Desco

CHAPTER 4: POWER GENERATION

4.1 Background and Trends Significant efforts aimed at adding new generation capacities characterized the power sector of Bangladesh in recent years. As a result, installed capacity and evening peak electricity generation have increased over the period of 1994-2011. Compound Annual Growth Rates (CAGR) during this period were 5.81 percent, 7.17 percent and 5.62 percent for installed capacity, derated capacity and evening peak generation respectively. A significant portion of this addition in generation came from liquid fuel based(Diesel, HFO) power plants rising the overall contribution of liquid fuels in power generation to 12.6 percent in 2011 compared to only 5 percent in 2010. However, the addition in installed capacity is not reflected reflected in terms of proportional proportional increase increase in power generation. More power plants have become non-operational in recent years resulting in huge gap between derated capacity and evening peak generation since FY 2005-2006 as evident from figure 4.1. Moreover, increase in generation costs resulted in huge budgetary subsidy. The government has estimated USD 366 million as subsidy in the energy sector for the fiscal year 2011-12 which is 333.33 percent higher than that of the FY 2009-10.1 The government has proposed to allocate USD 872 million in the power sector as the development budget for FY 2011-12 which is 340 percent higher than that of FY 200910. Installed, derated capacity and evening peak generation as of December 31, 2011 was 8,033 MW, 7,413 MW and 4,728 MW respectively. Figure 4.1: Installed, Derated Capacity and Evening Peak Generation 1994-2008 (in MW)

Source: Power Cell

1

In line with the increase in generation capacity, average daily electricity generation has increased steadily from 25.26 M kWh in FY1994-1995 to 72.26 M kWh in 2009-2010 as shown in Figure 4.2. This represents a CAGR of 7.70 percent over the period. Figure 4.2: Average of Daily Electricity Generation 1994-2010 (in M kWh)

Source: Powercell

As of June 2011, household electrification rate increased to 50 percent of the total population compared to 47 percent in April 2010. Considering the captive generation as well per capita consumption of electricity grew by 7.2 percent during this period and now the consumption stands at 252 kWh per capita. Electricity generation in Bangladesh is overwhelmingly gas based. More than 82 percent of evening peak electricity is generated by using natural gas (Figure 4.4). This is followed by liquid fuel and coal with generation shares of 12.61 percent and 2.49 percent respectively. Hydro accounts for 2.78 percent of generation. Compared to previous year’s (2010) power generation mix, contribution of natural gas decreased by approximately 8 percent and contribution of liquid fuel increased by 152 percent in the mix of total generation of electricity. Around 1,169.88 M kWh of electricity generated in 2010 was attributed to coal whereas in 2011, only 780.74 M kWh of electricity was generated from coal based power plants. Figure 4.3: Energy Generation (FY 2010): 29,247 M kWh

Figure 4.4: Energy Generation (FY 2011): 31,355 M kWh

Source: Powercell

In line with the increase in generation capacity, average daily electricity generation has increased steadily from 25.26 M kWh in FY1994-1995 to 72.26 M kWh in 2009-2010 as shown in Figure 4.2. This represents a CAGR of 7.70 percent over the period. Figure 4.2: Average of Daily Electricity Generation 1994-2010 (in M kWh)

Source: Powercell

As of June 2011, household electrification rate increased to 50 percent of the total population compared to 47 percent in April 2010. Considering the captive generation as well per capita consumption of electricity grew by 7.2 percent during this period and now the consumption stands at 252 kWh per capita. Electricity generation in Bangladesh is overwhelmingly gas based. More than 82 percent of evening peak electricity is generated by using natural gas (Figure 4.4). This is followed by liquid fuel and coal with generation shares of 12.61 percent and 2.49 percent respectively. Hydro accounts for 2.78 percent of generation. Compared to previous year’s (2010) power generation mix, contribution of natural gas decreased by approximately 8 percent and contribution of liquid fuel increased by 152 percent in the mix of total generation of electricity. Around 1,169.88 M kWh of electricity generated in 2010 was attributed to coal whereas in 2011, only 780.74 M kWh of electricity was generated from coal based power plants. Figure 4.3: Energy Generation (FY 2010): 29,247 M kWh

Figure 4.4: Energy Generation (FY 2011): 31,355 M kWh

Source: Powercell

Public and private sectors equally share the power generation generation sector of Bangladesh. Bangladesh. 51 percent of Bangladesh’s total power plants are owned by the state. The Government, in face of the country’s

current power crisis envisions electricity for all by 2021 while ensuring a reliable supply at affordable affordable prices. The target has been particularly set in line with the United Nations Millennium Development Goals (MDG) for economic development and poverty alleviation. Empirical data on electricity generation and GDP growth reveals a correlation of 1.5 to exist between the two variables. Thus, an increase in GDP by 7 percent percent requires power generation to increase increase by 10.5 percent. percent. According to the government’s Election Manifesto, power generation targets include 5,000 MW by 2011, 7,000 MW by 2013 and 20,000 MW by the year 2021. Maximum power generation stood at 5244 MW in 2011. The government of Bangladesh claims to progress according to its plan and projects the possibility of generating 7,000 MW and 8,000 MW by years 2013 and 2015 respectively.

4.2 Nature of the market The market for electricity includes households, agriculture, industries, and transport. In Bangladesh, about 50 percent of the population currently has access to electricity. The remaining 50 percent represents the market yet to be brought under the national grid. The present generation capacity (derated) of 7,413 MW cannot be realized to its fullest due to the events of forced outage, maintenance activities and particularly fuel constraints i.e. gas supply shortage. One-fourth of the generation plants of the power system are more than 20 years old, which causes higher maintenance costs and regular plant outages. In addition, gas supply shortfall forced the power plants to operate at a reduced capacity in recent years. Hence, even the demand originating from within the grid remains unmet. Against the demand of 6,454 MW (with DSM) in the year 2011, the actual generation capacity falls short by 1,000-1,200 MW, which reaches around 2,000 MW during the summer months. Figure 4.5: Planned Electricity Demand-Supply Balance

Source: Power Division

As the country suffers a shortage of dependable electricity generation, the ongoing power system development programs emphasize capacity addition. However, the implementation trends do not provide a promising picture of this development program. In order to meet the demand on shortterm basis, a number of plants on the quick rental basis have been contracted and commissioned.

The share of the quick rental in the added capacity was 32.3 percent in 2010 and in the next year the projected contribution by these plants was 67.9 percent. Such a high dependence on quick rental power plants does not provide the assurance that the power supply scenario is becoming more reliable and stronger any time soon. Nevertheless, the government’s projection of the demand supply trend of the power sector draws an optimistic picture that includes having surplus generation capacity from the year 2013 onwards.

4.2.1 Demand forecast for electricity Over the last ten years, net energy demand has grown at an average compound annual rate of 8.1 percent. The Power System Master Plan 2010 (PSMP) forecasted year wise demands for electricity in Bangladesh up to 2030 (Appendix 4A). According to the projections by PSMP, Grid system demand with Demand Side Management for 2015, 2020 and 2030 would be 10,283 MW, 17,304 MW and 33,708 MW respectively as opposed to the current (2012) demand of approximately 7,518 MW. Captive demands for areas where grid is not likely to reach within the projected years are estimated to be 1,335 MW, 1,515 MW and 2,951 MW for 2015, 2020 and 2030 respectively. The Power System Master Plan 2010 forecasts the demand for electricity on the basis of GDP growth and the elasticity of electricity demand. The projection also considers the possible impact of demand-side management (DSM) programs. DSM programs involve using energy-saving equipment and machinery, holiday staggering programs in the industrial segment, and avoiding wastage of electricity. The power demand forecast shows that the demand for electricity will be growing at around 10 percent over the next decade. The growth will slow down after that and will stabilize at a rate of 7 percent from the year 2028 onwards. However, considering the reinforcement from DSM, demand for electricity is projected to be growing at a comparatively comparatively slower rate. A noteworthy fact is that the off-grid demand goes up over the forecasting horizon. The power system master plan does not seem to have any plans in connecting the entire population to the national grid in the near future, which casts doubt about the government’s commitment to their stated vision of providing electricity to all

by 2020. The impact of DSM is very significant in the power sector analysis as the master plan estimates up to a 15 percent reduction in demand for power due to appropriate practice of DSM projects. In Bangladesh, a number of initiatives have already been taken to popularize DSM for both primary energy and power usage. The initiatives include: holiday staggering program in the industrial segment (reduced 150 MW of demand), closing the shopping malls at 8 pm (reduced 350 MW of demand), distributing over 10 million energy saving CFL bulbs at free of cost among the subscribers (reduced 150-160 MW of demand), providing advice on DSM, and encouraging DSM through mass promotions. However, the DSM measure, supplying energy efficient CFL bulbs, failed due to poor quality of bulbs procured under the program.

For power system development analysis, Bangladesh is divided into five geographical regions: the Central, Northern, Southern, Western and greater Dhaka regions as shown in figure 4.6 Figure 4.6: Geographical Segmentation in Power System Development Program

Source: Power System master Plan 2006

The load distribution factor for a region is that region’s percentage of total national demand. Table

4A.2 in Appendix 4A presents estimated electricity demand for each area for the Base Case of the Power Sector Master Plan 2006. The regional substation load based on the results of the Power System Master Plan -2010 is shown in the figure 4.7 below. The substation load of Dhaka region is approximately 40 percent, which is the highest. In addition, the substation load of the east region is approximately 70 percent. If the amount of the power generation is equally located in both the east and west, the power flow from the west to the east will be approximately 20 percent. As the Jamuna River divides the country into eastern and western zones, a huge amount of investment will be required to construct the rivercrossing transmission line. Therefore, it is important that the power development plan be consistent with the regional load balance.

Figure 4.7: Substation Load by Reg ion

Source: Power System Master Plan 2010

4.2.2 Supply plan to meet the demand In order to meet the growing demand for electricity, 15,000 MW of new generation capacity has been planned. The plan involves commissioning a number of quick rental and rental power plants as immediate measures to meet the demand in the short run. Once the generation scenario is strengthened after the completion of large power projects, small generation units will be gradually uninstalled. The generation expansion program of GoB is planned to be implemented in the following phases: 

Immediate: 6 -12 Months Rental and Quick Rental Plants (liquid fuel) Short term: 18 - 24 Months Peaking Plants (liquid fuel) Medium term: 3 - 5 years Combined Cycle Plants (Gas or dual fuel) Peaking Plant (Gas or dual fuel) Coal fired steam plants Long term: beyond 5 years LNG based Combined Cycle Plants Domestic/Imported Coal Power Plant Gas/Oil based Peaking Plant Nuclear Power Plant Renewable Energy 







  



    

Anticipated completion of the new power generation projects up to 2016 are illustrated in Table 4.1.

Table 4.1: Calendar-wise Project Completion (from 2010 to 2016) YEAR

2010

2011

(MW)

(MW)

2012 (MW)

2013 (MW)

2014 (MW)

2015 (MW)

2016 (MW)

TOTAL (MW)

Commissioned Public

255

1107

582

1040

1270

450

1500

6204

Private

270

105

1319

1134

1053

1900

1300

7081

Quick Rental

250

1238

Total

775

2450

1488

1901

2174

2323

2350

2800

14,773

Source: Bangladesh Power Development Board

Indigenous natural gas, coal, LPG, LNG, nuclear, and hydro resources are mainly considered as fuel for the additional generation plan. It also includes cross-border trade. Other factors such as availability of fuel, cooling water, transportation of heavy equipment, proximately to grid network and load center etc. are also considered for plant placement. The generation plan up to 2030 segmented by fuel type is illustrated by the following figure: Figure 4.8: Power Generation Plan till 2030 by Fuel Type


The plan heavily relies on coal based power generation in the future, while the contribution of the gas based plants are expected to decline over time. Both domestic and imported coal resources are given equal priority in the generation plan. However, the prime minister has recently declared its intention to conserve domestic coal for future generation and meet present demand through imports. Moreover twelve noted citizens protested the proposal of a coal-fired power project near the Sundarbans. They expressed their worries over a move to sign an agreement with the NTPC of India for setting up the proposed 1,300-megawatt plant at Rampalupazila in Bagerhat. The other fuel types and cross-border power trade will be undertaken as acting in a supporting role in meeting the national demand.

The year wise detailed power development plan according to the PSMP 2010 is given in table 4B.1 in Appendix 4B. The name of each power plan indicates the region where it is planned to be commissioned. 4.2.2.1 Region wise supply (existing and planned) Summary of BPDB’s supply forecast up to 2016 is given in the table 4.2 below. According to the plan,

Khulna zone in the western grid will have greatest addition of up to 2,743 MW of installed capacity while no capacity addition will be made in the Rajshahi zone in the coming 4 years. Two detailed Tables of existing and planned power plants up to 2016 divided into different regions are provided in Appendix 4B table 4B.2 and 4B.3. Table 4.2: Summary of Existing and Planned Power Supply (Regional Breakdown)

Eastern Grid

Western Grid Existing

Dhaka

Chittagong

Comilla

Mymens ingh

Sylhet

Khulna

Barisal

Rajshahi

Rangpur

Installed Capacity (MW)

3333

937

1167

232

571

959

78.5

483

340

Derated Capacity (MW)

3164

887

1054

197

563

864

68

463

306

2743

450

Planned Installed Capacity (MW)

1853

1246

265.5

145

1524

1052

Source: Keystone Study

4.2.3 Mix of plants, e.g. Large, CHP, Peaking etc. In Bangladesh there is no system for combined heat and power (CHP) service. The Peak and Base load power generation addition depend upon the demand fluctuation in the daily load curve. Figure 4.9 below depicts the general demand fluctuation and generating operational conditions in a typical day. Gas based combined cycle power plant, nuclear and coal-fired power stations demonstrate several advantages over a stable fuel supply system as well as economic efficiency making the systems suitable for baseload generation power. Gas (LNG) power stations are more suitable for middle load generation power due to environmental adaptability and operations capability as

compared with other generations. Oil and hydro powers are able to operate flexibly over demand fluctuations; hence these powers are suitable for peak load generations.

Figure 4.9: Optimum Mix Generation

Source: TEPCO Annual Report

To set the long-term power source configuration driving the peak and base load power plants, screening analysis for the power system is done analytically. The screening analysis consists of a combination of the fuel/cost graph and the electric power demand duration curve. It shows what demand uses which power supply, i.e., economically optimal combination of power supplies. The gas price in Bangladesh is much lower than the international price. If fuel prices are assumed to increase because of tight demand of the primary energy, the optimal power supply configuration ratio would be- oil 10 percent, gas 20 percent, and coal 70 percent. To estimate the mix of power plant, it is necessary to find out the actual peak demand and base load demand. In Bangladesh, the power supply has constantly remained constrained in peak hours. Potential demands have not been met, and rotational outage has frequently occurred. Table 4.3 depicts the characteristics of base load , middle load and peak load generation.

Table 4.3: Characteristic of Base-Middle-Peak Generation

Base Hydro Economic Condition

Operational Condition

Fixed

Middle

Nuclear

Coal

Gas/LNG

High

Variable

-

Start up duration

Fast

Slow

Load Control

-

-

Peak Oil

Hydro(Pumped Storage

Hydro(Dam/pndage)

Low Low

Middle Middle Slow

Middle

High High

Fast Fast

Source: PSMP Study Team

The following figures (4.11 and 4.12) illustrates power development plan by BPDB up to 2010 for Base load generation by fuel type for base scenario in MW and percentages respectively. Figure 4.11: Power Development Plan by FY 2030 (MW)

Source: Power Division Figure 4.12: Power Development Plan by FY 2030 (%)


4.2.3.1 Year wise plan till 2016 According to Bangladesh Power Development Board’s Planning for the next 4 years, the following

mix (Table 4.4) of Peaking, Large and Combined Cycle Power Plants will be commissioned throughout 2012 to 2016. Table 4.4: Mix of Plants (Large, Peaking, CCPP) 2012- 2016

2012

2013

2014

2015

2016

Peaking Plants

Large Plants

Combined Cycle PP

No. of Plants

11

4

1

Capacity (MW)

1287

295

163

Contribution in Total additions in Generation

44%

16%

4%

No. of Plants

15

2

8

Capacity (MW)

3027

199

1726


91%

6%

52%

No. of Plants

16

0

15

Capacity (MW)

3054

0

2463


93%

0%

75%

No. of Plants

8

0

8

Capacity (MW)

2032

0

1410


93%

0%

65%

No. of Plants

3

0

1

Capacity (MW)

2350

0

750


100%

0%

32%

Source: BPDB

4.2.3.2 Long term plan (2010-2030)

According to the PSMP-2010, the maximum demand in 2015, 2021 and 2030 will be 10,000; 19,000 and 34,000 MW respectively. To meet the demand with reliability, installed capacity needs to be increased to 24,000 MW and 39,000 MW by the year 2021 and 2030 respectively. Generation capacity from different primary fuel in the year 2030 would be: 

Domestic and imported coal based ST- 19,650 MW (Base Load)



Nuclear power- 4,000 MW (Base Load)



Gas and LNG- 8,850 MW regional Grid- 3,500 (Middle)



Regional Grid- 3,500 MW (Peaking) Liquid Fuel, Hydro, Renewable- 2,700 MW (Peaking)

4.2.4 Projects under pipeline As of December 2011, 39 power projects were in the pipeline with 6,784 MW of installed capacity in the private sector and 5,098 MW of installed capacity in the public sector. Detailed list of the projects in the pipeline is provided in Appendix 4C. The list includes the name, location, capacity, fuel type and expected commissioning date of the projects.

