Power Sector Opportunities

An Expert's View about Oil in Bangladesh

Last updated: 20 Sep 2011

It has been estimated that power outage in Bangladesh results a loss of annual industrial output of $1 billion. Power is one of the major reasons of slow GDP growth and the Government of Bangladesh (GOB) has recognised the power sector as a priority sector.

Sector briefing Power Sector Opportunities in Bangladesh Why Bangladesh? The international Monetary Fund (IMF) has indicated that Bangladesh?s economy has th become the 48 largest in the world and is worth US$225 billion on a PPP basis. Similarly JP Morgan, a global leader in investment banking has also included Bangladesh in their Frontier Five, based on relative market attractiveness. Price Waterhouse Cooper (PWC) has included Bangladesh in their new PWC 30 list considering its potential growth. Investors Chronicle, a UK based research firm, has indentified Bangladesh to be one of the seven hottest emerging markets in the world owning to its relatively stable currency with solid foreign reserves and record foreign remittances as well as near 7% growth rate. The present ??Electricity demand is increasing at the Government has set ??Vision 2021?? to move rate of 8-9% commensurate with GDP Bangladesh to a middle income country by growth rate which will be 10-12% after 2021. In line with this strategic vision, the 2012. Bangladesh needs total US$13 Government of Bangladesh has undertaken billion investments in power sector. The massive programmes for infrastructure revised private sector power generation development in partnership with the private policy of Bangladesh provides a number of sector including FDI, in particular, in the power incentives for the foreign investment in and energy sector. the power sector??. 1 Bangladesh for foreign lenders to such companies. Private parties may raise local and Bangladesh Overview foreign finance in accordance with regulations; local engineering and manufacturing The Peoples Republic of Bangladesh covers an 2 companies may provide indigenously area of approximately 144 000 km and its manufactured equipments of international geographical location is to the east of India. standard to private power plants etc. The Ready Made Garments (RMG) sector is a Bangladesh Power sector at a Glance major foreign exchange revenue generator for (FY2010) Bangladesh contributing 77% to the country?s net exports during 2009-2010. Garment ? Electricity Growth :10 % in exports, totalling $12.3 billion in FY09 and FY-2010 (Av. 7 % since 1990) remittances from overseas Bangladeshis totalled $9.7 billion in FY09 accounted for ? Generation Capacity :6727 MW almost 25% of GDP. (June, 2011) ? Total Consumers :12 Million Statistics ? Transmission Lines :8,500 km ? Distribution Lines :2,70,000 GDP per capita (2010) US$685 km ? Per Capita Generation : 236 kWh GDP US$ 100.08 billion (incl. Captive) GDP Growth Rate (2010) 5.83%(Provisional)) ? Access to Electricity : 49 % Population (estimated) 156 million Birth rate (Per 1000 Population) 20.4 Net population growth rate 1.39 % Power Generation Capacity (8 May 2011) Foreign exchange reserves £10.5 bi llion There are total 36 private operators in the (Feb, 2010) country and they are generating 3193 MW of Inflation (Inflation January 8.14% power which is 47% of the total generation. 2011) Most of them are gas based with only 106MW Financial year July-June being generated from furnish oil. Source: Ministry of Finance, Bangladesh Demand Supply Situation Power Sector in Bangladesh ? Generation: 4500 ? 4700 MW It has been estimated that power outage in (Capacity- 6727 MW) Bangladesh results a loss of annual industrial ? Highest so far: 4779 MW ( May 2011) output of $1 billion. Power is one of the major ? Gas shortage causes 600 - 800 MW less reasons of slow GDP growth and the Power Generation Government of Bangladesh (GOB) has ? Peak Demand: 6000 MW recognised the power sector as a priority ? Load shedding up to 1200 MW during sector. GOB has decided to build more power hot summer days projects through private sector and public ? Shortage and unreliable power supply private partnership. has constrained economic growth Incentives for private/foreign investors Priority Areas In 1996 the Government of Bangladesh ? Comprehensive and integrated plan for allowed private sector to generate power. To power generation, transmission and encourage private sector investment in power distribution sector, Private Sector Power Generation Policy ? Fuel diversity and sustainable supply of of Bangladesh has offered an attractive fiscal fuels and non fiscal incentive that includes: ? Private sector participation in power Exemption of corporate income tax for 15 generation including foreign investors years, import of plants and equipment and ? Harnessing renewable energy sources spare parts up to a maximum of ten percent ? Demand Side Management (DSM) and (10%) within a period of twelve (12) years of Energy Efficiency improvement program commercial operation without payment of ? Rationalize power tariff and ?life line? duties. Free repatriation of equity and tariff dividends, exemption from income tax in 2 ? Cross Boarder Power Trade Forthcoming Energy Efficiency Primary Fuel Supply Scenario improvement projects ? The Government is planning four (4) energy Gas: No significant gas discovery in efficiency improvement projects which are as recent years; offshore and onshore gas below: exploration initiatives and increased Sl. MW Fuel Location Client reserves in present fields may change No. the present scenario 01. 