in 2019 However, per unit cost of electricity (Tk/kwh) has declined but at a slow pace (from Tk.6.01 in FY19 to Tk.5.91 per kwh in FY20) • A significant rise in cost of electricity from IPPs and quick rental in recent years constrain slowing down the per unit cost The per unit cost is the lowest in case of BPDB and purchase from public plants (Tk.3.8 and Tk.4.5 respectively) but it is higher in case of rental power plants (Tk..8.3) Total and Per Unit Cost of Electricity in FY2019 and FY2020 FY 2017-18 Amount (Crore Tk) Cost (Tk/kWh) FY 2018-19 Amount Cost FY 2019-20 Amount Increase Increase or Cost (Crore Tk.) (Tk/kWh) (Crore Tk.) (Tk/kWh) decrease in FY 2019 or decrease in FY 2020 i. BPDB's Generation 9,431.39 6.44 ii. Purchase from IPP 10,410.59 5.72 7,648.06 15,748.50 4.58 7,464.76 4.47 (18.91)% (2.40)% 7.42 17,518.98 7.00 51.27% 11.24% iii. Purchase from Rental 6,281.73 8.77 5,013.62 8.40 3,216.43 8.34 (20.19)% (35.85)% iv. Purchase from Public Plant 7,289.54 4.52 6,839.30 3.82 6,671.67 3.86 (6.18)% (2.45)% v. Purchase from India 2,812.58 5.87 3,702.63 5.46 4,017.13 6.01 31.65% 8.49% vi. Interest on budgetary support 1,188.31 0.20 1,294.80 0.19 1,294.80 0.19 8.96% 0.00% vii. Provision for Maintenance and 1,162.67 0.19 998.20 0.15 1,015.02 0.15 (14.15)% 1.68% development fund Total 38,576.81 6.33 41,245.12 6.01 41,198.80 5.91 6.92% (0.11)% 11 Source: BPDB annual report#12• 2. State of the Power Sector during FY2021 There is huge variation in per unit cost of electricity purchased from different IPPs While the average cost is found to be Tk.7.42 in FY19 and Tk.7.0 in FY20, the unit costs for some plants were as high as Tk.394 in FY2019 and Tk. 1579, Tk.944, Tk.606, Tk.394 and Tk.311 respectively for different plants Unit cost variation (measured in st. deviation) is higher in FY2020 compared to FY2019 FY 19 FY 20 Difference in per unit cost between average 450 Difference in per unit cost between average 24 394.53 1800 400 and highest costs, FY2019 22 1,579.57 and highest costs, FY2020 1600 2019 (Selected PPs) 150 200 350 300 250 16 18 20 2019 (Weighted AVG) 2020 (Selected PPs) 400 1400 1200 600 606.08 944.21 394.53 311.45 100 82.47 10 50 75.78 72.68 57.46 31.75 7.42 200 8 39.3 38.51 7 31.22 0 65 0 Bangla Track Power Company Ltd. Bangla Track Power Company Ltd. (Unit-2) 6 Bangla Track Aggreko Energy Solution Ltd. - Aorahati (100MW) Aggreko Energy Solution Ltd. - Brahmangaon (100MW) APR Energy 300MW Paramount BTrac Energy Ltd. Sirajgonj Power Company Ltd. APR Energy 300MW Paramount Bangla Track Aggreko Energy Aggreko Energy BTrac Energy Power Company Solution Ltd. Solution Ltd. - Ltd. Sirajgonj Ltd. (Unit-2) Aorahati Brahmangaon (100MW) (100MW) Karnaphuli Power Ltd. Lanka Power Limited - Feni 2020 (Selected PPs) --2020 (Weighted AVG) Standard deviation of unit cost of power generation 2020 (Selected PPs) --2020 (Weighted AVG) Particulars FY 2019 FY 2020 Public Power Plants 6.0 131.7 IPP and SIPP 19.6 245.7 Rental and Quick Rental Power Plants 6.9 8.7 Purchase from India 1.4 1.6 Source: Author's calculation 12 185 225 2020 (Weighted AVG)#132. State of the Power Sector during FY2021 2.5 BPDB's operating income and expenses during FY2020 • • BPDB's financial position is still in red although operating losses has slightly declined BPDB's operating loss is about Tk.4350 crore in FY2020 A number of cost-heads have experienced significant rise in costs during FY2020 Distribution expenses (42.9%), generation expenses (excl. fuel cost) (23%), electricity purchase from IPP (11%) . A number of cost-heads have experience decline in expenses: fuel cost, electricity purchase from rental Head of Accounts BPDB's Operating Income/Expenses Operating income/expenses Changes (% per year) Between FY2018 and FY 2018 FY 2019 FY 2020 Between FY2019 and FY2019 FY2020 Operating Revenue (1) 30,604 34,507 35,535 12.8 2.9 Sale of Electricity Other Operating Revenue 29,741 33,064 34,012 11.2 2.9 863 1,443 1,524 67.1 5.6 Operating Expenses (2) 36,812 39,553 39,887 7.5 0.8 Fuel Cost 6,122 4,249 3,415 -30.6 -19.6 Generation Expenses (Excluding fuel cost) 2,406 2,442 3,008 1.5 23.2 Electricity purchase from IPP 10,411 15,749 17,519 51.3 11.2 Electricity purchase from RENTAL 6,282 5,014 3,216 -20.2 -35.9 Electricity purchase from Public Plant 7,290 6,839 6,672 -6.2 -2.5 Electricity purchase from India 2,813 3,703 4,017 31.7 8.5 Wheeling Charge to PGCB 183 215 232 17.6 7.9 Distribution Expenses 924 948 1,354 2.6 42.9 General & Administrative Expenses 383 395 453 3.2 14.82 Operating Profit/(Loss) = (1-2) -6,207 -5,046 -4,352 -18.7 -13.8#142. State of the Power Sector during