4.2.5 Rental and quick rental projects under pipeline There are no projects under pipeline for rental and quick rentals. The last were commissioned in 2011. 4.2.5.1 Mix of fuel for rental and quick rental

No new rental or quick rental projects are in the pipeline. Figure 4.13 shows the fuel mix for rental projects that were recently commissioned i.e. in 2010 to 2011. Figure 4.13: Fuel Mix for Rental Projects Commissioned in 2010-2011

4.2.6 Commercial arrangement of contracts The nature of commercial arrangements varies depending on the ownership structure of the power projects. Commercial arrangement of contracts of BPDB owned power plants follow the Public Procurement Rules (2008) which is discussed in a later section (4.2.9). Commercial arrangement of contracts in case of Independent Power Producers (IPP) is guided by the Private Sector Power Generation Policy of Bangladesh (IPP) whose tenure could be anything from 7 to 22 years. IPPs are characterized by three contracts. The Power Purchase Agreement (PPA) is a contract between BPDB and the IPP where BPDB is bound to purchase the power produced by the IPP. The Fuel Supply Agreement is between the IPP and the Fuel Supplier (namely Petro Bangla) where the IPP is guaranteed uninterrupted fuel supply. The Implementation Agreement (IA) is a direct contract between the IPP and the Government backstops BPDB’s payment commitment, provides fiscal incentives to facilitate the project. Rental Power Plants again follow PPR or a competitive bidding process whereas contracts for quick rentals are awarded based on negotiation. Price determination in such cases either requires the single buyer to supply fuel where the vendor only gets the capacity payment or the vendor is allowed to import the necessary fuel directly, provided the fuel is a pass through item. Payment is made by the single buyer on a monthly basis in Bangladeshi taka, unless otherwise specified in the

contract. The duration of the contract may vary from a minimum of three years up to twelve years. However, contracts have extended beyond twelve years in the past. Rental power plants have a ‘must dispatch’ obligation under the c ontract up to the declared capacity

with an acceptable level of variance. A default results in penalty. But if directed by the load dispatch authorities to produce a lower amount of electricity or go for a complete shutdown, the vendor is entitled to receive capacity payment only. According to the power generation expansion plan, the GoB intends to phase out rental power plants shortly with the commissioning of gas or coal-based large scale steam turbine or combined cycle power plants. Any delay in execution of the plan will compel the government to extend the rental contracts resulting in the government either choosing to continue providing high subsidies or seek alternatives measures e.g. tariff inflation, extensive load shedding, etc. 4.2.6.1 Future challenges that power sector (especially national government) could face because large amounts of very high cost rental power has been contracted

The addition of new power facilities to the national grid for the last few years has come at a significant cost to the economy and the government as much of the new electricity comes from the use of expensive fuel oil-fired rental plants which produce power at over six times the prices charged by the standard gas-fired plants. The financial burden imposed by rental power plants has contributed to a troubling decline in the country’s scarce foreign exchange reserves because of import of capital machinery and additional fuel oil for the rental power plants and make hefty increases in the price of fuel oil and power to ordinary consumers. Since January 2009, there has been an increase of 2,900 MW in power. However, net gain in power is only about 1,500 MW due to the lack of maintenance and old age of already existing plants. About 1,088 MW out of the 1,944 MW created by the GoB has come from the use of untendered rental power plants. The rental power plants run on expensive imported liquid fuel — either furnace oil or diesel. The government buys 2 million tonnes more than it had to, three years back. Moreover, the power produced by these plants is more than six times the cost of power from the standard gas-fired power stations which have in the past produced most of the country’s power. Within a year, till August 2011, BPDB has more than doubled the amount of energy it buys from 2

rental plants which produce electricity at USD .16 a kilowatt-hour (unit) which is over six times what the public sector plants sell power for, USD .024 a unit. At the same time, there has been a 25 percent decrease in the level of low-cost power generated in the public sector plants. Consequently, according to the BERC, the power board will spend more than double the amount of money on a unit of power in February than it did when the government first assumed office — USD .065 compared with USD 0.029. In order to deal with these significantly higher costs, the government increased the retail prices of both fuel oil and power. The price of power was increased by approximately 25.5 percent whilst the cost of diesel and kerosene went up by 39 percent, compressed natural gas by 79 percent and furnace oil by 131 percent. Economists of the country say that the increase in fuel oil and power prices has contributed to the surge in inflation which has risen from 7.5 per cent in November 2010 to 11.6 per cent in November 2011. They accuse the government of failing to consider the consequences of this policy on an

2

economy which already had a large budget deficit and claim that it will take a long time for the economy to recover. The economy is trapped in a cycle where inflation is increasing whilst at the same time local businesses are not able to invest as banks have lent significantly to the government. The government has exhausted its borrowing limit, around USD 2.26 billion, for the financial year 2011 –12 from the banking channels and thus created a liquidity crisis for the entrepreneurs. Few steps have been taken thus far by the power board to decrease the use of its low-cost power generating plants through renovation of its old plants to replace the use of expensive rental plants. The power board is yet to formulate a guideline for the release and use of the Power Maintenance and Development Fund which was created with some of the additional money it collected from an increase in electricity tariffs in February 2011. The rental power plants together have emerged as a serious challenge for the government. The GoB is left with no option other than spending a substantial amount from its reserve to run the rental plants, which has again come under strain of late because of the less-than-expected inflow of foreign assistance and remittance income, on the import of additional quantity of diesel and furnace oil. Apart from the foreign exchange expenditure, what is worrying the government more is the subsidy that it would have to provide on account of the supply of fuel to the rental power plants and the gross mismatch between power procurement and selling tariffs. There are confusions about the subsidy estimates since varying disclosures are made from to time by men in-charge of the ministry and agencies concerned. However, according to the latest estimates, if selling tariffs remains unchanged both in the case of petroleum products and power, the government would have to provide subsidies worth USD 2.8 billion - USD 1.7 billion on oil marketing by the Bangladesh Petroleum Corporation (BPC) and USD 1.1 billion on power purchase, mainly from rental power plants, by the Power Development Board (PDB) in the current fiscal. If the 'subsidy' estimates are right, the government will have difficulty in meeting those, particularly when the allocation against all types of subsidies in the national budget for this fiscal is little over USD 1.1 billion. In such a situation, the government will take recourse to what most governments do; it would borrow from banks in excess of the amount projected in the budget, thus, adding more fuel to an already high inflationary pressure (point-to-point inflation, according to the Bangladesh Bureau of Statistics, was 12 per cent in last September).

4.2.7 Conversion efficiency of existing plants One fourth of the generation plants of the power system are more than 20 years old causing higher maintenance costs and plant outage. The current status of existing gas-fired power plants Facilities under BPDB control can be roughly classified into 4 groups. The current state of each is shown in the following table 4.5.

Table 4.5: Classification of Gas-fired Power Plants under BPDB Control


The capacity of a conventional facility using steam turbines (ST) ranges from 55 MW to 210 MW. For adopted steam conditions, the pressure is 13 MPa for a 210 MW unit (maximum capacity) and 9.0 MPa for a re-heat type with a temperature of 540 °C and non-re-heat type with a temperature of 535 °C. The design performance (thermal efficiency) of such a facility is approximately 30 percent; lower than that of a coal thermal power generation plant. The oldest facility was produced in 1974. Almost all gas turbine facilities (GT) are old, small-capacity, and with low thermal efficiency except for the recently installed large-capacity plants in Tongi and Baghabari. Manufacturers supplying the facilities include GE (USA), ALSTOM (France), Mitsubishi (Japan), and Hitachi (Japan). Figure 4.14 illustrates the current state efficiency of each gas-fired power generation facility. Figure 4.14: Actual Efficiency of Gas fired Power Plant

Source: BPDB, System Planning

Lack of inspection, funds and regular maintenance leads to “break down maintenance” and lower

efficiency. Moreover, the reduced efficiency of the steam turbine facilities was caused by steam leakage from turbine, absence of a high-pressure heater, difficulty to maintain a vacuum in the

condenser, and leakage from thin pipes in the condenser. Some gas turbines reduced in efficiency with age. To improve the efficiency BPDB prepares retirement plans for the existing power generation plants. Higher efficiency may be achieved through re-powering of the existing power stations, construction of higher efficient gas combined power stations and allocation of gas to more efficient power stations. The retirement plan by BPDB for the gas fired facilities is given in Appendix 4D.

4.2.8 Realistic addition in power supply The BPDB plan for the next 4 years (2012-2016) is provided in appendix 4O, table- 4O.1. The likely Fuel combination of the additional power projects according to the plan is illustrated in table 4.6. Table 4.6: Planned Fuel Mix of Additional Capacity Installed Gas

Gas/LF

FO

LNG

Coal

Solar

Wind

6169 MW

1501 MW

1691MW

225 MW

2938MW

23 MW

100 MW

48.78%

11.87%

13.37%

1.78%

23.23%

0.18%

0.79%

Realistically, actual addition rarely reflects government’s plans. If taken the example of India, according to a KPMG study on power sector of the country, historically India exhibited failure to meet targets on the power generation capacity additions. Variance with the target has been as high as 50 percent in the past. India is a manufacturer of power equipment and has more qualified engineers and technical personnel and capabilities compared to Bangladesh. Bangladesh faces several challenges in terms of unavailability of domestic coal, rising international prices of coal and liquid fuel, inability to raise electricity prices to the level of full cost recovery and fiscal constraints. Moreover, absence of deep pocket-financiers and long term financing limits the full realization of plans. While the government has been quite successful in implementing short term rental power plants, the performance in relation to longer based load plans are disappointing. Thus expectations regarding realistic addition in Bangladesh could be revised down to approximately 30 to 40 percent (5059 MW to 3794 MW) as opposed to what is planned (12647 MW) by BPDB for the next four years.

4.2.9 Procurement procedures for parts, repairs and services Procurement procedures of goods (parts) and repair maintenance & expert services of power plants usually follow the Public Procurement Rules-(PPR) 2008 and Public Procurement Act-2006 of GOB. For procurement purposes of projects funded by development partners, partner’s or donor’s

guidelines are followed. State owned power plant projects specifically follow the PPR 2008 rules. Privately owned power plants also follow a competitive bidding process unless required otherwise for specific goods. Equipment/parts suppliers are usually responsible for r epair and services of parts, usually bound by Engineering, Procurement and Construction (EPC) contracts, for a certain period of time. The procurement processes under PPR are briefly discussed below. A detailed summary as well as a copy of the Public Procurement Rules are attached in Appendix 4L. Table 4.7: Procurement Procedures under PPR 2008

Open tendering

competition open to all interested firms

Limited tendering

competition limited to those invited to tender

Two stage tendering

Similar to open tendering but proceeding in two stages

Single-Stage Two Envelope tendering

Similar to open tendering but Technical and Financial Proposals submitted in two separate sealed envelopes simultaneously.

Request for quotations

a simplified method of smaller purchases

Direct procurement

sole source procurement when competition is inappropriate

Request for proposals

used for the procurement of intellectual and professional services

4.3 Key Players 4.3.1 Main customers today and in the future A Single Buyer System prevails in the power sector making. Almost 100 percent or all of the electricity generated is either produced or purchased by Bangladesh Power Development Board (BPDB) making it the sole customer of power generation companies. Nevertheless, a small portion of electricity produced by rather small IPPs and RPPs are directly synchronized to the 33kV distribution line of selected PalliBidyutSamity (PBS) of the Rural Electrification Board (REB). Unless a cost-based or economic tariff structure is operational in the country, a ”Power Exchange” or open market system or other improved methods for trading electricity is not likely to be introduced in Bangladesh anytime soon. As such, the buyer-seller dynamics is expected to remain the same. Customers for GE would comprise of power generation companies that have been awarded or will be awarded contracts to set up power projects in the future. Both private and public sectors actively participate in the power generation scenario of Bangladesh. The Public – Private ratios of additional capacity a BPDB plan for the next four years are summarized in table 4.1. The public private ratio for new projects commissioned up to 2016 stands at 5:7. This

indicates an increase in private sector involvement in the power generation sector than the current (September 2011) 51 to 49 scenario. GE Customers in the future can thus be expected to largely comprise of private power generation companies. 4.3.1.1 Vendors awarded contracts for power generation services for the past 5 years

The list of vendors and Machine OEMs that were awarded to set up Power Plants in the last 5 years are given in Appendix 4F. 4.3.1.2 Key buying criteria for customers

Tariff for electricity is determined by the Government or the single buyer through the Bangladesh Energy Regulatory Commission (BERC). Customers are bound to procure electricity at the fixed rate. Grid electricity, being cheaper, is preferred by retail customers as alternative sources usually cost more. Suppliers of equipment for both Public projects and IPPS are more or less chosen by a competitive bidding process. Suppliers are initially shortlisted given they meet all technical standards. The bidder

offering the most competitive price i.e. the bidder offering the lowest tariff is finally awarded the contract.

4.3.2 Vendors awarded contracts for power generation services for the past 5 years. Vendors awarded contracts for different power generation services are provided in Appendix 4 E. Names of equipment/spare parts/ services and corresponding manufacturers, local agents and contract winning companies are enlisted according to capacity and type of power plants.

4.3.3 Operating expenses for existing plants Operating, Maintenance, administrative and Personnel expenses of BPDB Power plants during FY 2007-2008, 2008-2009 and 2009-2010 are given in the Appendix 4G(table 4G.1-4G.4). Operating costs and maintenance cost may vary across power plants depending on type, size and plant utilization factors. Fuel costs, fixed O&M costs and variable costs of existing power plants are also provided in Appendix 4G, table 4G.5.

4.3.3.1 Maintenance practices

Absence of any specific regulations regarding routine inspections of public power units calls for generators to independently carry out inspection activities at their discretion. Stringent supply demand situations make it difficult to halt operations for maintenance purposes. Lack of inspection funds is also a probable reason for less frequent inspections. Thus operations continue non-stop until the equipment breaks down leading to greater damage and longer repairing periods; a classic case of “break-down maintenance.” In order to ensure implementation of regular inspections, the

Power System Master Plan -2010 recommends the revision of existing rules and regulations and enables the maintenance scheme to shift over from break-down maintenance to time-based or condition-based maintenance. Figure 4.15: Conceptual comparison of three different maintenance strategies

Source: PSMP 2010

One of the reasons why majority of the plants today are incapable of reaching designated performance levels of capacity and efficiency is restorative nature of maintenance activities instead of preventive. As such, most repairs take place after something breaks down. Meeting the stable power demand would require a transition to the concept of “take care before break down” in place of the current “repair after break down” philosophy. In other words, proceed with regular

inspections regardless of whether something is broken or not such as “Time Based Maintenance (TBM)” or heeding equipment predictors during monitoring Condition Based Maintenance (CBM)”.

4.3.4 Sales channel for GE competitors Power Procurement Rules-(PPR) 2008 are followed in case of public power plants as discussed earlier. Selection of sponsors for power plants in case of IPPs follows a similar competitive bidding under private sector power generation policy where BPDB issues a Letter of Intent (LoI) to the awarded company. The sponsor company then starts selection procedures of Engineering and Procurement (EPC) contractor and the Operation and Maintenance (O&M) contractor. The EPC contractor and the O&M contractor directly select the major equipment suppliers and spare parts

suppliers respectively who either sell their products directly or through local agents. Sometimes equipment suppliers provide the equipment directly to the project sponsors. Suppliers are usually required to present price quotations to the EPC/ O&M contractor or to the project company. Based on the quoted prices and quality assurances vendors are awarded contracts for the supply of specific equipment/spare parts. In some instances, BPDB specifies the major equipment suppliers or the specific criteria for the major equipment suppliers in the “Request for Proposal” for a project. The sales channel for a typical private power project equipment supplier follows the following pattern in Bangladesh. Equipment Supplier

Local Agent

EPC Contractor

Project Sponsor

Or, Or, 4.3.4.1 SWOT analysis of GE competitors

Competitors of GE for the purpose of a SWOT analysis in the power generation sector are identified from the major vendors that were awarded contracts for supplying large machines to power projects in the past few years. In this regard, a brief SWOT analysis for ABB, Siemens, Hitachi and Rolls-Royce is discussed in the following section. 4.3.4.1.1 ABB

ABB is a global provider of power and automation technologies. The power technologies division serves electric, gas and water utilities, as well as industrial and commercial customers. The automation technologies division provides products and services for automating and improving industrial and commercial processes. The company primarily operates in Europe and Asia. It is headquartered in Zurich, Switzerland and employs about 112,000 people. The SWOT for ABB is discussed below. Table 4.8: SWOT Analysis for ABB Strengths 

Strong market position and brand strength



Broad product portfolio



Strong R&D capabilities

Weaknesses 

Has contingency payment obligations due to asbestos litigation



Opportunities

Weak performance of all business divisions in recent years

Threats



Increasing demand for electricity in B angladesh



Government expansion plans and concessions such as

Highly competitive environment in Bangladesh.



Several Chinese companies offer more competitive prices.

tax incentives and guaranteed purchase of electricity 

Falling gas supplies in Bangladesh



Delays in project implementation due to lack of

Possibilities of importing additional power from India



and Myanmar

transparency, bureaucracy and fund arrangement 

Lack of quality investors in Bangladesh



Weakening financial capabilities of single buyer, BPDB

Source: Keystone Team

4.3.4.1.2 Siemens

Siemens is a global group in electronics and electrical engineering, operating primarily in the industry, energy, and healthcare sectors. The group operates in about 190 countries. It is headquartered in Munich, Germany and employs about 427,000 people. Table 4.9: SWOT Analysis for Siemens Strengths

Weaknesses



Strong market position and brand strength



Increasing debt to equity ratio/ Highly leveraged



Broad product portfolio



Weak internal control



Strong R&D capabilities



High dependence on third party providers



Major presence in Bangladesh



Allegation of improper payments resulting in Black Listing by the World Bank even though recently lifted.

Opportunities 

Threats

Increasing demand for electricity in Bangladesh



Highly competitive environment in Bangladesh. Several Chinese companies offer more



Government expansion plans and concessions

competitive prices.

such as tax incentives and g uaranteed purchase



of electricity




Possibilities of importing additional power from




India and Myanmar







4.3.4.1.3 Hitachi

With full-scale of Hitachi group, Hitachi pursues the compatibility of stable supply of energy and environmental preservation. Hitachi focuses not only on the various power generation systems but also power distribution system and next generation energy development. The SWOT of Hitachi follows as below.

Table 4.10: SWOT Analysis for Hitachi Strengths

Weaknesses



Strong brand recognition



High Costs



Advanced R & D capabilities



Lack of service quality and breadth



Tendency for brand loyalty worldwide



Tendency to develop specific capabilities based on advantages present in region of operation Opportunities

Threats









Highly competitive environment in Bangladesh. Several Chinese companies offer more competitive prices.




of electricity








India and Myanmar







4.3.4.1.4 Rolls-Royce

Rolls-Royce Group plc is a global power Systems Company headquartered in London, United Kingdom. It is the world’s second -largest maker of aircraft engines behind General Electric) and also

has major businesses in the marine propulsion and energy sectors. SWOT for Rolls-Royce: Table 4.11: SWOT analysis for Rolls-Royce Strengths

Weaknesses



Cost Advantage



Low R&D



Strong reputation



Weak Supply chain



Strong financial position



Strengths in gas-based generation Opportunities

Threats









Highly competitive environment in Bangladesh. Several Chinese companies offer more competitive prices.




of electricity








India and Myanmar







4.3.4.1.5 Chinese suppliers

Chinese suppliers of power plant equipment offering competitive prices have been prevalent in Bangladesh in recent years that are quite popular. SWOT for such companies in general are discussed below. Table 4.12: SWOT Analysis for the Chinese Suppliers

Strengths

Weaknesses



Low prices



Low quality



Cost advantage



Delay in implementation

Opportunities 

Threats

Increasing demand for electricity in



Bangladesh 

Highly competitive environment in Bangladesh.

Government expansion plans and






Delays in project implementation due

concessions such as tax incentives and guaranteed purchase of electricity 

to lack of transparency, bureaucracy

Possibilities of importing additional

and fund arrangement

power from India and Myanmar 






4.4 Environmental Regulation for Existing Plants and Current Emission Levels The regulatory framework for the whole of energy sector has been discussed in chapter 2. Regulations specific to the environmental standards for the power sector especially power plants can be found in the Environmental Conservation Rules (ECR) 1997 of Bangladesh. The ECR(1997) elaborates the environmental standards applicable in the country for all under the regulation include air quality; water quality; (surface water, (boundary, source); emissions from motor vehicles or ships; odor; sewage industrial units and industrial effluents or emissions. Standards for these

industries. Item falling drinking water); noise discharge; waste from items pertinent to the

power sector are given in Appendix 4 H.

4.4.1 Relevant policies National Energy Policy 1995

The National Energy Policy (1995) addresses both energy conservation and environmental issues. The policy suggests utilization of energy for sustainable economic growth, development of the indigenous energy sources and assurance of environmentally sound and sustainable energy development programs causing minimum damage to the environment. The Environment Policy and the Energy Policy have seven recommendations; of which the following three are relevant to the power plants. a.

“Environmental Impact Assessment should be made mandatory and should constitute an integral part of any new energy development project.”

b.

“Use of economically viable environment friendly technology is to be promoted.”

c.

“Popular awareness to be promoted regarding environmental conservation.”

National land Use Policy 2001

According to the national Land use Policy, 2001, the following objectives could be relevant to power plants. 

Prevention of the current tendency of gradual and consistent decrease of cultivable land for the production of food to meet the demand of expanding population;



Ensuring usage of land in harmony with natural environment; Usage of land resources in the best possible way



Protection of natural forest areas, prevention of river erosion and destruction of hills;



 

Prevention of land pollution; and Ensuring minimal use of land for construction of both government and non-government buildings.

