Rampal electricity cost doubles for high coal price, increased dollar rate

The cost of power generation (per kilowatt hour) at the 1320 MW Rampal power plant is now estimated to be Tk 14-15 per unit, instead of Tk 7-8 per unit, as envisioned when the project was first taken up, according to UNB.

“The recent hike in coal prices in the global market has pushed up the generation cost. If the coal price declines, the generation cost will also come down rationally,” said Subhash Chandra Pandey, the project director of the Bangladesh-India Friendship Power Company (Pvt.) Ltd (BIFPCL).

The BIFPCL, a joint venture of Indian state-owned NTPC and Bangladesh Power Development Board (BPDB), is the owner and operator of the Rampal power plant.

Officials of the BPDB said that not only the hike in coal price, but escalated dollar price also played a major role in increasing power generation cost in all power plants including the Rampal.

“The coal price was almost half when the power generation cost of Rampal was calculated at the time of implementation agreement,” said a BPDB official. This seems to be a common problem for BPDB, who don't seem to recognise the inherent volatility of international energy markets when making big decisions or entering into agreements.

“Also the dollar exchange rate is about Tk 106 now, up from Tk 84 at the time of the implementation agreement, while per metric ton (MT) of coal price is $232.33,” the official said, preferring anonymity.

Recently, local conglomerate Bashundhara won a contract to supply 8 million MT of coal at $232.33 per MT under the index of ICI-2 to reach the product up to the jetty of the power plant, a sources at BIFPCL revealed.

The Unit-1 of the Rampal coal-fired plant resumed production from Wednesday after a month-long shutdown caused by shortage of coal.

The plant is still under a test run that started in August before being discontinued last month.

Though the plant has resumed its partial production, officials still worry about its uninterrupted operation due to dollar crisis that may again disrupt the import of coal, the plant’s main fuel.

During a briefing session on Thursday, Subhash Chandra Pandey, the project director of the BIFPCL for the Rampal plant said there is no substitute to coal import if the plant is to be kept operational.

“The coal used in the plant is of high standard and not available in the subcontinent”, he told a group of energy reporters who visited the plant.

According to official sources, Unit-1, having 660 MW capacity was forced to shut down on January 14 due to shortage of coal supply.

The authorities of the power plant were unable to open any letter of credit (LC) to import coal due to the dollar crisis.

After a lot of persuasion at the government’s policy level, LC opening was allowed for importing coal and the supplier sent a consignment of 30,000 metric tons.

BIFPCL officials said the supply of foreign exchange required for import of coal for the plant is not under their control.

The official said another consignment of 50,000 MT of coal is also coming to the country soon.

With the current stock of coal, the plant can run until April this year, said the project director, adding that the unit-1 needs about 4500 MT of coal per day to keep operational with full capacity.

“The unit -2 is expected to come into operation in June this year and at that time it will require about 9,000 MT of coal per day,” the official of the project said.

He said though the unit-1 is now under test run as the BPDB which has a power purchase agreement (PPA) with the BIFPCL has not given the go-ahead yet for start of the commercial operation of the plant.