FY2021 2.5 RE based power generation in FY21 . • Renewable energy is largely off-grid based and particularly solar energy based • • . Out of 730MW of installed capacity 496MW (67.9%) are solar Technology Solar Wind 69.8% of solar power is based on off-grid Hydro Lack of smart grid system is a major bottleneck for expansion of grid based solar RE Net metering system has added 24.7 MW electricity till date • This is only 3.3% of the total installed capacity of renewable energy Different sources of RE Off grid On grid Total (MW) (MW) (MW) 346.69 149.93 496.62 2 0.9 2.9 0 230 230 0.69 0 0.69 Biomass to electricity Total 0.4 0 0.4 349.78 380.83 730.61 Source: SREDA Biogas to electricity Share of RE • Little contribution of DPDC, DESCO and Year others State of net metering system Installed capacity % share or RE in total installed capacity 2019 615 2.73 Utility Name Installed Capacity Quantity 2020 649.5 3.12 BPDB 6.9 MW 307 BREB 11.5 MW 261 2021 730.61 3.32 DPDC 2.2 MW 243 DESCO 2.3 MW 325 Source: BPDB annual report WZPDCL 0.9 MW 199 NESCO 0.9 MW 50 TOTAL 24.7 MW 1385 14 Source: SREDA#152. State of the Power Sector during FY2021 2.6 Selected Initiatives and Activities undertaken by the BPDB • • Mega projects having 3,840MW power generation capacity are being implementing at Payra, Maheshkhali and Matarbari areas aimed at ensuring power and energy security MOPEMR is seeking the prime minister's approval to convert 13 large coal power projects into clean liquefied natural gas (LNG) based plants These 13 coal-based projects either made little progress or could not secure financing Bangladesh Power Development Board (BPDB) has been paying the Payra power company Tk115 crore every month as "capacity payment" - a kind of penalty for keeping a functional plant idle • Payra is operating at half capacity, as one of its two units has remained idle since its completion in December last year owing to delays in the construction of a transmission line Government of Bangladesh has set a target to generate 2000 megawatts of electricity from renewable energy sources in three years, which will be 10 per cent of the country's total power production BPDB has started evaluating a number of bids submitted by aspiring bidders for two more wind power plants - one in Chandpur and another at Inani Beach, Cox's Bazar. . Each of the two projects will have 50-MW generation capacity • A levelised tariff of Tk 10.56 kwh (each unit) over the period of 20 years 15#162. State of the Power Sector during FY2021 2.6 Selected Initiatives and Activities undertaken by the BPDB • • · Bangladesh accounts for 1.2% of the global share of LNG imports in 2020, an increase of 0.1% from 2019. . The country imported LNG from Algeria, Equatorial Guinea, and Nigeria. The highest volume of LNG import came from Nigeria-0.55 million tonne Bangladesh will buy two LNG cargoes from spot market in June, one less from May, 2021 as it will be importing more gas from term suppliers in the hot summer month. . • . • Buy another 33.60 lakh MMBtus of liquefied natural gas (LNG) from the spot market to meet the growing demand for the super-chilled fuel. Vitol Asia Pte of Singapore will supply the fuel. Each MMBtu (Metric Million British thermal units) will cost $8.012. Bangladesh initiated to import LNG from spot market after two years of the country's first LNG cargo import in August 2018. It has a 15-year contract with Qatargas to import 2.5-million tonnes per year at a 12.65% slope of the three-month average Brent price plus a 50-cent constant The government for the first time has taken the pricing authority of LPG marketed by private companies in its hand by re-fixing its price at the retail level. • . According to the order, per 12kg LPG cylinder will cost Tk975, which is now being sold at Tk1000 to Tk1100, depending on companies. The retail price of the state-owned LP Gas Limited's 12.5kg cylinder will cost Tk591, instead of the existing price of Tk.600 16#172. State of the Power Sector during FY2021 2.6 Selected Initiatives and Activities undertaken by the BPDB The 'Power Factor Improvement and Smart Grid under Dhaka Power Development Company (DPDC) Dhaka, Bangladesh' is the first ever smart grid project in Bangladesh and will be implemented over the next five years • • The French Development Agency (AFD) and the government have signed a grant financing agreement of 12 million euro or around Tk 1.24 billion to support advanced digital solutions It will also prevent an accumulated 1,04,000 tonnes of CO2 emissions per year Electricity billing will be online in future as part of upgrading the system, which will