Environmental Conservation Rules (ECR) 1997 amended 2003

These are the first set of rules, promulgated under the Environment Conservation Act 1995. The rules set, among others, (i) the National Environmental Quality Standards for ambient air, various types of water, industrial effluent, emission, noise, vehicular exhaust etc., (ii) requirement for and procedures to obtain Environmental Clearance, and (iii) requirements for Environmental Impact Assessment (EIA) according to categories of industrial and other development interventions.

Obtaining Environmental Clearance

"EIA Guidelines for Industries" published by the Department of Environment (DoE) and the "Environment Conservation Rules 1997”are the formal documents providing guidance for conducting Environmental Assessment. Any proponent planning to set up or operate an industrial project requires obtaining an “Environmental Clearance Certificate” from the DoE, under the Environment Conservation Act 1995 amended in 2002. The application for Environmental Clearance includes a project feasibility study report, the EIA report, No Objection Certificate (NOC) of the local authority; Mitigation Plan for minimizing potential environmental impacts; and appropriate amount of fees in ‘treasury chalan’ (in the present case the amount is BDT = 100,000). The DOE authority reserves the right to request additional information, supporting documents, or other additional materials for the proposed project. The ECR (1997) focuses on the classification of industries into three main categories i.e. Green, Amber and Red; based on their pollution potential. Red listed industries are those that can cause 'significant adverse' environmental impacts and are, therefore, required to submit both Initial Environmental Examination (IEE) and an EIA report. These industrial projects may obtain an initial Site Clearance on the basis of an IEE based on the DoE’s prescribed format, and subsequently submit an EIA report for obtaining Environmental Clearance. Power Plant projects fall under the “Red” category according to ECR’97, and would therefore

require, among others, an EIA for obtaining Environmental Clearance from the DoE. This involves three steps. First, obtaining site clearance to permit pre-construction and construction activities; second, obtaining approval of the EIA study and third, obtaining Environmental Clearance. This permit is required before the power station can be operated. Refer to the “ Environmental Regulation for Existing Plants and Current emission Levels” section

under the power generation sector study for policies around particulate and gaseous emissions levels.

4.4.2 The policy on selection of a plant size for a particular location

The determination of the size of a power plant in Bangladesh usually precedes the selection of a suitable site. Demand for power and a least cost expansion plan is the basis for the generation expansion planning procedures. Fuel availability and cost drives the selection of generation options. Optimal locations for power plants are then ranked considering the following factors:     

   

Proximity to the load centers and their forecast load demand. Transmission to the load centers. Availability of adequate space at the site. The value of the land for other uses. The suitability of the ground and geotechnical conditions for construction of the plant. The possibility of flooding or seismic events. Potential sources of cooling water and makeup water. Fuel deliverability at the site. The impact of the facility in a positive or negative manner on the local environment.

  

Sources of fill and construction materials. Access to the site for transportation of heavy equipment and construction materials. Availability of social facilities near site.

Apart from the policy requirements mentioned above, political influences often determine the selection of plant sites.

4.5 Future Issues and Challenges 4.5.1 Impact of global demand-supply dynamics on the Bangladesh market Increase in the price of major equipment in the international market eventually impacts the investment cost for setting up of a power plant in Bangladesh, resulting in cost overrun. Delays in the procurement of such equipment may result in a time over-run for a project. Moreover increase in fuel prices in the international market will eventually increase the generation costs. Although supply of gas is heavily subsidized in Bangladesh making the price one-tenth of the international market, international prices of liquid fuel result in increased expenses for power generation companies.

4.5.2 Impact of current gas availability and low gas pressures The power generation scenario of Bangladesh heavily relies on natural gas as fuel source. The share of other fuel sources is negligible. At present fuel consumption for power generation is as follows: Table 4.13: Present Fuel Consumption Scenario Total

D-Coal

I-Coal

Gas

FO

HSD

Others

D-Coal

I-Coal

Gas

FO

HSD

[GWH]

[GWH]

[GWH]

[GWH]

[GWH]

[GWH]

[GWH]

[1,000t/y]

[1,000t/y]

[mmcfd]

[1,000t/y]

[1,000t/y]

792

882

405

35,474

659

0

28,885

3,948

1,564

416

239

0


About 82.12 percent of the annual power supply is currently being generated from indigenous natural gas reserves. The gas demand ratio of the power sector (grid Power and captive power) to all sectors used to be around 45 percent, but the consumption pattern started declining from the 2007. The trend of the Gas Demand Ratio is shown in table 4.14 below: Table 4.14: Gas Demand Ratio of the Power Sector


The following figure shows the month-wise availability of gas in the power sector for the years 2009, 2010 and 2011 (up to July). It is clear from the trend that the supply of gas was reduced in the latest

years even during the peak season. Due to this gas supply shortfall a number of plants could not operate at their usual capacity. This causes an average generation loss of around 500-800 MW currently. Figure 4.16: Month-wise Average Gas Availability for Power Generation in MMCFD


Production loss due to the gas shortage and low gas pressure reached 792 MW as on November 1, 2011 (Appendix 4 I, Table 4I.1). Two of the plants had to be kept inactive and the Haripur NEPC GT 110 MW plant had to be converted to a liquid fuel based plant because of the lack of adequate gas supplies.

4.5.3 Plan to address low gas pressure at power plants The generation expansion plan undertaken by the government reduces the power system’s reliance

on natural gas as the primary fuel. However, a large portion of the future demand of power is still planned to be met by gas based generation. The projection of the status of the gas based power production scenario is shown in the Appendix 4 I, Table 4I.2. Gas Requirement will rise up to nearly twofold by 2018. In order to meet the projected demand for gas in power generation, the following plans of actions have been undertaken: 

New gas based plants are planned where gas is available (Sylhet, Bhola).



At least 50 percent allocation of total produced gas is planned for power generation.



Enhanced exploration activities to ensure gas supply to power plants.





All the new gas based power stations are designed with gas booster compressor. To meet additional gas demand for the gas based proposed power plants in Meghnaghat, Haripur and Siddhirgonj areas and also to ensure gas supply with requisite presser in existing power plants in Siddhirgong area, GTCL has taken up Bakhrabad - Siddhirgonj Gas Transmission Pipeline project under WB loan. Additional 380 MMSCFD gas will be required to be transported to the proposed and existing power plants. The pipeline has designed to supply 400 MMSCFD with a pressure 1000 psi (g). This pipeline would also be the initial source to supply gas to the southern part of the country. Tender evaluations for the pipeline project have been completed and GTCL expected to place work order within June, 2011 and this pipeline project will be commission by June, 2013.

To overcome the acute gas



shortage with low presser TGDTCL has taken up MonohNorsindi gas pipeline project which will bring benefits to the gas consumer of Demra, Siddhirgonj and Narayangonj areas. TGDTCL has given work order but there is case in the court against this work order, for which contractor could not start the work. They expected the contractor will start work very soon and the project will be completed by June, 2012. After completion this pipeline gas flow & pressure will be increased in some extent in Siddhirgonj RMS which can be used to operate gas based power plants in this area. 

CHEVRON Bangladesh has started installation of Gas Booster Compressor at Muchai near Rashidpur gas field and installation and commissioning work will be completed by September, 2012. The inlet and outlet pressure of the compressor is 1000 ps (g) and 1300 psi (g) respectively. Gas pressure at the subsequent area will be improved.



GTCL has also taken up a project to install the Gas Booster Compressor at Ashuganj (AGMS). Tender evaluation has been completed and they expected to give work order in the month of May, 2011 and probable date of completion by end of 2012. This will also help to increase gas flow and pressure in Dhaka area.



CHEVRON Bangladesh has started exploration of gas in Moulovibazar and they have a plane to supply additional 900-1000 MMSCFD gas from Bibyana and Jalalabad gas field by 2013.

4.5.4 Significance of financing as a bottleneck for power projects Power Generation is a capital-intensive sector requiring substantial investment for setting up power plants. Therefore, financing is always a major drawback in the growth of the power sector. Large multilateral financing institutions like the World Bank or the Asian Development Bank have rarely showed any interest in financing prolific power generation projects in Bangladesh until recently. These organizations have, in recent years, sanctioned loans to a few public sector power generation companies to install medium size (120/150/335/360 MW) power plants. Recently, the Government has invested an amount equivalent to more than one billion US Dollars in a single project for setting up of 820 MW diesel-based peaking power plants in various locations of the country. These instances indicate that financing of large projects will get positive responses from relevant quarters in future. However, bureaucracy involved both in the donor and recipient ends make the implementation time of the projects unpredictable lengthy. On the other hand increased government borrowing from the commercial banks is aggravating the liquidity crisis faced by banks suppressing funds available for private sector investments. Moreover an implementation of the Basel III by 2014 would require banks to follow more stringent standards of maintaining capital adequacy and liquidity which might prove getting financing from the commercial banks more difficult.

4.5.5 Scope for bundled sales and sales dependent financing of equipment Equipment sales are usually not a package for procurement. Power generation projects are procured on an Engineering Procurement and Construction (EPC) basis. The vendor bidding for the project will be responsible for Engineering, Procurement and Construction of the project as a whole.

Normally the turn-key EPC contractors are awarded a certain power project with the condition that the turn-key contractor will supply goods from reputed companies like, ABB, Alsthom, GE or equivalent. The turn-key contractor will engage reputed civil construction companies like Hundai, Marubeni etc. The EPC contact will have mentions of the companies from whom equipment and other things will be procured. The power projects in Bangladesh are financed in the following ways: (i) grants and low-interest loans provided by the donor agencies; (ii) inter-governmental finance in the forms of grants, soft loans or supplier’s credit; and (iii) commercial loans from the domestic banking sector. The first two

sources provide the project sponsors with low-cost financing solution, while the commercial loans charge high interest rates. The recent removal of the ceiling on the commercial interest rates has made the rate go even higher. Also, the local firms are now allowed to seek financing from foreign credit market directly at the rate of LIBOR + 4-5 percent. So it is likely that the power project companies will be looking for financing solutions other than the local commercial loans. Under these circumstances, if GE wants to create a competitive edge over the competitors by providing financing solutions along with equipment supply, the interest rate needs to be competitive. Examples of attractive interest rates would be LIBOR based interest rates or the refinancing rates quoted by the local financial institutions participating in the donors’ fund disbursement process.

4.6 Scope for GE 4.6.1 Current market situation for GE to leverage its product portfolio The power system development plan of the government mainly involves capacity development programs along with the expansion of access to electricity all over the country. As mentioned earlier, the recent advancement of the domestic power generation subsector is being heavily reinforced by the government’s initiatives for encouraging private sector participation on both stand -alone and public-private partnership basis. Tax incentives, guaranteed purchase of the generated electricity and refinancing schemes in low-cost financing for the renewable energy based projects are some examples of the government’s efforts in the power sector development programs. In line with government’s vision, substantial capacity addition plans are underway and substantial investments are due in the power sector. As such, GE may leverage its power generation product portfolio in the upcoming power projects. Since GE wants to leverage its turbines especially gas turbines in the market, an approximation of market shares of major players in terms of turbines are is given in table 4.15. Contribution of each company to the market has been calculated based on the capacity of plants for which the company is providing the turbine. Projects that have been considered in the calculation include both plants that have started operation in the last five years and plants that are under construction. Table 4.15: Market Share of Turbine Suppliers of Power Projects

Steam Turbine

Capacity (MW)

Share

Fuji Electronic System (Japan)

335.4

15%

GE (USA)

335.4

15%

Alstom (Western Europe)

335.4

15%


360

16%

Siemens AG Germany

225

10%

Shanghai Turbine Co. Ltd.

250

11%


450

20%

Harbin Turbine Co. Ltd.

60

Total

2291.2

100%

Gas Turbine

Capacity (MW)

Share

GE(USA)

335.4

16.42%

BHEL, India

240

11.75%

MHI Japan

360

17.62%

Siemens AG Germany

375

18.35%

Ansaldo, Italy

592.25

28.99%

Alstom, France

34.5

1.69%

Ge, France

106

5.19%

Total

2043.15

100%

Source: Keystone Study Team

An overall Idea about companies supplying all sorts of equipment to all power plants and who are currently prevalent in the market can be obtained from the vendors that have been awarded contracts for power generation services and power plants (Appendix 4 F and 4 G). Moreover, the highlighted columns of table 4J.1 in Appendix 4J depict an approximation of the equipment costs and installation costs associated with each type of power plant in Bangladesh. These costs could be taken as a close estimation of prevalent market prices of equipment in lump sum for power plants in Bangladesh.

4.6.2 Merger and acquisition opportunity A prominent example of shifts in ownership structures among the power generation companies in Bangladesh include that of the $300 million, 450MW Combined Cycle gas-fired power station, operating in Meghnaghat. The plant was initially built by AES (Allied Energy Systems) Corp, the USbased producer. It was later sold to British company CDC Globeleq, which also took over a 22-year Power Purchase Agreement (PPA) with Bangladesh Power Development Board (BPDB). The CDC Group, through its subsidiary CDC Globeleq Holdings Limited sold the entire share of Globeleq Ltd to Pendekar, a consortium of Tanjong Energy Holdings (Malaysia) and Aljomaih Automotive Company (Saudi Arabia) in 2007. Pendekar Energy Ltd is currently one of the biggest players in the power generation sector in Bangladesh. Other power generation companies prevalent in Bangladesh are quite established in themselves to opt for strategic moves to the extent of an acquisition or merger. However, many inexperienced companies have recently been awarded contracts. Some of these companies have quoted low unsustainable tariff to procure the contracts. It is quite possible that these companies could be acquired by other mature players in the power sector sooner or later.

CHAPTER 5: COAL SECTOR

5.1 Introduction Bangladesh depends heavily on natural gas for energy, and in order to reduce the dependence on gas, GoB has initiated the development of the domestic coal sector by preparing a domestic coal delivery system and investigating ways of improving coal fired power plant operations. In the near future, if significant gas discovery cannot be made in and if LNG prices in the Asian market continues to remain high, coal will likely dominate the fuel-mix of power generation in Bangladesh.

5.2 Background and Recent Trends The only coal based power plant to date was established on Jan 31, 2006 by BPDB in Barapukuria, Dinajpur. It has two units of 125 MW each. At present its derated capacity is 220 MW. The coal comes from the Barapukuria Coal Mine. The historical data of coal production from this mine is given in the Table 5.2.

5.2.1 Current situation of coal based power generation At present only 3.66 percent of the installed capacity and 3.52 percent of the derated capacity of all the country’s power generation comes from this coal based power plant. Table 5.1 shows the fuel mix scenario as of November 2011. The contribution in terms of both installed and derated capacities of Coal, F.Oil, Gas, HSD and Hydro power plants of BPDB are presented in the table as well: Table 5.1: Present Fuel Diversification Scenario (November 2011) Unit Type

Percentage of Usage According to Actual Capacity

Percentage of Usage According to Derated Capacity

Coal

3.66 percent

3.52 percent

F.Oil

6.51 percent

5.86 percent

Gas

75.22 percent

75.03 percent

HSD

11.25 percent

11.91 percent

Hydro

3.36 percent

3.68 percent

Source: Bangladesh Power Development Board

The Barapukuria Coal Mine (BCMCL) is the only coal mine in Bangladesh. It was developed jointly by Petrobangla and CMC of China (agreement concluded in 1 994). According to “the Management, Production and Maintenance” (M&P) Contract, CMC was supposed to transfer technology including the facilities, to Bangladesh by June 2011. In addition, the coal mine has concluded a consultancy agreement with IMC Consulting Ltd. of UK in June 2011. The underground equipment and technology for coal mining are mostly sourced from China.

Coal production has been stable in recent years. The coal mine produced 0.84 million tons of coal in 2008. The coal production in 2009 remained stable, but mining rates decreased due to a lack of demand from power plants. , Mining operations have been suspended since August 2010due to an accident involving a collapsed roof. This accident highlighted the difficulty of underground mining operations. Table 5.2 lists coal production in tons during 2006 to 2011 period. Coal is supplied to two adjacent 125MW Thermal Power Stations in Barapukuria. At present, 250 tons of coals are used every day for power generation. The remaining coal is primarily supplied for brick farms and other industries. The Barapukuria coal mine has an annual production capacity of approximately one million tons. A study is underway to determine ways to enhance the capacity to an annual production of 1.5 million tons. Table 5.2: Coal production Records at Barapukuria Coal mine

FY

Planned Coal Production (t)

Coal Production Result (t)

2006

500,000

362,470

2007

770,000

348,200

2008

970,000

611,674

2009

1,020,000

904,659

2010

930,000

709,155

2011

560,000

712,683

Source: PSMP Study

The total reserves in the 5 coal fields of Bangladesh are estimated to be 2.9 billion metric tons. This is the energy equivalent of 67 tcf of gas. The recovery rate of coal from reserves varies with the choice of technology used and the method of mining. Assuming a modest recovery rate of 30 percent coal, the available reserve will translate to about the energy equivalent of 20 tcf of natural gas. The following Table 5.3 gives an overview of present coal production situations and issues in Bangladesh.

Table 5.3: Coal in Bangladesh Present Production Situations and Issues Coal field name

Depth

No.

(m)

of coal

Av. thickness of

Measured coal

composite coal

reserve (million

probable coal

seams (m)

tons)

reserves (million

seams

Measured+

Remarks

tons)

Barapukuria

118 -506

6

51

(Dinajpur)

303 (Minable

390



concluded a development agreement in 1994. BCMCL was founded in 1998. Capacity designed: One million ton /year

coal reserve by U/G: 64 million

 

tons)

Petrobangla and China National Machinery Import and Export Corporation (CMC) in China



A small-scale open-cast mining project is feasible A 250MW coal-fired thermal power station is in operation, and a study is on the table to build a new 125MW power station.

Asia Energy has completed a feasibility study. When the company was going to engage in a large-scale open-cast coal mine development, the development project was suspended in

Phulbari, (Dinajipur)

150 -240

2

15-70

572

572

August 2006. 

Although Global Coal Management has succeeded to the development interest, the project is yet be progressed.



Khalaspir, (Rangpur)

Dighipara, (Dinajipur)

Jamalgonj, (Bogra)

257 -483

328 -407

6401,158

8

5

7

42.3

62

64

143

150

1053

low. The developer has submitted a feasibility study for coal mine development by underground

685

mining to the GoB. 

The annual coal production plan ranges from two million to four million tons.



GSB made five borings in a 1.25 km2 area and found five coal seams. The initial probable coal reserve is 600 million tons.

600

1053

The measured coal reserve is 277 million tons. Since only 14 borings were made, the reliability is



A Korean syndicate has approached Petrobangla for development and investment.



Largest coal field in Bangladesh



Targeting coal seam gas of CBM (coal bed methane) in deep underground

Source: PSMP Study

The fields discovered have depths ranging between 118-506 meters and 150-240 meters in Barapukuria and Phulbari respectively. The depth of the coal field discovered in Jamalganj is 640-1158 meters. The coal fields cover an area of about 70-80 square kilometers.

5.2.2 Formalization of Coal Policy for Bangladesh The Coal Policy is currently being prepared, and in order to cope with the rapid increase of energy demand, privilege measures for coal mine development are to be introduced so that the efficient use of coal can be promoted and coal fired power stations can be developed. The first version of Draft Coal Policy was published in December 2005 by the Energy and Mineral Resources Division of Ministry of Power, Energy and Mineral Resources. After that it was revised several times. The latest one was the “Bangladesh Draft Coal Policy –June2007”, which outlined impact of the gas shortage, the status of the power generation sector, coal development, investment in the coal sector, the importing of coal, and other environmental factors in Bangladesh. Therefore this policy will be a useful point of reference in understanding the domestic coal supply in the context of this study. This policy states that coal will be used as an alternative fuel for power generation instead of gas to maintain national energy stability. A fifteen-member committee was formed during the first week of October 2011, headed by a former

The fields discovered have depths ranging between 118-506 meters and 150-240 meters in Barapukuria and Phulbari respectively. The depth of the coal field discovered in Jamalganj is 640-1158 meters. The coal fields cover an area of about 70-80 square kilometers.

5.2.2 Formalization of Coal Policy for Bangladesh The Coal Policy is currently being prepared, and in order to cope with the rapid increase of energy demand, privilege measures for coal mine development are to be introduced so that the efficient use of coal can be promoted and coal fired power stations can be developed. The first version of Draft Coal Policy was published in December 2005 by the Energy and Mineral Resources Division of Ministry of Power, Energy and Mineral Resources. After that it was revised several times. The latest one was the “Bangladesh Draft Coal Policy –June2007”, which outlined impact of the gas shortage, the status of the power generation sector, coal development, investment in the coal sector, the importing of coal, and other environmental factors in Bangladesh. Therefore this policy will be a useful point of reference in understanding the domestic coal supply in the context of this study. This policy states that coal will be used as an alternative fuel for power generation instead of gas to maintain national energy stability. A fifteen-member committee was formed during the first week of October 2011, headed by a former chairman of Petrobangla, to prepare the eleventh draft of the coal policy. The committee was given four months time. Thus it is expected that by early February 2012, the draft report will be submitted to the government. After the submission of the report it will necessarily go through rounds of scrutiny, debate and review. However, as the gas reserve is depleting fast and power generation using imported fuel is hitting the economy hard, there is a definite urgency in finding alternative sources of primary commercial energy. However, given the contentious debate over the coal policy : open versus deep shaft mining, royalty payment to the government, and resettlement of affected people; coal policy is unlikely to be finalized soon. The Prime Minister has recently announced that domestic coal will be preserved for future generation. Clearly the government has opted for imported coal based power generation in the near future.

5.3 Nature of the Market 5.3.1 Demand supply dynamics for Coal based power plant The demand for coal based power plants in the next 20 years (2011-2030) was estimated in the Power System Master Plan (PSMP). According to the PSMP Fuel Diversification Scenario the demand for coal based power plant will be 1325 MW between the years 2011 to 2016 and 18,000 MW henceforth (20172030). These power plants will be fueled using both domestic and imported coal. The main objective of the PSMP study was to formulate a Master Plan for the attainment of stable power supply in Bangladesh up to the year 2030. The plan was devised taking into account the diversification of fuel resources for an optimum power development plan, the power system plan, and identification of potential power plant sites. In regards to the issues of decreasing gas supply (and depleting reserves) coupled with the lead time needed for the construction of gas-fired power stations, the PSMP Study suggests that the power development scenario should include coal and oil as primary fuel sources as well. According to this

scenario, if the fuel price were to increase because of the tight demand for primary energy, the optimal power supply configuration ratio would be- Oil: 10 percent for peak, gas: 20 percent for middle and peak, and coal: 70 percent for base generation. Therefore, power generation will be the most economical when 70 percent of the total power plants is coal based. 5.3.1.1 Upcoming coal based power plant ( up to 2016): supply plan of BPDB

BPDB already initiated plans to meet the demand for coal based power plants between 2011 and 2016. It aims to do so by utilizing three (under construction) power plants to produce 2,850MW of coal-based power. One of them is the Barapukuria 3 rd unit (250 MW), a public sector project, which is expected to be commence operations in June 2014. As of now the in-house feasibility study of the project has been completed and its DPP is being prepared. Table 5.4: Status of the New Coal Projects

Sector

Public

Description

1.

2.

3.

Barapukuria 250-300 MW Coal (3rd Unit) Khulna 150-300 MW Coal Fired Power Plant

Chittagong 150-300 MW Coal Fired Power Plant

Capacity (MW)

250

150

150

Expected Fuel

Status COD

Coal

Imp. Coal

Imp. Coal

June, 2014

• •

•

PQ & RFP invited: 03.11.2010

•

PQ & RFP Received: 31.01.2011

•

PQ & RFP invited: 03.11.2010

•

PQ & RFP Received: 31.01.2011

Sept. 2014

Sept. 2014

•

Private

4.

Khulna South

Draft Agreement for Joint Venture between NTPC & BPDB is under preparation. NTPC will start feasibility study soon.

Imp. 1300

In house feasibility completed. DPP is under preparation.

March 2015 Coal

•

1834 Acres of land acquisition at Chalna, Bagerhat under process

5.

6.

Maowa, Munshigonj 300-650 MW Coal Fired Power Plant

Chittagong 300-650 MW Coal Fired Power Plant

300

300

Imp. Coal

Imp. Coal

•

PQ invited: 03.11.2010

•

PQ Received: 27.01.2011

•

PQ invited: 03.11.2010

•

PQ Received: 27.01.2011

Sept. 2015

Sept. 2015

7.

Chittagong 1300 MW

Imp. Coal

1300

•

June , 2016

•

Feasibility Study will start soon. 3188 Acres land acquisition under process

Source: BPDB

Two large projects will are also planned for the Khulna and Chittagong areas. In November 2010, BPDB started the bidding process for two smaller projects in the 150MW to 300MW range for Chittagong and Khulna, and as well as two larger projects in the 300MW to 650MW range for the Chittagong Coastal Area and the Maowa-Munshiganj area; i.e. a total of four imported coal fired power projects on a BOO basis. These projects are expected to be commissioned by 2016. The implementation status of the coal based power projects is shown in Table 5.4. According to BPDB’s plans a total 3,750 MW is to be generated using coal based p ower plants which are

expected to be commissioned by June 2016. The PSMP team estimates that the projected demand for coal power in this period will be about 1,325 MW. Thus, the supply plan is well above the projected demand, but it is hard to say whether these projects will be implemented on schedule. 5.3.1.2 Supply of coal based power plants according to Power System Master Plan (PSMP) analysis (2016-2030)

To meet the increased demand for coal based power, the PSMP teams suggested specific year-wise coal based power plant additions between 2011 and 2030. Some of the power plants have already been added to the BPDB plan and their procurement process has started as well, as described in the previous section. These projects are in the locations which the PSMP considered for optimal for potential sites for coal power station projects. According to the PSMP, 14 new domestic coal based power plants with the capacity of 10,800 MW and 12 new imported coal based power plant with the capacity of 7,200 MW will be needed within the years 2016 to 2030. So in this period the total supply for coal based power plant would be 18,000 MW. The Table 5A.1 of Appendix 5A gives the detailed list of the projected 18,000 MW coal based power plants planned for the years 2017 to 2030. The commissioning and the retirement years are also given for each power plant. It should be mentioned that the two units of Chittagong’s 1,200 MW power plants are already included

in the BPDB plan and are expected to start operations by 2016. The total supply would be 16,800 MW against a demand of 18,000 MW. This demand-supply discrepancy will be compensated by the additional supply generated between 2011 and 2016 The following Table 5.5 summarizes the PSMP projections for Coal based power plant additions with respect to the total demand between the years 2017 to 2030. Table 5.6: Coal based Power Plant Additions

FY

Unit Addition, Numbers of unit

Peak Load [MW]

Domestic Coal

Domestic Coal

Import Coal

600 MW

1,000 MW

600 MW

2017

12,644

2018

14,014

2019

15,527

2020

17,304

2021

18,838

2022

20,443

2023

21,993

2024

23,581

2025

25,199

2026

26,838

2027

28,487

1

2028

30,134

2

2029

31,873

2

2

2030

33,708

1

1

6

12

3 1 2 1

1 1 2

1

Total Total MW

1

2

8

4,800

6,000

2

7,200

Source: PSMP Study

5.3.2 Key players The Barapukuria Coal Mine (BCMCL) is the only coal mine in Bangladesh. It was developed jointly by Petrobangla and CMC of China (agreement concluded in 1994). In addition, the coal mine has concluded a consultancy agreement with IMC Consulting Ltd. of UK in June 2011. The underground equipment and technology for coal mining are mostly sourced from China. In January 2006 CMC in association with SEEC commissioned two 125 MW units of coal based thermal power plants (250 MW). A list of model and manufacture names for the different equipment for the coal fired thermal power plant is given at the Table 4E.6 of Appendix 4E. In this project Shanghai Turbine Generator Co. Ltd. supplied the turbine and generator, and Shanghai Boiler Factory / Works Ltd. supplied the boiler equipment. Different pumping, coal & ash handling, transformers, breakers and motors were supplied by several companies. Most of them are based in China except for KAY international Ltd. Haryana India, which supplied the blower for ash handling.

8.3.2.1 Sales channel for GE competitors

In case of public power plants the procurement is done according to the Power Procurement Rules(PPR) 2008. This procurement procedure is already discussed in the Power Generation Chapter (Section 4.2.9).The PPR 2008 is also attached to the Appendix 4L. In case of IPPs a competitive bidding process is followed by BPDB to select the sponsors for the power plants. Once the Letter of Intent (LOI) is issued by the BPDB to the awarded company, the company starts the selection of Engineering and Procurement (EPC) contractor and the Operation and Maintenance (O&M) contractor. The EPC contractor and the O&M contractor then select the major equipment suppliers and spare parts suppliers respectively. Sometimes major equipment suppliers provide the equipment directly to the project company. All the equipment suppliers have to give the price quotation to the EPC/ O&M contractor or to the project company. Then the supplier is chosen according to the cost and quality basis. Sometimes BPDB also specifies the major equipment suppliers or the specific criteria for the major equipment suppliers. The detailed IPP policy is attached to the Appendix 4N.

5.3.2.2 SWOT Analysis of Major Competitors Strength, Weakness, Opportunities, Thereat (SWOT) Analysis in respect of Shanghai Turbine Generator Co. Ltd and Shanghai Boiler Factory / Works Ltd. is presented below: Table 5.7: SWOT Analysis of Shanghai Turbine Generator Co. Ltd Strength 



 

Weakness

Enhanced financial strength and professional expertise because of formerly being a joint venture of Shanghai Machinery Manufacturing Works (SEMMW) and Westinghouse Electric Co. Ltd. (WEC). and at present a joint venture with Siemens. Transportation advantage for being located near the main railroad of the country and on the upstream of a large river. Highly educated and trained workforce. Efficient HR department that keeps the employee motivation high.







Huge backlog of orders from different clients making it particularly risky and difficult to manage. Difficulty of managing a diversified culture because of the joint venture with Siemens. No external quality control procedures.

Opportunities 

 





Threats

Equipment manufacturing companies that already have experience in setting up power plants, would be given priority in future power plant construction contracts. Increasing demand for electricity in Bangladesh Government expansion plans and concessions such as tax incentives and guaranteed purchase of electricity Possibilities of importing additional power from India and Myanmar Falling gas supplies in Bangladesh





 

Highly competitive environment in Bangladesh. Several Chinese companies offer more competitive prices. Delays in project implementation due to lack of transparency, bureaucracy and fund arrangement Lack of quality investors in Bangladesh Weakening financial capabilities of single buyer, BPDB


Table 5.8: SWOT Analysis of Shanghai Boiler Factory / Works Ltd. Strength 











Weakness

Diversified and customized product line to meet the clients’ demand accurately. Campus recruitment program and extensive training on-the-job facilities to build up a tailored workforce. International exposure by becoming one of the top 500 Asian brands. Huge and highly efficient manufacturing facilities as its production of elevator per single factory per day ranks first in the world. Employee motivation through a wide range of entertaining and social activities. Increasing presence in providing and manufacturing the renewable energy services and equipment.





Difficulty of management because of extensively diversified manufacturing operation and fast growth. Particularly newer in the industry compared to the long-established competitors.

Opportunities 

 





Threats

Equipment manufacturing companies that already have experience in setting up power plants, would be given priority in future power plant construction contracts. Increasing demand for electricity in Bangladesh Government expansion plans and concessions such as tax incentives and guaranteed purchase of electricity Possibilities of importing additional power from India and Myanmar Falling gas supplies in Bangladesh





 

Highly competitive environment in Bangladesh. Several Chinese companies offer more competitive prices. Delays in project implementation due to lack of transparency, bureaucracy and fund arrangement Lack of quality investors in Bangladesh Weakening financial capabilities of single buyer, BPDB


5.3.3 Main customers of GE today and in the future in the coal power sector At present, the only coal based power plant is operated by BPDB itself and the electricity is directly synchronized to the national grid. Recently, Orion Group, Bangladesh has been awarded to build two 300 MW and one 650 MW coal based combined cycled power stations on a Build Own Operate (BOO) basis. Off the power plants, one will be in Chittagong with a capacity of 282.67 MW, one in Khulna of 282.67 MW capacity and one in Mawa of Munshiganj of 522 MW capacity. So the Orion Group is the only potential customer for GE at present in this sector. BPDB signed a joint venture deal with Indian state-owned National Thermal Power Corporation (NTPC) for the Khulna South Power Plant with the capacity of 1300 MW. In October 2011, the Bangladesh government sent a technical team to India to prepare an outline on its plan to develop this power plant. A high-level technical team from NTPC is likely to arrive in Bangladesh in the last week of January, 2012 to finalize technical terms and conditions for setting up the power plant. So BPDB, NTPC and other IPPs might be the main customers in future.

5.3.4 Key buying criteria for the customers in the coal power sector BPDB has the policy of buying power (by initiating a tender) in such a way that the least cost generation expansion is ensured, but due to the acute shortage in gas supply and the absence of coal policy, BPDB

had to make a generation expansion plan based on expensive liquid fuel (HSD, HFO etc.). In future, for a specific area if there is an adequate gas supply and gas infrastructure BPDB will go for gas based power because of its low fuel cost and low tariff rate. If gas is not possible it will opt for coal power and if there is no possibility of getting domestic and imported coal in that area, then BPDB may go for Liquid fuel based power. So tariff will be the most important criterion for BPDB in buying private coal power. For instance, BPDB will buy coal power from the Mawa plant at USD 0.0499 per KWh, from the Chittagong plant at USD 0.0463, and from the Khulna plant at USD 0.0463. This kind of low tariff will influence BPDB to go for more coal based power plant in future. So to quote a competitive tariff the customers (bidders) might look for prospective suppliers who can provide equipment at the lowest cost ensuring the technical compatibilities.

5.4 Issues and Challenges for Coal based Power Plant 5.4.1 Requirement of coal in the upcoming years The PSMP team projected the coal demand for the next twenty years according to their projected generation capacity. The following table shows the projected domestic and imported coal based energy generation and the yearly consumption of both of these types of coal. Table 5.9: Net Electricity Generation and Coal Consumption (Fuel Diversification Scenario)

8

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Net Generation Total

D-Coal

I-Coal

[GWH]

[GWH]

[GWH]

Coal Consumption D-Coal [1,000t/y]

I-Coal [1,000t/y]

0

43,882

659 659 659

48,713

2,306

0

54,047

2,306

0

59,945

2,300

8,081

66,457

2,086

19,496

73,671

1,652

18,966

239 239 239 792 792 789 722 588

81,610

9,474

18,539

2,810

7,432

90,950

12,931

16,075

3,795

6,517

99,838

13,443

18,830

3,938

7,542

108,636

17,025

17,883

4,962

7,192

118,485

20,407

17,992

5,923

7,320

127,368

25,722

17,016

7,470

6,964

137,964

26,453

17,885

7,669

7,286

147,245

30,166

23,577

8,728

9,584

158,456

37,319

28,891

10,748

11,740

167,938

48,404

28,456

13,924

11,581

180,089

60,352

31,473

17,327

12,882

190,752

66,286

35,130

19,023

14,335

35,474 39,467

0 0

Source: PSMP Study

0 0 0 0 0 3,188 7,705 7,590

So according to the fuel diversification scenario, from 2011 to 2030 an additional 19,325 MW coal based power plants will come into operation which will require 110.7 million tons of domestic coal and 128.86 million tons of imported coal. It should be mentioned that as BPDB plans for 250 MW domestic coal based and 3,500 MW imported coal based power plants within 2016, the coal demand in this period might be higher than the projected PSMP demand.

5.4.2 Financing challenges in coal based power plant Due to issues of high carbon emissions, World Bank, ADB and other multilateral entities are reluctant to finance coal based power plants. Moreover, bureaucracies involved in both of the donor and recipient ends, the implementation of the projects may become unpredictably lengthy. As both the GE Financial Service and the equipment for coal power are expensive, providing financing/services might not create a distinct value proposition for GE. But if they could provide financing with long term maturity in the coal power project, it might be attractive to the customers of GE.

5.4.3 Current price of domestic and imported coal Bangladesh currently imports coal only from India at a price of USD 60 per MT which is used by the brick fields. For power generation, BPDB collects domestic coal from Barapukuria Coal Mining Company (BCMC) at a price of USD 84 per MT. However, the cost of domestic coal mining is higher than the price as it takes approximately USD 116 per MT for coal mining at BCMC. Hence the government subsidized the domestic coal sector for power generation. The coal that is collected from BCMCL has a Gross Calorific Value (GCV) of approximately 6200-6300 Kcal/Kg and it is used for electricity production in Bangladesh. The Indian coal with same the same GCV is priced at USD 80 per MT while Indonesian coal is priced at USD 110 per MT.

5.4.4 Challenges with Indian coal and Indonesian coal Indian coal and Indonesian coal is different in their quality because of presence of sulfur and ash. Indian coal is low in sulfur, but contains much higher amount of ash than Indonesian coal. Indian coal contains 30 percent to 45 percent ash in contrast to coal from developed countries that contains 15 percent to 20 percent ash. Currently 85 percent of the coal mining in India is done through Open Cuts (OC) mining, which has been causing the quality of coal to deteriorate over time. At present the average heat contents generated by Indian coal is 3500-4000 kcal/ kg. In contrast, the Indonesian coal is ultra-low in sulfur with only 0.5 percent on average and contains 2 percent to 12 percent of ash which is also much lower than Indian coal. However, depending on the presence of ash, sulfur, moisture and other volatile matters, Indonesian coal is ranked as bituminous and sub-bituminous. Coals with as-received heat contents in excess of 5300 Kcal/kg are generally regarded as bituminous coal while coals with as-received heat contents of 4100 kcal/kg to 5300 kcal/kcal are classified as sub bituminous coal. Indonesia typically exports the bituminous and higher heatcontent sub-bituminous coal while it supplies the lower heat content sub-bituminous coal in the domestic market. Hence the major challenges with the Indian coals are low productivity and high negative environmental impact. Indian sulfur & ash mixed coal is already being used in brick fields of Bangladesh which has been causing high level of environmental degradation. High amount of ash can also affect the power plants in a negative way by reducing their life-time and efficiency while increasing pollution.

In contrast to the Indian coal, quality is not a concern with Indonesian coal as it exports different grades of coal. The major concerns with Indonesian coal to use in Bangladeshi power sector are hence the price and transportation cost. Indonesian coal Free on Board (FOB) price ranges from USD 50 to USD 130 per MT depending on the quality compared to the price of Indian coal ranging between USD 40 to USD 70 per MT. India’s geographical proximity with Bangladesh also makes it convenient to import coal from India as the import cost from Indonesia would be much higher because of the shipping and transportation cost. However, India itself is short of domestic coal and to meet their increasing power demand India imports huge amount of coal. Therefore, availability of Indian coal is also uncertain.