help stop 'inflated' electricity bills Office management system will be online Some 61,265 electricity clients across the country raised allegation until July 05 against inflated electricity bills out of around 40 million consumers across the country 17#182. State of the Power Sector during FY2021 2.6 Selected Initiatives and Activities undertaken by the BPDB • • • . A project involving Tk 4,000 crore has been taken under the BREB to develop the distribution network . DPDC received Tk 3,051 crore from the Annual Development Programme to expand and strengthen the power system network. Under the project, the overhead electric cables will go underground The government has made allocations to develop the transmission system to evacuate electricity from the Rooppur Nuclear Power Plant and Matarbari and Payra power plants A move is underway to install 1.4 million (1400,000) smart prepayment meters under jurisdiction areas of Dhaka Power Distribution Company Limited (DPDC). . As a part of the government's plan to bring all consumers of power under smart prepayment metering system DPDC will spend Tk 145 million as fees for a consultant to supervise nine electricity substation installation and rehab work. The AFD will provide the support MOU has signed between Petrobangla and H-Energy, India on import of LNG through pipeline from India 18#193. The Power Sector in the National Budget for FY2022 1999#203. The Power Sector in the National Budget for FY2022 3.1 Power Sector in the Policy Speech of National Budget for FY2021 Aim: Ensuring power and energy security through public investment Projects underway: 38 power plants with a capacity of 14,115 MW are under construction, and • • Contracts have been signed for the construction of another 20 power plants with a capacity of 2,961 MW Six power plants with a capacity of 650 MW are in the process of tendering • Construction of 33 power plants with a capacity of 15,019 MW has been approved Ensuring energy security: To increase the supply of LNG, there is an initiative to set up a land-based LNG terminal with a capacity of 1,000 million cubic feet per day in the Matarbari area of Cox's Bazar district • • To enhance and consolidate energy security, the government has taken steps to increase fuel oil reserves In 2009, the country's fuel storage capacity was 8.94 lakh m. tons, which has been increased to about 13.20 million m. tons Renewable energy: At present, 722 MW of electricity is being generated from renewable energy Solar power plants and wind power plants are being installed to generate 10 percent of the total electricity from RE#213. The Power Sector in the National Budget for FY2022 3.1 Power sector in the Policy Speech of National Budget for FY2021 My Village My Town: Encouragement and support will be provided for setting up of biogas plants and solar panels on group basis to increase the supply of electricity and energy in the villages and make them more reliable. T&D Line: There is a plan to increase the number of transmission lines to 28,000 km and the number of distribution lines to 6.60 lakh km by 2030 System Loss: Reduced from 14.33 percent in 2009 to 8.73 percent in May, 2021 • Little reflection in the budget speech about government's political commitment and Prime Minister's commitment in various international platforms moving the power sector towards clean-power#223. The Power Sector in the National Budget for FY2022 3.2 Overall allocation for the power sector • Budget allocation for power division (in crore taka) 30000 24853 25398 23674 25000 21971 20000 In the FY 2022 Budget, the Energy and Power sector has an allocation of Tk. 27,484 crore which is mostly earmarked for ADP (Tk 27,367 crore) 15000 • Allocation for Power Division: Tk 25398 Crore (Op: Tk.49 Cr., Dev: Tk.25349 Cr.) Allocation for Energy and Mineral Division: Tk 2086 Crore (Op: Tk.68 Cr., Dev: Tk.2018 Cr) Allocation has increased by 15.6% in BFY2022 compared to that in - RFY2021 (Tk 23,777 crore) – almost at the same rate in Power Division and Energy and Mineral Division . The share of Energy and Power divisions in total budget has reduced to some extent in FY 2022 (from 4.71% in FY 2021 to 4.55% in FY2022) 23,632 24,804 25,349 10000 21,935 5000 42 49 36 49 0 RFY 2020 BFY 2021 RFY 2021 BFY 2022 ■Total ■Operating ■Development Budget allocation for energy and mineral resources division 3000 2480 2500 2086 1905 2000 1806 1500 2,417 1000 1,836 2,018 1,749 500 63 69 57 68 0 RFY 2020 BFY 2021 RFY 2021 BFY 2022 Operating Development ■Total 22#233. The Power Sector in the National Budget for FY2022 3.2 Overall allocation for the power