5.4.5 Transportation challenges for imported coal At present, there is no Jetty facility of Chittagong and Mongla port to handle coal. The shipping system for imported coal will have to be freight by ship using a bulk coal carrier. It is growing in size recently and the payload (PLD) increases to 300,000t class. However, the depth of the Bay of Bengal in Bangladesh is overall shallow and the big vessel has difficulty reaching the shore. The draft is about 8 to 9m in Chittagong and Mongla ports, and about 28,000-30,000t will be limited to the ship that can enter the port, though it differs by the ship type. Therefore, it will be necessary to require the ship of about 28,000-30,000t when considering the import of coal. For this reason the PSMP study suggested the construction of a coal center in the deep sea to accept larger vessels. So the port facility development (construction of deep sea port) will be the most challenging factor in case of imported coal. Regarding domestic vessels, according to Bangladesh Inland Water Transport Authority (BIWTA), the levels of operation capability are determined in the Bay of Bengal according to weather conditions, and the largest size of the ship which can pass through the worst level area is 5,000 tons. So only 5,000 ton class domestic vessels with 5m draft and 1,000 tons class Berge with 2m draft could be used to unload coal from the deep sea port to the power plants.

5.4.6 Comparison of the costs of electricity generation for different fuels A comparative study of electricity tariff for different fuels based on the international price of Indian coal, Indonesian coal and Natural Gas and on the national price of domestic coal and natural gas is done by the team. Though at present BCMCL is selling coal at the rate of government fixed 84 USD/ MT, its production price is almost 116 USD/ MT. The average calorific value of the Barapakuria Coal is almost 6,200 kcal/ kg. The Free on Board (FOB) price of this type of Indonesian Coal is 110 USD/ MT. Including the fright and handling cost the total cost will be 170 USD/ MT. In 2007, Barapakuria Thermal Power Plant imported some Indian coal as the domestic production was shut down at that time. The Calorific Value of that coal was 5000 kcal/ kg. The present cost of this graded coal is 70 USD/ MT including the transportation cost. We assumed the plant efficiency is 32 percent for less than 600 MW plant and 42 percent for higher capacity plant. With these assumptions the tariff was calculated to USD 0.05 per kWh, USD 0.038 per kWh and USD 0.074 per kWh respectively for domestic coal, Indian coal and Indonesian coal in case of 32 percent efficiency. Again in case of power plant greater than 600 MW, the tariff was calculated to USD 0.038, USD 0.029 and USD 0.056 respectively for domestic coal, Indian coal and Indonesian coal.

In case of gas based power plant we considered 32 percent efficiency for the open cycle power plant and 56 percent efficiency for the combined cycle power plant. Using the local and international prices of gas, in case of open cycle power plant the tariff was calculated to USD .011 and USD .082 and in case of combine cycle power plant it was calculated to USD .006 and USD .047 respectively. The following table summarizes the comparative tariff study. Table 5.10: Comparison of Tariff for Different Types of Coal and Ga s Primary Fuel

Price (USD/ MT or USD/ MCF)

Calorific Value (kcal/ kg or kcal/ CF)

Efficiency

Tariff (USD/ kWh)

Tariff (BDT/ kWh)

Domestic Coal

116.00

6200.000

0.320

0.050

4.122

Indian Coal

70.00

5000.000

0.320

0.038

3.085

Indonesian Coal

170.00

6200.000

0.320

0.074

6.041

Domestic Coal (> 600 MW)

116.00

6200.000

0.420

0.038

3.141

Indian Coal (> 600 MW)

70.00

5000.000

0.420

0.029

2.350

Indonesian Coal (> 600 MW)

170.00

6200.000

0.420

0.056

4.603

Natural Gas (Local Price)

1.00

236.925

0.320

0.011

0.930

Natural Gas (International Price)

7.20

236.925

0.320

0.082

6.695

Natural Gas (Local Price) (CC)

1.00

236.925

0.560

0.006

0.531

Natural Gas (International Price) (CC)

7.20

236.925

0.560

0.047

3.826

Source: Keystone Calculation

5.5 Main Strategy: Technology/Solutions or a Lowest Cost Game Neither the procurement procedures provided in the ADB-WB guidelines, nor the same of PPR 2008 of GoB recommends only the lowest cost method. Theoretically, bidding methods suggested by all of the above aim at ensuring quality first and that is why only technically qualified bidders are identified and then among these technically qualified bidders, the lowest cost bidder is awarded the bid. That is why the procedure is termed as a ‘Quality Cost Based Selection (QCBS)’ process. However, the shortcoming of this procedure is that it cannot always guarantee the best technology/solution. It is often observed that the technical criteria set by the procuring entity can be met by many mid-level companies and consequently the best technology/solution providers do not participate at all in the tender process.So the lowest cost game would be the major criterion in the selection of Vendors/ Equipment suppliers in public power plants. In case of IPPs negotiation plays an important role in finalizing a contract. So a lowest cost game would be more effective to penetrate the market of private power plants.

APPENDIX TO THE CHAPTER 4: POWER GENERATION 4A ELECTRICITY DEMAND FORECAST Table 4A.1: Demand Forecast up to 2030 Year

3

GDP

Elastic

Electricity

Total

Effect of

Total

Electricity

Grid

Off-grid

Growth

ity

Growth

Demand

DSM

Demand

Growth

System

Captive

Rate

Rate

without

(percent)

with DSM

Rate

Demand

Demand

(percent)

(percent)

DSM

(percent)

with DSM

2010

5.5

1.50

8.25

7,454

0.0

7,454

4.5

6,454

1,000

2011

6.7

1.50

10.1

8,203

5.0

7,793

10.5

6,765

1,027

2012

7.0

1.50

10.5

9,064

5.0

8,611

10.5

7,518

1,093

2013

7.0

1.50

10.5

10,016

5.0

9,515

10.5

8,349

1,166

2014

7.0

1.50

10.5

11,068

5.0

10,514

10.5

9,268

1,246

2015

7.0

1.50

10.5

12,230

5.0

11,618

10.5

10,283

1,335

2016

7.0

1.50

10.5

13,514

5.0

12,838

10.5

11,405

1,433

2017

7.0

1.50

10.5

14,933

5.0

14,186

10.5

12,644

1,542

2018

7.0

1.50

10.5

16,501

5.0

15,676

10.5

14,014

1,662

2019

7.0

1.50

10.5

18,233

5.0

17,322

10.5

15,527

1,794

2020

7.0

1.40

9.8

20,020

6.0

18,819

8.6

17,304

1,515

2021

7.0

1.35

9.5

21,912

6.5

20,488

8.9

18,838

1,649

2022

7.0

1.30

9.1

23,906

7.0

22,233

8.5

20,443

1,790

2023

7.0

1.25

8.8

25,998

8.0

23,918

7.6

21,993

1,925

2024

7.0

1.20

8.4

28,182

9.0

25,645

7.2

23,581

2,064

2025

7.0

1.15

8.1

30,450

10.0

27,405

6.9

25,199

2,206

2026

7.0

1,10

7.7

32,795

11.0

29,187

6.5

26,838

2,349

2027

7.0

1.05

7.4

35,205

12.0

30,981

6.1

28,487

2,494

2028

7.0

1.00

7.0

37,670

13.0

32,773

5.8

30,134

2,638

2029

7.0

1.00

7.0

40,306

14.0

34,664

5.8

31,873

2,790

2030

7.0

1.00

7.0

43,128

15.0

36,659

5.8

33,708

2,951


3

Certain Assumptions:

Demand in 2009 =5500 MW; GDP growth rate =5.5%; Elasticity =1.5; Electricity growth rate =8.25% Demand in 2010 =5500 MW*(1+0.0825)=5954 MW; Captive power =1500 MW; Stand-by = 500 MW; Process industry+ Swing capacity =1000 MW; Waiting de mand=500MW Total demand in 2010 including Captive + Waiting =7454 MW

Table 4A.2: Demand for Electricity by Regions Central Region

Northern Region

Southern Region

Western Region

Dhaka Region

Net Peak

Net Peak

Net Peak

Net Peak

Net Peak

Load

Load

Load

Load

Load

Year

(MW)

(MW)

(MW)

(MW)

(MW)

2005

369

519

880

516

2,024

2006

402

566

958

562

2,204

2007

438

616

1,044

612

2,401

2008

478

671

1,137

667

2,616

2009

520

731

1,239

726

2,849

2010

567

797

1,349

791

3,104

2011

613

862

1,460

856

3,357

2012

663

932

1,579

926

3,632

2013

717

1,009

1,708

1,001

3,929

2014

776

1,091

1,847

1,083

4,250

2015

839

1,180

1,998

1,172

4,597

2016

902

1,268

2,147

1,259

4,938

2017

968

1,362

2,306

1,352

5,304

2018

1,040

1,462

2,477

1,452

5,697

2019

1,117

1,571

2,660

1,560

6,119

2020

1,200

1,687

2,857

1,675

6,573


CHAPTER 7: TRANSMISSION AND DISTRIBUTION

The Power Division under the MPEMR manages the electricity sector. The power generated by the BPDB and its generation subsidiaries, the IPPs, is supplied through the PGCB’s power transmission facilities to

the distribution utilities. In the capital city of Dhaka, DPDC and DESCO are responsible for the electricity supply to retail consumers. In other urban cities, the BPDB, the WZPDCL, and in rural areas the REB supply electricity to retail consumers.

7.1 Background and Recent Trends 7.1.1 Transmission sector In the early 1960s the first high voltage double circuit transmission line (132 kV) was built from Kaptai to Shidhirgonj (near Dhaka). There were substations (132/32 kV) at Chittagong, Feni and Comilla. This transmission line facilitated the transfer of power from the newly built Kaptai Hydro Station (80 MW) (commissioned in 1962) to Chittagong, Feni, Comilla and Shidhirgonj. Another 132 kV transmission line was also built from Shidhirgonj to Ullon, Dhaka. With the help of this transmission line and several other 33 kV lines, power was supplied from Shidhirgonj to the Dhaka area (in addition to the power received from Kaptai, power was also generated at the Shidhirgonj 30 MW power station). These transmission lines were followed by the Sylhet- Shahjibazar- Ashugonj- Ghorashal- Shidhirgonj transmission lines, which connected the newly built Shahjibazar Power Station (1968), the Ashugonj Power Station (1970) and the Ghorashal Power Station (1974). The liberation war (1971) delayed the commissioning of the Ghorashal power station. At that time the Goalpara- Bheramar-Ishordi 132 kV transmission line was built; however it was gradually extended up to Thakurgaon. This line connected the Goalpara and Bheramara power stations to the load center on the western side of the Jamuna river. Following 1971 newly built power stations and a number of different load centers were connected to the Eastern Grid (on the Eastern side of Jamuna River) and the Western Grid (on the Western side of Jamuna River) by new T/Ls. In 1981 the first 230 kV transmission line from Ghorashal to Ishurdi inter-connecting the eastern and the western grid was commissioned. This line was initially energized at 132 kV. During the 1980s high capacity generation units were added to the Ghorashal and Ashugonj Power Stations. To transmit power from these power stations, new 230 kV transmission lines were built between Ghorashal – Ashuganj and Ghorashal- Tongi. At the same time the first east west interconnector was energized at 230 kV. In the nineties, a 230 kV transmission line from Raujan to Hatazari was commissioned to transmit power from the Raujan Power Station. In 2000, the Hatazari to Comilla North T/L was commissioned. The Ashuganj- Comilla and the Ghorashal- Haripur 230 kV transmission lines were commissioned few years earlier. These T/L constituted the backbone of the 230 kV lines of the eastern grid. After PGCB was formed in 1996, it started construction of a 230 kV backbone line for the western grid (Khulna- Ishurdi- Bharabari- Shirajganj- Barapukuria). New 230/132 kV substations were constructed at Aminbazar and Rampura to feed bulk power to the Dhaka area. The Meghnaghat- Haripur- Amin Bazar and the Amin Bazar- Tongi 230 kV T/Ls were constructed to transmit power from IPP power stations at Haripur&Meghnaghat and also to feed the Amin Bazar 230/132 kV substation. Between 2002 and 2005 all the above mentioned T/Ls and Substations were commissioned. In 2008, a second east-west inter connector was commissioned connecting the Ashuganj Substation and the Shirajganj switching station. From this period till today many other 132 kV lines and substations were commissioned to feed more load centers, while at some other substations capacities were increased. As the acquisition of land is becoming difficult, particularly in city areas, the PGCB has started the construction of Gas Insulated Substations (GIS) with the extension of the Jaydebpur 132/33 kV

substation using GIS units (2006) and commissioning the Gulshan (132/33 kV) GIS substation (2006). Another GIS was built in Gallamari, Khulna. There are also 230/132 kV GIS substations in the old airport area (Agargaon, Dhaka) along with three other 132/33 kV GISs in the Dhaka area. With the increase of load demands as well as power generation capacities, the PGCB has now started the construction of 400 kV transmission lines. The first 400 kV double circuit T/L between Aminbazar and Meghnaghat is expected to be commissioned (initially at 230 kV) in 2012-2013. Another 400 kV transmission line from Bibiayanabazar to Kaliyakar, with 400/230/132 kV substations at Kaliyakar is planned to facilitate transmission of power from the under construction IPP power stations at Bibiyana bazar which are expected to be commissioned during the later parts of 2012-13. Table 7A.1 of Appendix 7A shows the details of the ongoing projects in the transmission sector being implemented by the PGCB which are expected to be completed within next two years. The objective/ benefit of these projects as well as number of sub-stations with the number and capacity of Transformers for each substation are also shown in the table.

7.1.2 Distribution Sector Though the Power Grid Company of Bangladesh Ltd. (PGCB) is the sole electricity transmission entity in the country, there are five entities that actually distribute this electricity. They include: (i) the Bangladesh Power Development Board (BPDB), distribution of power in district towns; (ii) the Rural electrification Board (REB) responsible for distribution of power in rural areas through 70 rural electric cooperatives (PBS); (iii) the Dhaka Electric Supply Company (DESCO), responsible for power distribution in North Dhaka Metropolitan area; (iv) Dhaka Power Distribution Company (DPDC), responsible for South Dhaka Metropolitan area and Narayanganj; and (v) the Western Zone Power Distribution Company Ltd, (WZPDCL), which covers the Khulna Division, the Barisal Division and the greater Faridpur District. With the addition of additional power generation and transmission facilities all the distribution utilities have already started various projects for power transmission to their customers. BPDB has undertaken the ‘Town Power Distribution Project’ in Rajshahi, Pabna, Sirajgonj, Bogra, Joypurhat, Gaibanda, Nilphamary, Dinajpur, Thakurgaon and Rungpur districts during the 2003-04 period. BPDB has reported a 87.05 percent completion rate of these projects as of February 2011. In addition, BPDB has undertaken two power distribution system projects for the ‘Emergency Rehabilitation & Expansion of Urban Areas’ in its Chittagong and Northern Zone s in July 2008. BPDB has

completed 46.18 percent and 35.73 percent of these projects respectively as of February 2011. A list of BPDB’s ongoing projects along with their implementation time and present status is given

below: Table 7.1: BPDB Ongoing Distribution Projects

Sl. No

Name of the Project

Implementation Time

Present Status

01.

10-Town Power Distribution Project (2nd Revised)

Original: 2003-04 To

87.05 percent up to February 2011

(Rajshahi, Pabna, Sirajgonj, Bogra, Joypurhat, Gaibanda, Nilphamary, Dinajpur, Thakurgaon, Rungpur)

2007-08 Revised: 2003-04 To 2009-10

02.

Emergency Rehabilitation & Expansion of Urban Areas power Distribution system under Chittagong Zone (2nd Revised)

01-07-2008 To 30-062011

03.

Emergency Rehabilitation & Expansion of Urban Areas power Distribution system under Northern Zone (2nd Revised)

09-07-2008 To 30-062011

04.

Central Zone Power Distribution Project Mymenshingh

01-12-2009 To 31-062013

05.

Renovation & Augmentation of Distribution Lines & 11/0.4 KV S/S under Sixth Zone of BPDB

01-07-2010 To 31-122011

06.

Pre-payment Metering Project for Distribution Southern Zone Chittagong (Phase-1)

01-01-2009 To 31-122010

07.

Greater Chittagong Power Distribution Project, SCADA Rehabilitation

01-01-2009 To 31-122011



11.00 percent up to February 2011 21.00 percent up to February 2011 0.42 percent up to February 2011 33.00 percent up to February 2011

Source: BPDB

There are also five ongoing distribution projects under REB, which has the total estimated cost of 357.11 million USD. The detailed list is given below: 

28 Nos. 132/33 kV Grid S/S



419 km 132/33 kV X-mission Line



28 Nos. 132/33 KV Poer X-former (Augmentation)



33 KV line with required equipment(6666)



38-Set 33KV River crossing

In North Dhaka Several projects have started for upgrading and expanding their distribution systems by strengthening the Electric Distribution Network. These projects are expected to cost approximately USD 171 million. The Upgrading & Expanding Distribution System project in the Gulshan Circle area mainly includes constructions of 33/11 KV (GIS) substations, installation of 33 KV UG Cables as source lines for new Substations and the installation of HT/LT Composite Distribution lines. The estimated cost of this project is USD 80 million with an expected implementation in June 2012. The distribution company is this zone has also undertaken its own ‘Electric Distribution Network Strengthening’ project that mainly includes the construction of 33/11 KV (GIS) su bstations, installation

of 33 KV UG Cable as source lines for new Substations and the installation of HT/LT Composite Distribution lines. The estimated cost of this project is USD 66 million with an expected implementation in June 2013.

The construction, augmentation and rehabilitation of eight 33/11 KV (GIS) Sub-stations is an ownfinanced project. It includes: Construction of 33/11 KV (GIS) Substations in Agargoan, Banani, Niketon, Purbachal and Mirpur-6 and the rehabilitation & reinforcement of the 33/11 KV (GIS) Substations at the Digun, Joarshahara and Tongi areas. The estimated cost of this project is BDT 12578.2 million with an expected implementation in June 2013. The following table summarizes the ongoing projects in this zone: Table 7.2: Ongoing Projects in North Dhaka

Sl.

Name of the

No.

Project

Procurement of the project

Implementati

Estimated

on Period

Cost (in million BDT)

1

Upgrading &

i) Construction of 33/11 KV (GIS) Substations.

June 2012

5949.00

Expanding

ii) Installation of 33 KV UG Cable as source line for new

Fund : GOB,

Distribution

Substation

ADB and Own

System in

iii) Installation of HT/LT Composite Distribution line

Fund

Gulshan Circle

iv) Installation of 11 KV UG Cable v) 11/.4 KV 200 KVA X-former vi) 11/.4KV 25 KVA X-former

2

Strengthening

i) Construction 33/11 KV (GIS) Substations.

June 2012

4859.20

DESCO’s Electric

ii) Installation of 33 KV UG Cable as source line for new

Fund : GOB,

Distribution

substation

ADB and Own

Network

iii) Installation of HT/LT Composite Distribution line

Fund

iv) Installation of11 KV UG Cable v) 11/.4 KV 200 KVA X-former vi) 11/.4KV 25 KVA X-former 3

Construction,

i) Construction of 33/11 KV (GIS) Substation at Agargoan,

augmentation

Banani, Niketon, Purbachal and Mirpur-6

and

ii) Rehabilitation & Reinforcement of 33/11 KV (GIS)

rehabilitation of

Substation at Digun, Joarshahara and Tongi

June 2013

1770.00 Own fund

08 Nos 33/11 KV (GIS) Sub-station Total

12578.2

Source: Keystone Database 2011

In the South Dhaka and Narayanganj there are five ongoing projects, including the reinforcement, renovation and augmentation of 33/11 kV sub-stations project financed by ADB, development of new

132/33 kV and 33/11 kV sub-stations project financed by ADB and KFW, procurement and installation of 132/33 kV 50/75 MVA transformers financed by ADB, the upgrade of the Shyampur BSCIC 11 kV switching station financed by ADB and the rehabilitation and augmentation of the distribution network of the DPDC financed by the GoB. These projects are expected to cost approximately BDT 8001 million. The detailed statuses of these projects are shown below: Table 7.3: Ongoing Projects in the South Dhaka and Narayanganj

Sl.