sector Budget allocation for power division (in crore taka) 30000 24853 25398 • The sector has a good track record in ADP implementation - average rate 23674 25000 21971 20000 of implementation in FY2021 is 15000 59.4% (July-April 2021) - higher than the overall average 23,632 24,804 25,349 10000 21,935 5000 • Both operating and development budget have increased in FY2022 42 49 36 49 0 RFY 2020 BFY 2021 RFY 2021 BFY 2022 • • Although both the budgets were reduced in FY2021 Both in case of power and energy divisions Government has returned back to pre-covid level in case of budget allocation for FY22 after halting a year (in FY21) apprehending resource constraints owing to Covid pandemic (figure below) 40.0 30.0 20.0 10.0 -10.0 -20.0 -30.0 ■Operating Development Total % Changes in non-development and development budget of the Power and Energy Divisions 0.0 Change (%) in FY 21 Change (%) in FY 22 -40.0 23#243. The Power Sector in the National Budget for FY2022 . 3.2 Overall allocation for the power sector • • • • Despite being burdened with overcapacity, power sector is continuing to give priority to generation related projects under ADP 62% of the total ADP allocation of power sector is provided for generation (including Ruppur Power Plant) Power sector should shift its allocation from generation towards more on transmission and distribution FY 2022 budget did not give due importance towards generation of renewable energy based power generation At present only 730 MW of electricity generation capacity from renewable energy which is only 2.86% of total generation capacity • PSMP 2016 had aimed to generate 10% of the total capacity from RE within 2025 No new investment under SREDA for RE-based projects Despite the political commitment for phasing out from fossil-fuel based power generation towards clean-energy based power generation, FY 22 budget has failed to address that commitment Sub-sector Distribution of ADP allocation of FY 22 in Power Sector Allocated ADP (Lakh) Generation Tk 28325.4 Transmission Tk 8779.3 Distribution Tk 8,558.6 Total Tk 45663.3 % of total ADP 62.03% 19.23% 18.74% 100% 24 Source: Author's calculation#253. The Power Sector in the National Budget for FY2022 3.2 Overall allocation for the power sector The power division needs to take cash loan from the government in order to meet the costs. In FY22 the subsidy provided for energy and power sector will remain same at Tk 9,000 crore like FY21 • BPDB is the single largest borrower of cash loan from the government. A large part of the borrowed fund will be used to meet the capacity payment The subsidy will likely mean that BPDB will not need to seek permission from BERC to raise the power tariff which is not desirable during the crisis period 160 Cash Loan Received by the Power Sector (billion Tk) 150 140 120 129 113 96 100 90 90 80 90 90 80 74 61 60 40 52 40 35 36 28 29 20 0 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 R F22B ■ PDB Total cash loan Source: Budget statement 2A_E and Mid term Macroeconomic Policy Statement 25#263. The Power Sector in the National Budget for FY2022 3.3 ADP allocation for BPDB • • A total of 102 projects will be implemented under the Power Division during FY2022 • . Highest number of projects are related to distribution (31) followed by energy (27) and generation (26) Number of transmission related projects are less Majority of projects are 'carryover' projects (40) followed by 'concluding’ (35) and 'continuing' projects (26) Despite the highest number of projects under distribution related activities, majority are carryover projects Same is also evident in case of transmission and generation which means inefficiency in project implementation Higher allocation for transmission and distribution does not necessarily mean better implementation of projects Types of implementing project under ADP in FY2022 Types of project Freq. Percent Distribution 31 30.39 Fuel & Energy 27 26.47 Generation 26 25.49 18 17.65 102 100 Transmission Total Project completion status by Types of project (in number) Carry Conclud Continui Ne Tot Project over ing ng W al Distribution 15 11 4 1 31 Fuel & Energy 6 9 12 02 27 Generation 11 9 6 0 26 Transmission 8 6 4 18 Total 40 35 26 102 Project completion status by types of implementing project Project Carry Conclud Continu Ne Tota over ing ing W 1 Distribution 48.4 35.5 12.9 3.2 100 Fuel & Energy 22.2 33.3 44.4 0.0 100 Generation 42.3 34.6 23.1 0.0 100 Transmission 44.4 33.3 22.2 0.0 100 39.2 34.3 25.5 1.0 100 Total 26#27• • 3. The Power Sector in the National Budget for FY2022 3.3 ADP Allocation for BPDB Relative Performnace of Project Completion, FY21 & FY22 . Majority of projects are at the early stage of implementation 18 16 14 12 • About 38.2% of projects will be implemented less than 50% level The situation did not improve from the last year (Fig above) The status of carryover projects is very shocking • 15% projects would be completed by at best 20% 13% projects would be completed by at best 40% Majority of projects have lost their track of project completion cycle (Fig below) 10 88 420 Zero >1-10% >10-20% >20-30% ■Possible implementation in FY21 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% <1% A part of the projects which are allocated for completion by FY2022 may not be completed on time Zero >20-30% >30-40% >40-50% >50-60% >60-70% >70-80% >80-90% Possible implementation rate by FY20-100% or more... Comparison of Completion Rate of Similar Projects between FY2021 and FY2022 >1-10% >10-20% >20-30% >30-40% >40-50% >50-60% >60-70% >70-80% >80-90% >90-100% Total Possible completion rate in FY22 ■>50-60% ■>80-90% >1-10% ■>30-40% ■>60-70% ■>90-100% or more than 100% >10-20% ■>40-50% >70-80% 27#283. The Power Sector in the National Budget for FY2022 • 3.3 ADP Allocation for BPDB Analysis of allocation by organizations reveal that allocations are not evenly distributed • In case of distribution related projects, allocation has increased at DPDC while it has declined in case of BPDB, BREB, DESCO and WZPDCL The allocation for transmission has been made only in case of PGCB The generation related allocation has been made in few companies such as BPDB, CPGCBL, NWPGCL A number of companies received less allocation such as B-R PCL, EGCB and RPC Agency wise Changes in ADP Allocation %▲ in FY22's Generation Transmission Distribution Allocation Ashuganj Power Station Company Ltd. (APSCL) Bangladesh Power Development Board (BPDB) BR Powergen Company Ltd. (B-R PCL) Bangladesh Rural Electrification Board -22.3 -22.3 1.5 38.2 -58.9 -58.9 -49.5 Coal Power Generation Company Ltd. (CPGCL) 54.8 54.8 Dhaka Electric Supply Company (DESCO) -58.5 Dhaka Power Distribution Company (DPDC) 85.4 -45.7 -49.5 -58.5 85.4 Electricity Generation Company of Bangladesh Ltd. (EGCB Ltd.) -37.1 -37.1 North West Power Generation Company (NWPGC) 54.4 54.4 Power Grid Company of Bangladesh (PGCB) 16.3 16.3 Rural Power Company Ltd. (RPCL) -75.3 -75.3 West Zone Power Distribution Company Ltd. (OZoPaDiKo Ltd.) -62.4 -62.4 28#293. The Power Sector in the National Budget for FY2022 3.4 Comparison with ADP Allocation Mentioned in 8th FYP . The Power sector does not get allocation in accordance with the allocation proposed in the 8th FYP During FY2022, allocation for energy and power are less than that mentioned in the policy document . A less allocation for fossil-fuel based energy is a blessing in disguised % changes in development allocation of budget over 8FYP 5.0 0.0 1.2 -5.0 -10.0 -8.2 -15.0 -20.0 -18.3 Energy Power ■%▲BFY21-8FYP -4.2 ■% ▲ BFY22-8FYP 0.5 -5.4 Power & energy 29#304. National Budget for FY2022 targeting the Clean Energy 30#314. National Budget for FY2022 targeting the Clean Energy A number of RE-based projects are implemented by different ministries and departments • • These include three projects under MOPEMR, three projects under MoA, one project under MoT Projects include solar panel establishment, solar power plant, irrigation through solar pump, micro-irrigation through solar energy and establishment of solar base station Projects implementation status are mixed: two carryover, three concluding and two continuing projects None of the project under SREDA is included in the ADP for FY2022 Renewable energy based Projects implemented by the MOPEMR, FY2022 Maximum Possible Name of project Completion by FY22 Organi sation Type of Project Project Ministry status Electricity distribution through solar panel establishment in the remote areas of Chattogram hill tracts Generat 39% CHTDB Continuing MOPEMR ion Sonagaji 50MW solar power plant building 36% EGCB Agriculture irrigation through solar driven pump 93% BREB Generat ion Distrib ution Carry over MOPEMR Carry over MOPEMR 31#324. National Budget for FY2022 targeting the Clean Energy Renewable energy based Projects implemented by the MOA, FY2022 Maximum Name of project Possible Completion by FY22 Organisation Type of Project Project status Ministry Increase crop production through expansion of solar energy and water saving modern technology (pilot) 82% DAE Generation Concluding МоА Experimental research on extension of two- tier agricultural technology through solar energy-based irrigation system and its versatility 