Name of the Project

Procurement of the

Implementation

Estimated Cost (in

project

Period

Million BDT)

No.

1

Comments

Reinforcement,

Replacing of 19 nos. of

01/07/2006-

1335.0576

210 MW capacity

Renovation and

old 10/14 MVA X-mers

30/06/2011

(PA USD

increase in 33 KV

Augmentation of

by 20/28 MVA X-mers

12.811M)

level

33/11 kV Sub-station

(GOB 438.2846)

(ADB financed) 2

3

Development of New

Construction of 2 nos.

01/07/2006-

4246.155

224 MW & 240 MW

132/33 kV and 33/11

2X50/75 MVA ,

30/06/2012

(PA USD 36.773M)

capacity increase in

kV Sub-station

Construction of 5 nos.

(GOB 1772.02)

33 KV & 132 KV

(ADB &KfW financed)

2X20/28 MVA

Procurement and

3 nos. 132/33 kV 50/75

01/09/2006-

544.156

180 MW capacity

Installation of 132/33

MVA X-former.

30/06/2011

(PA USD 4.943 M)

increase in 132 KV

(GOB 198.095)

level

level respectively

kV, 50/75 MVA Transformer Project (ADB financed) 4

Up-gradation of

2X20/28 MVA

01/07/2006-

184.809

45 MW capacity

Shyampur BSCIC 11

Transformer

30/06/2011

(PA 1.787 M)

increase in 33 KV

(GOB 59.699)

level

kV Switching Station to a regular 33/11 kV Sub-station Project (ADB financed) 5

Rehabilitation and

29 km 11kV line, 38 km

01/01/2010-

1690.712

Improve

Augmentation of

11.4 kV line & 73 km 0.4

30/06/2012

(PA 0)

Distribution

Distribution Network

kV line

(GOB 1690.712)

network. Ensure

of this zone

Reliable Power

(GOB financed)

Supply Total Source: Keystone Database 2011

BDT 8001 Million

In order to reduce system loss and increase consumer satisfaction through more accountability measures, the WZPDCL was established and incorporated as a public limited Company on the 4th November, 2002 under the Companies Act 1994. It started operating from April, 2005 when it signed Vendor Agreements (VA) & Power Sale Agreements (PSA) with BPDB. The WZPDC has undertaken several projects which will cost approximately USD 76 million. Among these projects, the Power Distribution Projects in the 21 districts will cost approximately USD 63 million and will be financed by the GoB and the WZPDCL. Another large project: a prepaid e-metering System includes a total of 105,000 1-Phase and 10,000 10,000 3-Phase meters meters installations. This project is expected to cost approximately USD 12 million. The detailed statuses of the ongoing projects under the WZPDC are given in the following table.

Table 7.4: Ongoing Projects in the West Zone

Sl.

Name of the Project

Procurement of the project

No.

1

Implementatio

Estimated Cost

n Period

(in Million BDT)

21 Districts Power

For 10 Nos. 33/11KV S/S 20 Nos. 5 MVA X-

01/01/2011-

Distribution Project,

former,14 Nos 10/13.33MVA X-former,63

31/12/2013

Financed by GOB &

KM 33 kV New line & 148Km Rennovation

WZPDCL

line,1210 Km LT New & 1250 Km

4691.8

Rennovation,1100Nos. 3-Phase Distribution X-former 2

Prepaid e-metering System

3

Solar Energy

105000 Nos.1-Phase Meter,

01/01/2011-

885.5

10,000 Nos.3-Phase Meter

30/06/2014

20 KW SOLAR PANEL AT WZPDC OFFICE &

2011-2014

10

2012-2014

10.8

2012-2014

2

Total

5598.1

SUB-STATION 4

SCADA SYSTEM

10 NosScada for 33/11 kV Sub Station under WZPDCL

5

VIDEO CONFERENCING

Installation of Video Conferencing

SYSTEM

System


7.1.3 Level of compensation in T&D Transmission lines in Bangladesh are not long and series compensation has so far not been used. Shunt compensation of 450 MVAR at the 132 KV level and 770 MVAR at the 33 KV level have so far been installed at different grid substations. Another 500 MVAR at different grid substations are also being installed. Installation of further shunt compensation units in next 3/4 years is not planned. A list of Capacitor Banks already in operation at different grid circle is shown below in the Table 7.6. Table 7.5: Grid Circle wise Capacitor Bank Information

Sl No.

Circle Name

At 33KV Capacity (MVAR)

At 132KV No Of Units

Capacity (MVAR)

No Of Units

01

Chittagong

220

44

45

1

02

Comilla

20

4

-

-

03

Dhaka

185

39

180

2

04

Khulna

80

16

180

4

Sl No.

Circle Name

At 33KV Capacity (MVAR)

05

Bogra Total

At 132KV No Of Units

Capacity (MVAR)

No Of Units

265

53

45

1

770

156

450

8

Source: PGCB

In the distribution sector only DESCO (60 MVAR) uses shunt compensation at their substations and lines. Previously BPDB installed 170 MVAR shunt capacitors which are not presently operative. There is no level of compensation in use in the other distributio n companies’ substations. But at consumer level the customer has to install shunt capacitors to improve its power factor according to the load. The customer has to maintain a power factor of 0.9521 to get exemption from a penal tariff.

7.1.4 Technical and commercial losses in T&D Energy losses occur in the process of supplying electricity electricity to consumers due to technical and commercial losses. The technical losses are due to energy dissipated in the conductors and equipment used for transmission, transformation, sub- transmission and distribution of power. These technical losses are inherent in a system and can be reduced to an optimum level. The commercial losses are caused by pilferage, defective meters, and errors in meter reading and in estimating unmetered supplies of energy. Reasons for high technical losses

The following are the major reasons for high technical losses in our country: 



    

Inadequate investment investment in transmission and distribution, particularly in the sub-transmission and distribution sectors. Low investment has resulted in an overloading of the distribution system without commensurate strengthening and augmentation. Haphazard growth of sub-transmission and distribution systems with the short-term objective of extension of the power supply to new areas. Large scale rural electrification electrification through long 11kV and LT lines. Too many stages of transformations. Improper load management. Inadequate reactive compensation Poor quality of equipment used in agricultural pumping units in rural areas, cooler airconditioners and industrial loads in urban areas.

Reasons for commercial losses

Theft and pilferage account for a substantial part of the high distribution losses in Bangladesh. Theft / pilferage of energy is mainly committed by two categories of consumers i.e. non-consumers and bonafide consumers. Antisocial elements avail unauthorized/unrecorded unauthorized/unrecorded supplies by hooking or tapping the bare conductors of L.T. feeder or tampered service wires. Some of the bonafide consumers willfully commit pilferage by way of damaging and / or creating disturbances in measuring equipment installed at their premises. Some of the modes for illegal abstraction or consumption of electricity are given below:

 

     

Making unauthorized extensions of loads Tampering the meter readings by mechanical jerks, placement of powerful magnets or disturbing the disc rotation with foreign matter. Stopping the meters by remote control. Willful burning of meters. Changing the sequence of terminal wiring. Bypassing the meter. Changing the C.T. ratio and reducing the recording. Errors in meter reading and recording. Improper testing and calibration of meters.

7.1.4.1 Losses in transmission sector

Transmission loss consists of only technical loss as there is no scope malpractice. Over the years the transmission loss has come down from 3.44 percent in 2005-06 to 2.66 percent in 2010-11 with the construction of more 230 kV transmission lines, the installation of more capacitor banks for shunt compensation, replacing old transformers with higher capacity transformers and also with the construction of new 132 kV lines. Metering systems have also greatly been improved by replacing old meters with three phase four wire programmable digital meters which have also negated or reduced the scope of malpractice. The meter readings for the energy transmitted are taken by committees consisting of engineers from PDB, concerned Power Station personal and the PGCB. Similarly energy received by the distribution companies is taken by committees consisting of representatives of PDB, PGCB and concerned distribution agencies, which further safeguards reduces the issue of malpractice. The following table summarizes the transmission loss for the last five years. Table 7.6: Technical Losses in Transmission Sector

Year 2010-2011 2009-2010 2008-2009 2007-2008 2006-2007 2005-2006

Transmission (percent) 2.66 3.07 3.23 3.55 3.15 3.44

loss

Source: PGCB

7.1.4.2 Losses in distribution sector

In the distribution sector the loss has also come down to less than 50 percent in the last ten years. This is because of the planned expansion of the distribution lines, the introduction of efficient metering system (prepaid meters, digital meters, AMI meters etc.) and improved billing and collection efficiency. The following table summarizes the distribution loss in the last 12 years. Table 7.7: Losses in Distribution Sector

Fiscal Years

System loss ( percent)

Fiscal Years

System loss ( percent)

1999-2000

26.09

2000-2001

25.34

2001-2002

23.92

2002-2003

21.64

2003-2004

20.04

2004-2005

17.83

2005-2006

16.53

2006-2007

17.14

2007-2008

15.56

2008-2009

14.33

2009-2010

13.49

2010-2011

12.75 Source: Power Cell

The authorities want to reduce system loss by installing new digital meters, AMI meters and prepaid meters. At the 33 KV level, the target is to reduce loss from 12.10 percent to 9.50 percent within the next 5 years. In case of T&D, the target is to reduce system loss from 14.40 percent to 11.70 percent gradually by the 2015-16 financial year. The following table summarizes the expected system loss in the Transmission and Distribution sector. Table 7.8: Target Loss in T&D Sector Fiscal Years

System loss (percent) at

Transmission System

33 kV level

loss (PGCB)

Total T&D Loss

2011-2012

12.10

2.65

14.40

2012-2013

11.45

2.60

13.70

2013-2014

10.80

2.55

13.10

2014-2015

10.20

2.50

12.40

2015-2016

9.50

2.40

11.70

Source: Power Cell

7.1.4.3 Value of aggregated technical and commercial loss and the issue of theft

High technical losses (9percent) in the system are primarily due to inadequate investments over the years for system improvement works, which have resulted in unplanned extensions of the distribution lines, overloading of the system elements like the transformers and conductors, and a lack of adequate reactive power support. The commercial losses (currently 3.5percent) are mainly due to inefficient meter reading and billing systems, theft & pilferages. This may be eliminated by improving metering efficiency, proper energy accounting & auditing and improved billing & collection efficiency. Improving the accountability of the personnel / feeder in-charges may help considerably in the reduction of aggregated technical and commercial losses.

The following table summarizes the amount of technical and commercial losses in the past five years. Table 7.9: Historical Loss in the Distribution Sector

Organization

Technical Loss

Commercial Loss

Total Loss

DESCO

8.86

0.00

8.86

DPDC

9.00

8.50

17.50

REB

9.00

5.40

14.40

BPDB

9.00

12.20

21.20

WZPDCO

9.00

2.50

11.50

Source: Power Cell

7.2 Policy, Regulation and Regulators 7.2.1 Regulatory product compliance Products used must comply with relevant IEC standard or any other standard as mentioned in bid document. Power Grid Company of Bangladesh (PGCB) is the only organization/utility/company engaged in transmission sector requires license from Bangladesh Energy Regulatory Commission (BERC). Also while undertaking new projects clearance certificate from Department of Environment must be obtained. But license from Explosive authority/similar organization is not necessary. Frequency allocation for wireless communication is to be obtained from Bangladesh Telecommunication Regulatory Commission (BTRC). Any imported T&D products that are sold in the local market must be certified by the Bangladesh Standard Testing Institute (BSTI) under the Ministry of Industry. But in case of products that are procured by the bidding procedures in the distribution sector BSTI certification is not needed. Though there is no specific standard is mentioned in the bidding documents the products are always checked to see whether they have any environmental and health hazards. All the distribution entities follow International Electro technical Commission (IEC) and Institute of Electrical and Electronic Engineering (IEEE) standards; moreover the REB also follows the American National Standard Institute (ANSI) guidelines for purchasing all sorts of electrical equipment. All distribution entities also look for ISO certified manufacturers.

7.2.2 Predominant maintenance philosophy Preventive maintenance is the predominant maintenance philosophy in the transmission and distribution sector of Bangladesh. The preventive maintenance schedule is drafted on the basis of the manufacturer’s instruction manual and working experience. Condition monitoring is als o in practice which is based on operational data, periodical inspection, tests etc. However, breakdown maintenance cannot be avoided altogether. But due to a shortage of distribution substation capacity, it is very difficult to conduct scheduled maintenance.

Consequently, industries have adopted the break-fix maintenance philosophy. If the

substation has an excess capacity then the authorities opt for preventive maintenance.

7.2.3 Adoption rate for communication protocols HART/FF/FDT protocols are not yet in use in transmission sector of Bangladesh. In every Measurement Instrumentthe distribution entities use the communication protocols RS 285 and RS 485.

7.3 Nature of the Market 7.3.1 Market size of T&D sector The transmission network in Bangladesh transmits power generated by Power Stations to the distribution network. Total installed generation capacity connected to grid system at present is 8,033 MW (derated capacity 7,413 MW (BPDB Website 31 st December, 2011)). However, the maximum power generated is 5,244 MW (as of August 2011). This is excluding the captive generation by industries which is estimated to be about 1,500 MW (installed capacity). Per capita consumption of electricity is about 220 kWh per annum (with captive generation taking into account). It is estimated that 50 percent of population is getting the facility of electricity. There will be an additional generation capacity of 11606 MW by 2015 against the forecasted demand of 10283 MW (Power system master plan 2010). The existing Transmission network consists of following Transmission lines & Substations 1. Transmission line:A) B) C)

400 kV Transmission line length: 0 ckt.km 230 kV Transmission line length: 2,647.3 ckt.km 132 kV Transmission line length: 6,015 ckt.km

2. Sub-station :A) 400/230 kV Substation Capacity: 0 B) 230/132 kV Substation Capacity: 7,225 MVA C) 132/33 kV Substation Capacity: 10,492 MVA As per present planning Transmission network in 2015 will be as follows. 1. Transmission line:A) B) C)

400 kV Transmission line length: 1,400 ckt.km 230 kV Transmission line length: 3,018.3 ckt.km 132 kV Transmission line length: 6,445 ckt.km 1. Sub-station :-

A) B) C)

400/230 kV Substation Capacity: 5,360 MVA 230/132 kV Substation Capacity: 12,525 MVA 132/33 kV Substation Capacity: 12,457 MVA

In addition to power generated by the BPDB, it is also the single buyer of power generated by all IPPs. Small IPPs, Rental P.S and Quick Rental P.S. sells to BPDB and the PGCB transmits power to the distribution entities. PGCB also transmits power to distribution divisions of BPDB (who sell power directly to consumers in places not covered by the distribution companies).

At present 50 percent of the population is covered by the national grid and there is a plan for full coverage by 2021. Presently the transmission lines are (230 kV and 132 kV) 8,662 km long and distribution lines (up to 33 kV) are 278,000 km long. And the total capacity of transmission substations is 17,717 MVA and the capacity of distribution substations is 11,515 MVA. The expected load addition up to 2016 is approximately 12,000MW. As such, two times more distribution lines are required to distribute additional 12,000 MW i.e. 556,000 km extra distribution lines are needed by 2016. Hence as the generation capacity addition will be almost 1.5 times to the current capacity, about 19,000 MVA capacity additions to the distribution substations will be required. The supply plan of the distribution entities are given in the distribution expansion plan table.

7.3.2 Market analysis of T&D products 7.3.2.1 Transformers for transmission (230/ 132 kV and 132/33 kV)

At present two voltage levels 230 kV and 132 kV, are in use in the Bangladesh transmission network. Therefore, the transformers used are of 230/132 kV and 132/33 kV voltage ratings. Transformers used in the system are of following capacity:

Table 7.10: Different Types of Transformer in the Transmission Se ctor

A. 230/132 kv

B. 132/33 kv

3 phase 150 MVA Single phase 75 MVA i.e. 3x75MVA

80/120MVA; 66/100MVA; 50/75MVA; 48/64MVA; 35/50MVA; 25/41MVA; 25/33MVA; 15/20 MVA

Source: Keystone Research

The capacities of the transformers of a new sub-station are determined on the basis of forecasted demand of electricity for the next 5 years of the area to be served by that substation. When transformers of an existing substation are fully loaded, it is replaced by transformers of a higher capacity. Transformers thus relieved are shifted to another sub-station where lower capacity transformers are already overloaded or almost fully loaded. Transformers are procured against new sub-station projects or via the upgrade of old sub-station projects. These projects are done on a turnkey basis. Sometime transformers are also procured separately if urgently needed for sub-stations which are in operation. All procurements are done through International competitive bidding (ICB) following the Public Procurement Act 2006 (with its amendments). In case of the foreign aid projects, donors’ guidelines are also followed. PGCB selects Turnkey contractors through International competitive bidding (ICB) for project work /large supply and generally follows some technical and nontechnical conditions, which are included in the tender document. A Turnkey contractor/ Bidder must fulfill the following conditions:















General experience: Bidder should have construction project management experience of at least 1(one) turnkey project (contract amount should be similar to present contract) outside their own country within the last 10 (ten) years as of the date of opening of technical proposals. The experience should be supported by user’s certificates indicating their address, telephone & fax numbers and detail of projects. Specific experience: Bidder must have the experience of the successful completion of at least 2 (two) similar or higher capacity projects including engineering, erection, testing and commissioning within the last 10 years as of the date of opening of technical proposals. The experience should be supported by user’s certificates in their lett er head indicating address, telephone & fax numbers of the users and detail of projects. Bidder must furnish copies of ISO 9001/1992 or equivalent certificates of proposed manufacturers of individual equipment. Bidder must provide a supply record of at least 10 (ten) years of equipment of the proposed manufacturers. The said equipment should in satisfactory service of similar or higher specification for a minimum of 3 years as of the date of bid opening. At least one evidence report from end users of satisfactory service should be mentioned as above. Evidence of satisfactory service shall be in the end user’s respective letter head stationary indicating address, telephone & fax numbers of the users. The bidder should submit satisfactory type test certificates of all equipments except transformer’s from independent testing laboratory. Typed test certificates or reports of Power Transformer shall be from independent testing laboratory or manufacturer’s own testing laboratory. Test carried at manufacturer’s own testing laboratory must have been witnessed by any one or more of the following persons: A representative from independent testing authority/laboratory •



•

A representative from independent inspection agency

•

An employer’s representative

The bidder should provide(in case bidder himself is not manufacture of equipment) manufacturer’s authorization showing the bidder has been duly authorized by the manufacturer or producer of related plant and equipment or component to supply & install that item in employer’s country.

Only Tape changers manufactured by MR, Germany or ABB Sweden are accepted and it is specified in tender document. The prices of some of the HV Power Transformer purchased in the recent period against different projects/supply through International Competitive Bidding (ICB) are given in the following table. Table 7.11: Recent Purchase of HV Power Transformer

Name of Project

Name of Turnkey contractor

Date of contract

Name of Manufacturer

Voltage rating & capacity

Unit Price FOB

CIF

Constructio n &Extension of Grid Substations including transmissio n line facilities (Phase-1)

230 kV Transmissi on Line

230 kV Transmissi on Line

Supply of Transforme rs

China National Electric wire &cable corporation, China

Lot-2 24 24.05.2009

ABB, INDIA

Lot-3 21.12.2009

ABB, INDIA

Shandong Dachi, China

132/33 kV, 25/41 MVA

USD 869,910

USD 915,146*

132/33 kV, 50/75 MVA

USD 869,910

USD 915,146*

ABB, INDIA

132/33 kV, 25/41 MVA

___

Euro 600,752

Do

ABB, INDIA

132/33 kV, 66/100 MVA

___

Euro 675,055

Hyosung, Korea

Lot-1 02.02.2009

Hyosung, Korea

230/132 kV, 3x75 MVA

Euro 2,513,292

Euro 2,602,937

Hyosung, Korea

Lot-1 02.02.2009

Hyosung, Korea

230/132 kV, 150 MVA

Euro 1,431,284

Euro 1,482,336

Consortium of GS ,Korea & Crompton Greaves, India

Sept.,2010

Crompton Greaves ,India

230/132 kV, 225/300 MVA

JV of Shandong Wuzhou Electrical co. ltd. & Shandong Takaoi Power Co ltd.