100% RDA Generation Concluding МоА Development of micro-irrigation using solar energy 48% BADC Generation Continuing МоА Renewable energy based Projects implemented by the MOPTCI, FY22 Name of project Maximum Possible Completion by FY22 Organisation Type of Project Project status Ministry Strengthening Tele talk network coverage in remote and inaccessible areas by setting up solar base stations 78% Tele Talk Generation Concludin g PTD 32#335. Addressing Reform in the Power Sector 33#34• 5. Addressing Reform in the Power Sector 5.1 Coal-based power plants are still being financed despite official announcement of abandoning coal-based power plants ADP allocation for FY2022 includes nine coal-fired power project with allocation which raises question about the Ministry's position regarding government's stance on abandoning coal-fired power plants. These include- • • a) Land acquisition, development and resettlement for implementation of Patuakhali thermal power plant (revised) (Tk.37 crore); b) Land acquisition, protection and feasibility study for Bangladesh- Singapore 700MW ultra super critical coal based power plant (2nd revised) (Tk.40 crore); c) Land acquisition, development and conservation for Patuakhali 1320MW super thermal power plant (Tk.42 crore); Few projects did not get any allocation- a) Land acquisition for Moheshkhali power hub; b) Matarbari ultra super critical coal fired power project-2 (PGCB part from Matarbari to Madunaghat 400KV transmission line) • Funding for some projects are related to coal-fired power plants which are currently in progress . MOPEMR should immediately stop all kinds of activities related to coal-based power generation particularly those which are in the pipeline 34#35Organization Type of Project BPDB Generation Coal & gas Thermal/Ultr RPCL Generation a super thermal Ultra super/Ultra CPGCBL Generation super critical coal 5. Addressing Reform in the Power Sector Name of project Status of ADP Allocation for Different Projects relayed to Coal-Based Power Generation and Transmission Land acquisition for Moheshkhali power hub Land acquisition, development and resettlement for implementation of Patuakhali thermal power plant (Revised) Land acquisition, protectiona nad feasibility study for Bangladesh-Singapore 700MW ultra super critical coal based power plant (2nd revised) Revised Type of plant Expenditure up allocation to June 2020 Cumulative Allocation FY22 Maximum Possible Completion by FY22 Project status Possible completion FY21 by FY21 Carry 131,661 58,210 1 143% 99.4 over Conclud 0 11250 3700 17% 82.4 ing Conclud 55,638 2200 4000 72% 87.5 ing Ultra Feasibility study for setting up super/Ultra Conclud CPGCBL-Sumitomo 1200 MW CPGCBL Generation 0 175 150 18% 47.7 ultra super power plant super critical ing coal Land acquisition and Ultra anchillary activities for setting up CPGCBL-Sumitomo 1200 super/Ultra CPGCBL Generation 0 1 10 0% MW ultra super critical coal super critical coal Conclud ing 85 based power plant Ultra Matarbari 2*600 MW ultra super/Ultra Continui super critical coal fired power project Land acquisition, development and conservation for Patuakhali 1320MW super thermal power plant CPGCBL Generation 1,274,693 420000 616200 64% 46.1 super critical coal ng Thermal/Ultr Carry APSCL Generation a super thermal 0 12395 4200 20% 40.4 over Link road and anchillary infrastructure building projects for Payra 1320MW Thermal/Ultr Carry NWPGCL Generation a super thermal 0 7500 10000 70% 50.3 over thermal power plant Matarbari ultra super critical coal fired power project-2 (PGCB part from Matarbari to Madunaghat 400KV Ultra super/Ultra Carry PGCB Transmission 52,593 56450 1 100% 104.1 super critical coal over 35 transmission line)#36• 5. Addressing Reform in the Power Sector 5.2 Allocation for Ruppur should be reduced • Ruppur Nuclear Power Plant received the highest allocation in the ADP (Tk.18426 cr.) which will help the project to complete 53% of the project Given the huge amount of access electricity in hand, such huge allocation for quick implementation of the project (target 2025) would create a pressure for surplus electricity Allocation for the project should be reduced - both from the government and from the Russian government The extracted allocation should be used for RE based power generation Allocation for Ruppur nuclear power plant and its transmission activities in FY22 Name of project Implementing organisation Type of Allocation Project FY22 Project Aid GOB Maximum Possible Completion by FY22 Project completion status Ruppur nuclear power plant Bangladesh Nuclear Energy Generation 1842616 1600000 242616 53% Continuing Commission Development of transmission infrastructure for generated power evacuation of Ruppur Nuclear Power Plant PGCB Transmissi on 207939 164995 42944 24% Continuing Total 2050555 1764995 285560 36#37• ● ● ● 5. Addressing the Reform in the Power Sector 5.3 Overcapacity should be significantly reduced • Over capacity has increasingly become a concerning issue As much as 60% capacity is currently unutilized (16 May 2021) A plant wise analysis shows that majority of plants remain idle as high as 100% in a particular day (16 May 2021) 25000 20000 15000 10000 5000 Such inefficiency caused high capacity payment to a large number of enterprises This caused a rise in average unit price of electricity as high as Tk.1500 per kwh Such huge cost burden is increasingly getting difficult for the BPDB to accommodate its loss and force it to take loan from the government BPDB is at present the highest recipient of cash loan from the government. . BPDB should revise its generation plans for 2030 considering the revised slow rise in demand 0 Overcapacity Issue in the Power Sector 70.0 48.9 64.1 60.2 60.0 50.0 40.0 30.0 20.0 10.0 0.0 16/1/2018 16/2/2018 16/3/2018 16/4/2018 16/5/2018 16/6/2018 16/1/2019 16/2/2019 16/3/2019 16/4/2019 16/5/2019 16/6/2019 16/1/2020 16/1/2020 16/2/2020 100% Installed Capacity OZZ/S/9T Peak Evening 16/4/2020 16/5/2020 16/6/2020 16/1/2021 16/2/2021 16/3/2021 16/4/2021 16/5/2021 Over capacity Plant wise overcapacity (in %) on 16 May 2021 21 20 29 80% 38 48 51 66 67 72 71 60% 40% 20% 0% Dhaka Chattagram Comilla Mymensigh Sylhet Khulna Barishal Rajshahi Rangpur Total ■0 1--20 21-40 41-60 61-80 80-99 100 37#385. Addressing Reform in the Power Sector 5.4 Exiting Quick Rental Power Plants • Despite the official stance on gradual phase out quick rental power plants, the period has been extended in most of the plants • • . These would further creating pressure to the BPDB Given the over capacity, the peak demand would be easily met by rest of the power plants During FY2020 only 440 MW worth of electricity was used which was only 1/3 of total capacity of quick rental power plants Without exiting these power plants it is difficult to create space for demand for grid-RE based power demand in the country. Name of plant RPP QRRS and Their Periods of Contract Installed Fuel capacity (MW) Derated capacity (MW) Contract period (in years) Contract expired 50 50 5555 Venture 34.5 MW, Bhola Gas 56 50 3 11.07.2021 Enegyprima, Sylhet Gas 50 50 3 04.01.2020(ext.) Engergyprima. Bogra Gas 20 10 3 12.11.2020(ext.) Precision, Ashuganj Gas 60 55 3 06.04.2023(ext.) Energyprima, Fenchuganj Gas 44 44 3 14.02.2021(ext.) GBB, Bogra Gas 23.3 21.7 Barakatullah, Fenchuganj Gas 55.1 51 Shajibazar (Hobiganj) Gas 92.8 86 15 16.06.2023 23.10.2024 09.02.2024 Desh, Kumargaon, Sylhet Gas 11.7 10 15 17.03.2024 Sub-Total (RPP) 412.9 377.7 QRPP Ghorasal 78.5MW (Max), Gas 78 78 3 Narsingdi 08-01- 21(Extended) 21-06- Ashuganj (United), B-Baria Gas 53 53 3 19(Extended) 17-03- Bhola (Aggreko) Gas 95 95 4 22(Extended) Madanganj (Summit), 31-03- HFO 102 101.2 5 Naryanganj 21(Extended) 07-05- Meghnaghat (IEL), Naryanganj HFO 100 100 5 21(Extended) Siddirganj (Dutch Bangla), 20-07- HFO 100 100 5 Naryanganj 21(Extended) Power Pac Mutiara, Keranigonj, Dhaka 26-03- HFO 100 100 5 22(Extended) 28-05- Noapara (Khanjahan Ali), Jessore HFO 40 40 5 21(Extended) Khulna (KPCL-II), Khulna HFO 115 115 5 31-05- 21(Extended) Amnura Sinha Power, Chapai 12-01- HFO 50 50 5 Nababganj 22(Extended) 21-05- Katakhali (Northern), Rajshahi HFO 50 50 5 22(Extended) Julda (Acorn), Chattogram HFO 100 100 5 25-03- 22(Extended) Sub-Total (QRPP) 983 982.2 Total RPP and QRPP 1359.9 38#395. Addressing Reform in the Power Sector 5.5 No further Extension of 'Speedy Supply of Power and Energy Act' Bangladesh's energy and power sector needs to shift its activities from the 'emergency management' (initiated in early 2010s) to 'market-led' management • It needs to improve its transparency, accountability and efficiency 'Speedy Supply of Power and Energy Act' 2010 was enacted targeting special need in 2010 • • It was enacted on October 12, 2010, for two years. In September 2012, the government first extended the law for two years which expired on October 11, 2014 The Act further extended for another four years till October 11, 2018 The Act has once again extended for three more years - till 10 October, 2021 Given the development of the power and energy sector, the 'Speedy Supply of Power and Energy Act' needs to be discontinued immediately As per Act, the it can be discontinued any time before its