Dec.,2010

USD 1,403,500 ___

Shandong Takaoi Power Co ltd.

230/132 kV, 225/300 MVA

USD 1,176,591

____

Crompton Greaves, India

Crompton Greaves, India

132/33kv 50/75MVA

____

USD 6,62,939-


*M/s China National Electric wire & cable corporation, China (CCC) quoted same price for 132/33kv,

25/41 & 132/33kv,50/75 Transformers. It is observed that the price quoted by turnkey contractors for equipment/transformers for project work are generally higher than the price quoted by contractors for supply of equipment/transformers. It is also observed price of equipment/transformers from European/USA manufacturing factories are higher than those (with identical specification) manufactured in Indian/Chinese factories. For this reason it is difficult to get European/USA manufactured equipment/for transformers through ICB particularly when Indian/Chinese turnkey contractors participated in bidding. It is necessary to have the approval of executive committee of the National Economic Council headed by Prime minister through via the Planning commission for any project where government financing is involved including for projects that have a foreign aid component. For evaluation of bids received trough

ICB, the concerned organization forms a Tender evaluation committee(TEC) which include representatives of the Design, Project and Finance offices of the organization, two representative of different ministries/ organizations and a consultant, if any. Therefore for Govt. financed projects the Ministry of Power, Energy & Mineral Resources (MOPEMR), MO Planning, the Planning commission all have influence with regard to the approval of the project. Concerned donor agencies also have influence in case of a project with a foreign aid component. Generally in PGCB consultants were not engaged in the majority of projects. However the following consultants were in engaged in few projects:a) M/s Mott McDonald, UK b) M/s Nippon-Koei, Japan c)

M/s Fitchners ltd, Germany

d)

M/s AE Com (former/s Maun sell), New Zealand for NLDC project.

e)

Korean Electric Power co. ltd.(KEPCO),Korea

7.3.2.2 Transformers for distribution (33/11 kV and 11/.4 kV)

Initially the projects were financed by Official Development Assistance (ODA) from Japan and UK, the equipment were procured mostly from UK and Japan. In the case of REB, as it was US financed; most of its equipments were procured from US and Canada. In case of ADB financed projects, the competition was open to all and all the entities followed PPR 2006 and PPR 2008 guidelines. In the case of open the tendering process, most of the equipment were procured from China and India. For the last five to six years the key suppliers/ bidders of transformers were CCC, China; GIETC, China; Heavy Electric, India; CGL, India etc. Some parts of transformers like OLTCs (On load tap chargers) and protection devices were procured from European and US companies like MR, Germany; Alstom UK, ABB Switzerland, SEL USA etc. Key customers are the different the distribution entities like BPDB, DPDC, DESCO, WZPDC and REB. Of course, there are a few private customers; IPPs purchase the above items. There are several methods of purchasing these transformers. These are open tendering, limited tendering, two-stage tendering, single stage two envelope tendering, request for quotations, direct procurement and request for proposals. In contrast to open tendering which is open for all competitors, the limited tendering is open to only the parties who are invited to participate in it. In the single step stage two envelopes tendering process the technical and financial proposals are submitted separately in two different envelopes. For smaller purchases, the authorities use request for quotations process and for procurement of intellectual and professional services they use the request for proposals process. Direct procurement is used as sole source procurement in cases where competition is considered inappropriate. As all the products are procured through these methods the price is market driven.

7.3.2.3 Substation automation and protection

Due to the standardization of operating performance and facilities in spare parts requirements, the main protective relays manufactured only by ABB (Switzerland/Sweden), Siemens (Germany), and Areva T&D (France) are procured in the transmission sector. All the products must follow IEC 61850 protocol. Equipment for sub-station automation is the responsibility of concerned Turnkey contractor. But in general, protective relay manufacturer is entrusted by the Turnkey contractor in design, manufacture, supply & commissioning of Sub-station automation equipment. Remote tap changer control of transformer is provided by the transformer manufacturer. Alftom, UK; CGL, India; ABB, Germany and SEL, USA are the major manufacturers of the relays in the distribution substations. 7.3.2.4 EMS/DMS/GIS software

M/S Areva, France constructed the National Load DispatchCentre in Bangladesh. All the software including the software for EMS is supplied by M/S Areva, France. ABB, Sweden constructed Supervisory Control and Data Acquisition (SCADA) for DPDC with the help of SPIDER SCADA Software. 7.3.2.5 Meters/AMI

PGCB always purchases 3 phase 4 wire programmable digital energy meters with class of accuracy 0.2 for the transmission sector particularly for inter organizational metering. PGCB prefers meters manufactured by EDM Sweden, Landys Gear Germany, and CWE USA. Supply of energy generally finalized during pre-contract negotiation meetings.

meters are

DPDC has been recently purchasing 3 phase 4 wire programmable digital energy meter (AMI/ AMR) with class of accuracy 0.2 for the HT (11 kV) consumer. Key suppliers of these meters are: Secure Meters, India; L&T, India; EDMI, Singapore; Landis+Gear, Singapore; Shanghai Meter, China; Fae, Brazil; Dengly, China 7.3.2.6 Communication

Till 2000 PDB/PGCB were using power line carriers for internal communication and load dispatching, but from 2000, OPGW were installed along with all new transmission lines and ground wires of almost all old transmission lines were replaced by OPGW. A communication system using OPGW was introduced. NKT, Germany; Prysmian, Spain; LS Cable, Korea; ZTT, China and Taihan Cable are the manufracturer of most of the OPGW cables in the transmission network. At the initial stage, communication equipment manufactured by ABB were used. These were used till the NLDC was constructed by Areva, France. All equipments, software, hardware for NLDC were from Areva including communication systems. Now, the Areva and the ABB equipments/ software are in use in the transmission system but in the future, communication systems compatible with the NLDC software and hardware will be used. The distribution entities use the available communication systems of Transmission network. Other than that, wireless communication (Motorola Equipment) and PSTN/ cell phones are also used.

7.3.2.7 UPS

NLDC uses UPS supplied by Areva, France. Important sub-stations are provided with emergency diesel generator sets.

7.3.3

Market analysis of monitoring and control solutions in T&D

Products of Bentley Nevada are not in use in transmission sector. However, it is learnt that automated data acquisition, analysis and decision support system of Bentley Nevada is in use in some of Gas Turbine Power Stations of BPDB. In addition Vibration monitoring & protection instruments of Bentley Nevada are in use in many combined cycle & Gas Turbine Power Stations in Bangladesh. Measurement solutions, Inspection technologies, Dresser and Control solution products are not in use in electric power transmission industry of Bangladesh.

7.3.4

Market analysis of industrial solutions

7.3.4.1 Medium voltage switchgears (UP TO 33kV)

ABB, India; Areva (Germany/ India), Compton Greaves Ltd., India; Energypac, Bangladesh; Siemens, India; TBEA, China; TAMCO, Malaysia etc. are the manufacturers of most of the 132 kV and 33kV switchgears of the distribution substation. Besides them, some local companies like Powerman, BETELCO, ADEX and GEMCO also supplied 11 kV breakers to the distribution entities. The current average price of 33 kV GIS Indor Switchgear with relay control panel is 630 USD and 11 kV Switchgear with CT & PT is 173 USD. Most of the Ring Main Units (RMU) is procured from local companies, except Compton Greaves Ltd., India. They provided RMU in some distribution projects. There is no Compact Substation in the distribution sector of Bangladesh. 7.3.4.2 Low voltage switchgears (up to 415 V)

Low Voltage or Low Tension (LT) Switchgear equipment that include Air Circuit Breakers (ACB), Molded Case Circuit Breaker (MCCB), Contractors & Relays (C&R), Miniature Circuit Breaker (MCB), Disconnetors and Switching devices are manufactured by a number of local companies including Adex Corporation Bangladesh Ltd., Energypac, Betelco, Gemco, Mirco Electronics Ltd., TNS Engineering & Consultants Ltd. Among these, Gemco is government-owned and the others are privately owned equipment manufacturing companies. Prices for some of the equipment for low voltage switchgears are provided in the following table: Table 7.12: Average Price of Low Voltage Switchgears

Equipment Name 11 KV 630 AMPS Vacuum Circuit Breaker with Cubicles (Indoor Type) for outgoing feeder 11 KV 1250 AMPS Vacuum Circuit Breaker with Cubicles (Indoor Type) for Bus coupler fade outgoing feeder 11 KV 1250 AMPS Vacuum Circuit Breaker with

Price per unit (USD) 5,200

5,142

5,330

Cubicles (Indoor Type) 33 KV Disconnector with Earth Switch 2000A 33KV Isolator without Earthing Blade gang operated Vertical Mounted Vertical Break. 11 KV 100 A Drop-out fuse L.T. Switchgear

550 865 30 2630

Source: Keystone Database, 2011

7.3.4.3 Low voltage panels

Low Voltage Panels manufactured by Adex Corporation, TNS engineering & consultants and Energypac are available in the distribution sector of Bangladesh. The average price if AC Distribution Panel is 47 USD and DC distribution Panel is 13 USD.

7.3.4

Key Players

7.3.4.1 Transmission sector

The Ministry of Power, the Energy and Mineral resources (MPEMR) and the PGCB are the most important players in the transmission sector. BPDB as the single largest electricity producer and single buyer is also an important player. Distribution entities as receivers of electricity transmitted by PGCB also play important roles. The list of Turn Key Contractors who were awarded to different contracts to implement different projects in transmission sector during last five years is given in the Table 7.12. The detailed list of contract awarded to different vendor is given in Table 7B.1 of Appendix 7B. From the detailed list it can be seen that Siemens, India (along with Siemens, Germany & Siemens, Bangladesh), China National Electric wire & cable Import/ Export corporation, China (CCC) & ABB Ltd., India won maximum numbers of contract in the substation side. The following table lists the major turnkey contractors in the transmission sector: Table 7.12: Turnkey Contractors in the Transmission Sector

Turnkey Contractors

11.

Consortium of Hyosung Corporation & Samsung Corporation

12.

JV of Samsung &Handbeak co. ltd., Korea

1.

Energypac, Bangladesh.

2.

ABB Ltd., India

3.

JV of Energypac, Bangladesh & ABB, India.

4.

Basic Engg. Bangladesh

13.

5.

China National Electric wire & cable Import / Export Corporation, China (CCC).

14. Crompton Greaves, India (CGL).

6. 7.

Siemens, India. Consortium of Siemens, Germany, Siemens, India & Siemens, Bangladesh

KEC , India.

15. Consortium of GS E&C,Korea& Crompton Greaves, India. 16. Consortium GS &E C 17. JV of Shandong Wuzhou Electrical co. ltd. &

8.

Consortium of Siemens, Germany & Siemens, Bangladesh

Shandong Takaoi Power Co ltd. China. 18. Marubeni, Japan

9.

HG Power, Malaysia. 19. Cobra Instalaciones Y Servicios S A, Spain

10.

Hyosung Corporation, Korea. 20. Jyuoti Structure Ltd., India 21. Sanergy, Iran Source: Keystone Database 2011

Although, there are no dominant player in Transmission line construction, M/S H.G. Power, Malaysia won highest number contract .ide. Overall, it is observed that Indian companies dominate the list of vendors. It needs to be mentioned that although M/S H.G. Power, Malaysia registered in Malaysia, the company is in Indian ownership. Indian & Chinese manufacturers dominate the list of manufactures of different equipment & materials. This is due to fact that they are near to Bangladesh & prices are more compatible in comparison to manufacturers of other countries particularly European countries. However, Circuit Breakers manufactured by Areva Germany, Siemens Germany & ABB Sweden are also supplied. Bibyana-Kaliakor 400 kV Transmission line and Kaliakor 400/230kV & 400/132 kV Substations are financed by EDCF, Korea and being a tied loan the most of the equipment/materials to be supplied in this projects are from Korea. Before 2005, the situation was a bit different. At that time most of the manufacturers from India & China didn’t qualify to supply equipment & materials due to lack of operational experience particularly in 230 kV system. However, with passage of time they gained the required operational experience and became qualified to supply equipment/materials to Transmission sector. The main protective relays manufactured only by ABB (Switzerland/Sweden), Siemens (Germany), and Areva(France) are used in transmission network for better co-ordination and to standardization of operating performance & spare requirements.

facilitate

The following table lists major manufacturers of equipment, which were supplied by the Turnkey Contractors of Substation: Table 7.13: Manufacturers of Substation Equipment

Product Type

Products

Manufacturers

400/132 kV Transformers 230/132 kV Transformer

Hyosung Corporation, Korea i)Daian, Japan ii) Hyosung Corporation, Korea iii) Crompton Greaves Ltd. (CGL), India iv) ABB Ltd., India v) Shandong Takaoi Transformer Co ltd., China i) TBA, China ii) Crompton Greaves Ltd. (CGL), India iii) ShangdongDachi, China iv) ABB Ltd., India Siemens, Germany i) Siemens, Germany

Transformers 132/33kv Transformer

Circuit Breaker

400 kV Circuit Breaker 230 kV Circuit Breaker

Product Type

Products

Manufacturers

132 kV Circuit Breaker

Instrument Transformer (CT & PT)

400 kV Instrument Transformer (CT & PT) 230 kV Instrument Transformer (CT & PT) 132 kV Instrument Transformer (CT & PT)

230 kV GIS unit GIS unit 132 kV GIS unit Protective Relay

ii) Crompton Greaves Ltd. (CGL), India iii) New Northeast Electrical (Shenyang) High Voltage Switchgear Co. Ltd., China i) Areva, Germany ii) ABB India iii) Siemens, Germany iv) Crompton Greaves Ltd. (CGL), India v) Shandong Takaoi High Volt Switchgear Co. Ltd., China vi) ABB, Sweden CGL, India i) Crompton Greaves Ltd. (CGL), India ii) ABB, India i) ABB, India ii) Energypac, Bangladesh iii) HenghyangNagfang,China iv) Crompton Greaves Ltd. (CGL), India v) Shandong Takaoi High Volt Switchgear Co. Ltd., China vi) ABB, Sweden i)Siemens, Germany ii)Shandong Takaoi High Volt Switchgear Co. Ltd., China Siemens, Germany i)ABB, Switzerland ii) Areva T&D, France iii) Siemens, Germany


The following table lists major manufacturers of Transmission Line equipment/material: Table 7.14: Manufacturers of Transmission Line equipment/material

Equipment Type Tower

Conductor

Underground Cable Insulator

OPGW

Manufacturers i) Steel Products, India ii) KEC ,India iii) Bosung, Korea iv) WeifangChangian Steel Tower Stock co., Ltd. China v) Confidence Steel, Bangladesh vi) K2Engg., Korea ( Proposed ) vii) Samwoo , Korea ( Proposed ) i) Sterlite, India ii) ZTT , China iii) Hangzhou ConductorCo.Ltd. iv) Apar, India v) Taihan, Korea TBA Cable Co Ltd.,China i) Dalian, China ii) NGK, Japan iii )NGK, China i) NKT, Germany ii) Prysmian, Spain iii) LS Cable, Korea iv) ZTT, China v) Taihan Cable Source: Keystone Database 2011

7.3.4.2 Distribution sector

There were four major procurements in the last five years in the south zone of Dhaka and Narayanganj. The details of these procurements along with their contract values are given in the Table 7.15. From the table it can be shown that Energypac Engineering Ltd., Bangladesh is the main contractor for these projects. Out of the four procurements they were involved in three of them. ABB Ltd., India was involved with one project with Energypac by forming a consortium. Another project was also solely contracted by them. ArevaEnergietechnik GmbH, Germany was also involved in a project by forming a Joint Venture with Energypac.

Table 7.15: Distribution Efficiency Improvement in the in the south z one of Dhaka and Narayanganj (2009-2011)

SI No

Name of Package

Name of Contractor

Contract Price Foreign (USD)

Contract Price Local (BDT)

Total Contract Price (BDT)

1

Design, Supply, Installation, Testing and Commissioning of 10 nos. upgraded substations.

Energypac Engineering Ltd.

12,144,880.87

11,35,36,769 .50

95,63,91,501.88

2

Design, Supply, Installation, Testing and Commissioning of 33/11 kV Substation at Existing Switching Station

Consortium of 1,715,282.10 Energypac Engineering Ltd., Bangladesh and ABB Ltd., India

1,59,91,020

13,50,31,597

3

Design, Supply, Installation of ABB Ltd., India 132/33 kV Transformers and Associated Materials at various 132/33 kV Substations

4,920,404.64

39,991,986.6 0

38,14,68,068.88

4

Design, Supply, Installation, Testing and Commissioning of 5 nos. of new 33/11 kV Substations.

9,391,215.55

14,35,70,418 .75

79,53,20,778.60

Joint Venture of ArevaEnergietech nik GmbH, Germany and Energypac Engineering Ltd., Bangladesh


The list of major manufacturers of distribution breakers and transformers is given in the Table 7.16. CGL, India is the manufacturer of all types of breakers and power transformers of the projects in this zone. 132 kV breakers are also manufactured by Pinggago, China; Siemens, Germany and ABB, Germany. Most of the 33kV and 11 kV breakers are manufactured by CGL, India; Siemens, India; ABB, India; Areva, Germany; TBEA, China and TAMCO, Malaysia. Local companies’ (Energypac, Powerman, Betelco etc.) 11 kV breakers are also procured. Power Transformers (132/33 kV and 33/11 kV) are mostly manufactured

by TBEA, China; CGL, India; Hocker Sidley, UK and BHEL, India. Only one local company i.e. Energypac’s 33/11 kV transformers are found in these projects. Again, all the distribution transformers (11/.4 kV) are procured from local manufacturers. Table 7.16: Manufacturer of the different components of the Substations in the south zone of Dhakaand Narayanganj

Item

Manufacturer

132 KV Breaker

Pinggago, China; CGL, India; Siemens, Germany; ABB, Germany

33 KV Breaker

CGL, India; Siemens, India; ABB, India; Areva, Germany; TBEA, China; TAMCO, Malaysia; Energypac, Bangladesh

11 KV Breaker

CGL, India; Siemens, India; ABB, India; Areva, India; TBEA, China; TAMCO, Malaysia; Energypac, Bangladesh; Powerman, Bangladesh; BETELCO, Bangladesh;

132/33 kV Power Transformer

TBEA, China; CGL, India; Hocker Sidley, UK; BHEL, India

33/11 kV Power Transformer

TBEA, China; CGL, India; Hocker Sidley, UK; BHEL, India; Energypac, Bangladesh; ABB, India

11/.4 kV Distribution Transformer

Local Manufacturers like GEMCO, Energypac, BETELCO, ADEX, POWER-MAN etc. Source: Keystone Database 2011

The detailed lists of Last five years procurements in the north zone of Dhaka are given in the Appendix 7C. 33 kV GIS breakers are mainly manufactured by Areva, Germany. Other 33 kV breakers are from Compton Greaves, India; Areva, India and Energypac, Bangladesh. Again, 11 kV breakers are mainly manufactured by Tampco, India; Areva, India and Siemens, India. Compton Greaves, India is the major manufacturer of most of the transformers. Recently, some 25 kVA Single Phase transformers from GE, Bangladesh are procured also. In case of metering equipment, most of them are either Chinese or Indian products. Secure, India is a major manufacturer for most of the 11 kV metering equipment. The following table gives the list of major equipment manufacturers for these projects: Table 7.17: Manufacturer of the different components of the projects in the North Dhaka

Item

Manufacturer

33 kV GIS Breaker

Areva, Germany

SF6/VCB Breaker (33 kV)

Compton Greaves, India; Areva, India

33 KV RTC Panel/OLTC

Compton Greaves, India; Energypac, Bangladesh

33 kV RTC Panel, outdoor Breaker


11 kV Breaker

Tampco, India; Areva, India; Siemens, India

Item

Manufacturer

20/28 MVA Transformer


200 KVA Station Transformer

Eaglerise, China; Compton Greaves, India; Energypac, Bangladesh

500KVA 3-Phase Transformer

Compton Greaves, India

25 KVA Single Phase Transformer

General Electric, Bangladesh

11 KV Metering (Different Ratings)

Secure, India Source: Keystone Database 2011

The detailed lists of Last five years procurements by BPDB in various distribution projects are given in the Appendix 7D. Most of the equipments including the distribution transformers (100 kVA and 250 kVA) are procured locally. In some projects a few Indian and Chinese equipments are procured. For instance, South China Electric Dev. Co Ltd, China was the manufacturer of the 100 kVA and 250 kVA distribution transformers of the Central Zone Power Distribution Project of BPDB. In most of the REB projects of last five years, different equipments are locally procured and most of the manufacturers are local companies. There was no major procurement in the west zone of Bangladesh in this period.

7.4

Future Investment and Opportunities

7.4.1 Yearly plan to meet generation addition The transmission company has prepared an outline of at least 15 projects that are to be completed by 2017 to upgrade and expand the transmission network throughout the country. Eight of the projects are scheduled to be finished by 2012-13. These include both construction of new transmission lines and new substations in different areas to reduce the shortage of electricity supply. An important project that is currently on going is the electricity interconnection between Bahrampur, India and Bheramara in the Western region of Bangladesh. Under this project, there will be construction of 30 KM 400 KV double circuit transmission line and a back to back 400kV HVDC station at Bheramara. When completed this will be first electrical interconnection with a neighbouring country and will allow an import of up to 500mW (the present commitment is 250 mW) from India. In the future Bangladesh may export surplus (if, any) electricity through this T/L. The projects to construct and expand new transmission lines include the Raozan-SikalbahaAnowara&Hathazari-Khulshi 60 KM 230 KV transmission Lines, the Ishurdi-Rajshahi 70 KM 230 KV transmission Lines, the RPCL Mymensingh-Tangail via Bhaluka 180 KM 132 KV double circuit K transmission lines, Goalpara-Bagerhat 45 KM 132 kV 2nd Single Circuit transmission lines and Chandraghona-Rangamati-Khagrachari 80 KM 132 KV Transmission Lines. After completion these T/Lswill meet the power demand in their respective areas.

There are also projects to build new substations by 2012-13 including 230/132 KV Substations in Shyampur, Jhenaidah and four new 132/33 kV substations with interconnecting lines in MymensignTangail. There are two more transmission line projects to be finished by 2014-15 which are the AminbazarMaowa -Mongla 400 kV, Mongla -Khulna(S) 230 kV Transmission lines and the Anowara - Meghnaghat 400 kV Transmission lines. These will transmit the power generated by proposed large coal fired Power Stations at Mongla, Khulna &Anowara, Chittagong to Khulna, Dhaka, Chittagong and other areas. Along with these short-term projects, there are three longer term projects to be completed within 2017 including the Khulna(s)-Barisal (N) 230 kV transmission line project, the Ruppur-Bheramara-Zajira 400 kV transmission line project and the Ashuganj-Joydebpur 400 kV transmission line. In the Table 7A.2 of Appendix 7A, projects planned for transmission sector to be implemented during next five years are shown.

7.4.2 Distribution expansion planned to get all of the power generation to consumers At present the distribution utilities have a total distribution line of 278,000 KM serving over 12 million customers. They suffer a system loss of 12.75percent. To reduce the system loss and to expand and improve the distribution network different distribution entities have plan for several upcoming projects. BPDB currently has six projects with completion dates within 2013-14 for the construction of distribution lines, substations and renovation works at Mymensingh, Chittagong, Comilla, Sylhet, Rangpur and Rajshahi. The total cost of these six projects is approximately USD 535 million. Table 7.18: Upcoming Projects of BPDB

Sl

Name of the Project

No

Completi

Project

on Date

Cost

Objective of the projects

(Tk

Crore) 01

Power Distribution Development

2013-14

637.00

project, Mymenshingh Zone 02

Power

Distribution

Development

substations and renovation works 2013-14

1088.00

project, Chittagong Zone 03

Power

Distribution

Power

Distribution

Development

2013-14

756.00

Power

Distribution

Development

2013-14

410.00

Power

Distribution

Construction the distribution lines , substations and renovation works

Development

2013-14

710.00

project, Rangpur Zone 06


project, Sylhet Zone 05


project, Cumilla Zone 04

Construction the distribution lines,


Development

2013-14

693.00

Construction the distribution lines ,

project, Rajshahi Zone

substations and renovation works Source: Keystone Database 2011

In the rural areas of Bangladesh, there are another six projects which are to be completed within 201213. These projects will connect one million new consumers in the rural areas with the distribution network through the construction of 14500 KM of new distribution lines in the Dhaka, Chittagong, Sylhet, Khulna, Barisal and Rajshahi division. These will cost approximately USD 4.75 billion. Table 7.19: Upcoming Projects in the Rural Areas under REB

Sl

Name of the Project

No

Completi

Project

on Date

Cost


(Tk

Crore) 01

One million new connections project

2012-13

34800.00

To connect one million new consumers

02

Rural Electrification extension project

2012-13

1322.00

Substation and distribution lines extension

2012-13

498.00

Construction of 4100 km distribution lines

2012-13

498.00


2012-13

407.00


2012-13

268.00


(Rajshahi,

Rangpur,

Khulna

and

Barishal area) 03

Rural Electrification extension project (Dhaka Division-1)

04

Rural Electrification extension project (Chittagong-Sylhet Division-1)

05

Rural Electrification extension project (Rajshahi-Rangpur Division-1)

06

Rural Electrification extension project (Barishal Division-1)


Year wise detailed procurement plan for these projects is given in the Appendix 7E. In the south zone of Dhaka and Narayanganj at least 20 projects including both short-term and longterm ones with several objectives. These projects will increase substation capacity by building new substations, ensure quality power supply, rectify system loss and provide better service to a wide range of customers. The estimated total cost to implement these projects is USD 580 million. The upcoming project list is shown in the Appendix 7F. The detail procurement plans for different projects are shown in the Appendix: 7G. To extend the distribution network in North Dhaka and to serve electricity to at least 600,000 new customers there has seven planned projects that are currently in operation. These projects will upgrade their existing mechanisms, strengthen distribution lines, electrify some new areas in Uttara, and install new prepaid meters all around Dhaka and install SCADA systems. Three of the projects have already

started. Their combined cost is approximately 330 million. The following table lists all the upcoming projects up to 2015 and their respective procurements. Table 7.20: Upcoming Projects in the North Zone of Dhaka

Sl

Name of the Project

No

Compl

Project

etion

Cost (Tk

Date

Crore)

Procurements

DESCO

01

Strengthen of distribution line project

201112

486.00

02

Extension and renovation of distribution system project (Gulshan Area)

201112

595.00

03

Construction, augmentation and rehabilitation of 08 Nos 33/11 KV (GIS) Sub-station

20112014

177.00

04

Replacement of existing 11 KV overhead line by underground cable in 04 routes Electrification of Uttara 3rd Phase &Purbachal Model Town

20112014

180.00

June 2015

1000.00

06

Prepaid Metering (200000 Nos)

110.00

07

SCADA System

20112014 June 2015

05

100.00

i) Construction 33/11 KV (GIS) Substations. ii) Installation of 33 KV UG Cable as source line for new substation iii) Installation of HT/LT Composite Distribution line iv) Installation of11 KV UG Cable v) 11/.4 KV 200 KVA X-former vi) 11/.4KV 25 KVA X-former i) Construction 33/11 KV (GIS) Substations. ii) Installation of 33 KV UG Cable as source line for new substation iii) Installation of HT/LT Composite Distribution line iv) Installation of11 KV UG Cable v) 11/.4 KV 200 KVA X-former vi) 11/.4KV 25 KVA X-former i) Construction of 33/11 KV (GIS) Substation at Agargoan, Banani, Niketon, Purbachal and Mirpur-6 ii) Rehabilitation & Reinforcement of 33/11 KV (GIS) Substation at Digun, Joarshahara and Tongi Installation of 11 KV Underground 16 KM Cable

1) Construction of 33/11 KV (GIS) Substations. ii) Installation of 33 KV UG Cable as source line for new substation iii) Installation of HT/LT Composite Distribution line iv) Installation of11 KV UG Cable v) 11/.4 KV 200 KVA X-former vi) 11/.4KV 25 KVA X-former Installation of 2,00000 Prepaid meter at Uttara, Mirpur, Baridhara and Gulshan. Equipment for Real Time data acquisition and 33 KV & 11 KV feeder control


According to the three years development plan of DESCO the total year-wise procurement of different equipments is given below:

Table 7.21: Year-wise Procurement Plan for the North Dhaka

Sl

Particulars

2011-12

2012-13

2013-14

1

Source line (33 KV) (km)

25

30

27

2

Distribution line (11 KV) (km)

250

300

270

3

No of substation (33/11 KV) (Nos)

10

0

5

4

No of 11 KV switching station (Nos)

2

2

1

6

Distribution Transformer (11/0.4KV) (Nos)

400

490

327

7

No of feeder (11KV) (Nos)

29

34

35

8

132/33 KV Grid SS (Nos)

0

0

3

9

Prepaid metering (Nos)

20000

80000

100220


In the west zone of Bangladesh there has been one project to extend the distribution system and substations in 21 districts within 2012-13 that will cost approximately USD 57.2 million. In this period there is also plan for prepaid metering system expansion, solar energy projects, SCADA system and Video conferencing system. Table 7.22: Upcoming Projects in the West Zone of Bangladesh

Sl

Name of the Project

No

Completi

Project

on Date

Cost


(Tk

Crore) 01

21

district

electricity

distribution

2012-13

469.00

project

Extension

of

distribution

substation

02

Pre-paid e-metering System

2012-13

88.55

03

Solar Energy

2012-13

1.00

04

SCADA System

2012-13

1.08

05

Video Conferencing System

2012-13

0.20

Total Cost

559.81 Source: WZPDC

The detailed equipment procurement plan of WZPDC for these projects is given below. Table 7.23: Procurement & Installation Item from 2011 to 2013 for the West Zone of Bangladesh

systems

and

Sl No.

Item Description

Quantity

01

5 MVA X-former

20 Nos.

02

10/13.33 MVA X-former

14 Nos.

03

33 KV Line( New+ Renovation)

211 KM

04

11,11/.4,0.4 KV line( New & Renovation)

2460 KM

05

11/.4,3-Phase Distribution X-former

1100 Nos.

06

1-Phase Meter

105000 Nos.

07

3-Phase Meter

10,000 Nos.

08

Solar Energy

20KW

09

SCADA System

12 nos.

10

Video conferencing System

L/S


Further procurement plan for projects like system efficiency improvement, pre-paid e-metering system and SCADA System is also given in the following Table 7.25. Table 7.24: Procurement & Installation Item from 2014 to 2017 for the West Zone of Bangladesh

Sl No.

01

Item Description

Quantity

5 MVA X-former

18 Nos.

02

10/13.33 MVA X-former

18 Nos.

03

33 KV Line( New+ Renovation)

215 KM

04

11,11/.4,0.4 KV line( New & Renovation)

2500 KM

05

11/.4,3-Phase Distribution X-former

1700 Nos.

06

1-Phase Meter

140000 Nos.

07

3-Phase Meter

14,000 Nos.

08

SCADA System

36 nos.

Total Cost Source: Keystone Database 2011

Estimated Cost In Crore TK

585.0

118.58

3.24 706.82

7.4.3 Asset mapping in the transmission and distribution utilities Asset mapping in not very popular in the transmission and distribution utilities. Asset mapping technologies like Dissolve Gas Analysis (DGA) is completed only for the testing purpose before the purchase of the transformer and after that this is done only once in a year.

7.4.4 Unmanning of substation in T&D At present there are no unmanned substations in the transmission and distribution network except for the ones in REB. From inception, all the substations of REB were unmanned. But these substations are still controlled manually and there is no remote control in these substations. At present there is no plan for unmanning the substations of other distribution entities or PGCB.

7.4.5 Distribution automation Still the utilities are aware of the benefits of distribution automation. Substation wise automation has already started in some areas. There are plans to improve the real time monitoring of the all the substations. DESCO has already introduced 33/11 KV Substation Automation programs. DPDC and BPDB are also taking similar initiatives.

7.4.6 Software for outage detection and workforce management DESCO and DPDC are also using a Complaint Management database which was developed by using Microsoft access with help of in-house IT experts.

7.4.7 Use of billing and CIS Software along with Meter Data Management (MDM) Software All distribution utilities of Bangladesh DESCO, DPDC, REB and BPDB are using billing software and Meter Data Management Software.

7.4.8 Smart Meter technologies in the distribution utility The distribution utilities have plans to convert all conventional meters to smart meters. Some of the companies that are supplying these meters are: Secure Meters, India; L&T, India; EDMI, Singapore; Landis+Gear, Singapore; Shanghai Meter, China; Fae, Brazil; Dengly, China. DESCO has already explored a Remote meter pilot project at Mirpur and Prepayment meters in Uttara.

7.4.9 Market for power backup/power quality Market for power backup i.e. UPS is discussed in section 7.3.2.7.

7.5 Issues and Challenges 7.5.1 Finance required to build the transmission capacity Financing is always a challenge for the transmission sector. Since the establishment of PGCB in 1996, this state-owned organization has implemented many projects. In the initial period, Asian Development Bank (ADB) was the major financier of many the PGCB projects. In addition, KFW also came forward by financing a transmission line. Other foreign financiers include: NDF (Nordic fund, Scandinavian countries), SIDA (Sweden), DANIDA (Denmark) and JICA. Two transmission lines were implemented with suppliers’ credit (one Chinese and two Indian companies). Furthermore, PGCB has also implemented

few projects through their own financing. In addition, one project was financed by the PalliBidyutSamity (PBS), Dhaka 1. The Government of Bangladesh has always supported PGCB by financing the local currency portion of the total project costs (on the basis of 60 percent equity and 40 percent loans). At present, different projects are being financed by the ADB, JICA, World Bank, EDCF (Korea) and the KFW. Negotiations are going on with the local branch of a foreign commercial bank for financing the BarisalBhola-Bahauddin 230 KV double CKT Transmission Line. The ongoing projects of PGCB are being financed by the ADB, the JICA, the KFW and the EDCF (Korea). The Bibiyana-Comilla (N) 230 kV transmission line project is being financed by the GoB & PGCB itself. Negotiations are currently taking place a foreign commercial bank (Local Branch) for financing the foreign currency portion of the Barisal-Bhola-Burhanuddin 230 kV Transmission Line project. The local currency portion of all the above projects is being financed by the GoB. JICA is almost certain to finance National Power Transmission Network Development Project. ADB and World Bank also have shown the indication of financing a few projects respectively. For financing other projects, discussions are going on with the ADB, World Bank and the JICA through the EconimicRealtions Divisions (ERD) of the GoB. One or two small projects may be funded by the PGCB itself. There is also a possibility of financing via suppliers’ credit, though rece nt experiences in this regard have not been encouraging. Financing projects by taking loans from commercial Bank is also an option but it is difficult to get long term loans from commercial banks. Lately, the Government of Bangladesh has been trying to promote Public-Private Partnerships (PPP). However, no policy has yet been formed. In future, PPPs may play an important role in financing the transmission sector. However, this will largely depend on the tariff structures of the country. As per present planning, a total of USD 713.84 million and USD 958.82 milion in local and foreign currency will be required to implement the upcoming next five years’ projects.

7.5.2 Financing challenge to distribution expansion As per present planning a total of 6948 million USD is needed for the distribution facilities, out of which 2759 Million USD is in foreign currency. If there are any additions to the generation capacity there must be some financing arrangements will be required for the T&D sector. To meet the finance for the upcoming distribution projects utilities are still looking for donors. But the common donors of Bangladesh like the ADB, the WB, the KFW, the IDB etc are placing a lot of conditions which are proving to be very difficult to fulfill. Hence the utilities are now looking for alternative financers.

7.5.3Grid connection with neighboring countries and amount of imports planned The first Electrical Inter Connection between Bangladesh and India is under construction. This Inter connection consists of a 85km (30 km In Bangladesh part & 53km in Indian part) Bahrampur (India) to Bheramara (Bangladesh) 400kV double circuit

Transmission line, one 400kV switching station at

Bahrampur and one 500MW HVDC back to back 400/230kV sub-stations at Bheramara. The switching station at Bahrampur and the 53km Transmission line in the Indian part is being constructed by Power Grid Corporation of India (PGCI), whereas 500MW HVDC back to back 400/230kV sub-stations at

Bheramara and 30km transmission line in Bangladesh part is being constructed by Power Grid Company of Bangladesh (PGCB). When completed it is expected that Bangladesh will initially import about 250MW of power from India. There is also a plan for constructing a 13km 230kV double ckt. transmission line between Comilla North switching station in Bangladesh and Palatana in Tripura, India. However this has not been finalized with India yet. The main objective of this project is to import power from the Combined Cycle Power Station being built at Palatana, Tripura, India. In addition PGCB also prepared proposals for constructing the following 3 radial lines. 1. Bongaon (India) - Jessore (Bangladesh) 132 kV 50km (10 km in India & 40 km in Bangladesh) Transmission line. 2. Krishnanagar (India) - Chuadanga (Bangladesh) 132 kV 46km (24 km in India & 22 km in Bangladesh) Transmission line. 3. Dalkhola (India) - Thakurgaon (Bangladesh) 132 kV 46km (24 km in India & 22 km in Bangladesh) Transmission line. Proposals of above 3 lines are yet to be discussed with India. It is likely that India will want back to back HVDC connection to prevent disturbance in one side affecting other side and also to have control over the power flow. On the other hand Bangladesh will want AC connection for transferring of small amount of power. The cost also does not justify construction of back to back HVDC connection. The Power System Master Plan (PSMP) also envisages following Interconnections. 1. Myanmar- Bangladesh Transmission line. Anowara, Chittagong is the likely to be the location for substation in Bangladesh side. This line is proposed to be built by 2020 and will allow transfer of 500 MW. 2. Shilchar (India) –Fenchuganj (Bangladesh) Transmission line. This line is proposed to be built by 2025 and will allow transfer of 750 MW. 3. Kishanganj (India) –Bogra (Bangladesh) Transmission line. This line will facilitate import 500 MW power from Nepal and proposed to be built by 2025. 4. Alipurdua (India) –Bogra (Bangladesh) Transmission line. This line will facilitate import 500 MW power from Bhutan and proposed to be built by 2025. However no plan has been done yet regarding these transmission lines.

7.5.4 Plans being formulated for distribution to incorporate variable distributed generation There is not specific plan to incorporate distributed generation system (solar, biogas, micro-grid etc.). Still BPDB has some upcoming projects planned on grid connected solar PV. The Government also has recently published the Renewable energy policy. It is taking different steps by which 5 percent of total generation by 2015 will be met from renewable energy and 10 percent by 2020. According to the GoB

Desco

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