period of expiry through repealing it 39#406. Conclusion 40 40#416. Conclusion • • • • The success of the power sector needs new narrative . The sector continued relying on fossil-fuel based power generation. and related transmission and distribution as its case of achievement The success needs to be examined from efficiency and reform points of view • Moving gradually from 'horizontal' towards 'vertical' expansion of the sector towards 'quality' along with 'quantity' The national budget for FY2022 has special importance from the power sector in the context of changing national and global perspectives with regard to moving towards carbon-neutral economy Particularly through phasing out coal and other fossil-fuel based power generation and promoting renewable energy Unfortunately, the proposed budget for the power sector does not reflect that perspective . The budget has put focus on traditional areas - mostly in generation and partly in transmission and distribution and no special focus on RE led power generation The budget speech did not reflect key policy reform issues such as shifting from coal and LNG, phasing out of quick rental, promoting RE based power generation 41#42• • 6. Conclusion The overall performance of the power sector during FY2021 is mixed . • • • Positive changes observed in case of generation, transmission and distribution Modest rise in RE based power generation though it's share is still negligible Overcapacity and frequent power outage and 'zero' load-shedding in official data three contradictory issues have been continuing BPDB borne a huge financial burden because of its over generation capacity - per unit cost for some power plants was as high as Tk.1500 although average cost is Tk. 7. Variation in per unit cost was higher in FY2020 compared to that in FY2019 Modest level of activities observed in the SREDA The budget allocation for the Power sector has increased - allocation for distribution get the priority . · • However, higher allocation does not explain adding new projects rather majority of the distribution related projects are 'carryover' projects which portrays inefficiency in project implementation Transmission related projects observed rise in 'carryover' projects The allocation for distribution and transmission for different agencies shows both reduction and increase in budget which portrays skewed nature of allocation and subsequent adverse effect on electricity users of different areas 42#43• 6. Conclusion The BPDB is the highest recipient of cash loan from the government over the last nine years . • ● . A major reason for not being no-loss/profitable state by BPDB is because of its over-emphasis on power generation by the private sector which caused almost half of the electricity unused (beyond reserve margin) Shifting this financial burden to the consumers by raising power tariff will be unjustified BPDB should exclusively focus on reduction of over-generation capacity, stop giving approval of new power plants, phasing out of coal and LNG, exiting from QRR and rental PPs Enhanced budget allocation for SREDA The MOPEMR particularly BPDB should announce the following: a) No new power plant to be in operation before 2025 b) No further extension of any QRR and rental power plants c) The timeline for exiting of quick rental power plants d) No allocation for coal-fired power plants (except those three which are ongoing and their related transmission and distribution) e) Reduction of maximum per unit cost of electricity from each plant with a minimum level of variation f) Gradual rise in proportionate share of budget allocation in transmission and distribution related projects over generation related projects g) Share of 'carryover projects' in transmission and distribution should be declined#44• 6. Conclusion • The budget allocation for RE related projects should be further enhanced Activities of SREDA should be further promoted • • Government should invest more in RE based projects (both small and large scale projects) Fiscal incentive structure for investment in RE-based power sector projects should be further widened FDI in the RE should be facilitated by making the domestic business environment favorable including making the businesses viable and derisking The power sector should be made competitive- thus all types of bidding should be held under 'open bidding' system maintaining transparency . In this context 'Speedy Supply of Power and Energy Act' should be discontinued immediately. ⚫ This Act should not get further extension after the end of the current tenure (10 October, 2021). 44#45Thank you. 45