1450 Gas Conversion of PDB ? Coal: Near term option; Indigenous or Ghorashal 4 x 210 Imported; imported coal might be expens MW steam into ive ? 2290 MW CCCP Oil: Volatile market; High price; For peaking duty 02. 85 Gas Conversion of PDB ? LNG: Necessary to ensure secure and Baghabari 171 reliable gas supply but expensive option MW GT into 250 ? Nuclear: Safe technology; No pollution MW CCPP but expensive option 03. 75 Gas/Liquid Conversion of PDB Fuel Sikalbaha 150 MW peaking plant into Opportunities 225 MW CCPP 04. 35 Gas Conversion of PDB Business opportunities are available in power Shahjibazar 2 x 35 generation, distribution and in transmission. into 105 MW CCPP Generation Expansion Plan Forthcoming EPC Projects ? Immediate: 6 -12 Months Below are the upcoming EPC projects: - Rental Plants (liquid fuel) ? Short term: 18 - 24 Months - Peaking Plants (liquid fuel) Sl. MW Fuel Location Client ? Medium term: 3 - 5 years No. - Combined Cycle Plants (Gas or dual 01. 2x750 Dual Meghnaghat PDB fuel) CCGT - Peaking Plant (Gas or dual fuel) 02. 750 CCGT Dual Keraniganj/ Dhaka PDB - Coal fired steam plants North ? Long term: beyond 5 years 03. 360 CCGT Gas Bheramara NWPGC - LNG based Combined Cycle Plants ? - Domestic/Imported Coal Power Plant 04. 300 CCGT Gas Shajibazar PDB ? - Gas/Oil based Peaking Plant 05. 150~225 Gas Bhola PDB ? - Nuclear Power Plant CCGT ? - Renewable Energy 06. 2X150 Siddhirganj EGCB Simple Between 2010 to 2016 the Bangladesh Cycle Gas Government has plans to generate 14,773 MW Gas of power. Among these 6204 MW which is 42% Turbine of the total target will be from public sector. 07. 450 Gas Bibiyana-3 PDB 8569 MW which is 58% of the total target will CCGT be from the private sector. From January 2009 08. 450 Gas Ashuganj (North) APSCL to May 2011, 1556 MW of power has been CCGT added into the system. A total of 30 tenders 09. 150-225 Dual Sikalbaha PDB are under process which will bring an additional CCGT 3879 MW. These tenders are expected to be rd floated within the next 6 months. Bangladesh 10. 250-300 Coal Barapukuria-3 PDB Govt is also considering few small projects CCPP unit which are under pre tendering process now. 11. 1200 ST Coal Chittagong PDB These projects will be from 100 ? 225 MW 12. 600 ST Coal Chittagong South PDB based on HFO, gas and coal. Govt is planning 13. 2x 660 Coal Khulna PDB to add total 1075 MW from these projects. 3 Transmission projects -Enhanced Gas Exploration, Production and 60% allocation to Power The Bangladeshi Government is considering -Domestic coal development Four (4) transmission projects which are as -Coal Import (long term contract) and deep below: sea port for coal handling -LNG import 1. Bibiyana-Kaliakoir 400 KV and Fenchuganj- Bibiana 230 KVT/L 168 km. Total cost of this project will be US$293 million. Project Financing 2. Aminbazar-Moawa-Mongla 400 KV & -Ensuring financing for Public and Private Mongla-Khulna (s) 230 KV transmission line sector projects is a major challenge (NG3):192 & 40 km. Total cost of this project -Availability of foreign currency and GoB fund will be US$220 million. Transportation of fuel and equipment 3. Anowara-Meghnaghat 400 KV transmission line (NG4): 260 km. Total cost of this project -Infrastructure development by Railway will be US$283 million. -Dredging of river routes by Bangladesh Inland Water Transport Authority (BIWTA) 4. Eight new 132/33 KV S/Ss with -Capacity building of Bangladesh Petroleum interconnecting 132 KV line: 860 MVA. Total Corporation (BPC), Railway, Roads &Highways cost of this project will be us$86 million. and BIWTA Contract Management Renewable Energy Projects -Expert contract management team development There are plans for a number of wind and solar -Reduction of project implementation time power projects in the country including solar Photovoltaic (PV) Plant at Kaptai, Chittagong, Procurement Process where free land is available with 4.38 2 kWh/m /day. Expected capacity of this plant is -Shortening of Tendering and approval process 5 MW. GOB has also planned for a wind park at Anawara upazila, Chittagong. The wind Coordination among different entities 2 Potential of this site is 177 W/m at 50 m and the average Wind Speed 6.7 m/s at 50 m -planning/implementation and operation height. Estimated Capacity will be 20 MW -Co-ordination in Demand Side Management though the Government has plans for a final (DSM) and Energy Efficiency Program 100-200 MW Wind Park at the same Site. -address transmission and distribution loss Also planned is another 10 MW wind power Human Resources Development plant at Cox?s Bazar and the Government is looking at setting up more solar PV plants in -Development of skilled manpower; adopt and the northern part of the country in Jamalpur operate new technology and Rajshahi plus they will undertake a wind mapping study of the coastal region very soon. Few of these upcoming projects will be public sector whereas most of the projects will be undertaken by private sector. Some of these projects will be funded by the Asian Development Bank. Major events and activities Challenges th 1. 6 Power Bangladesh 2011 th Date: 13 ? 15 October 2011 Primary Fuel Supply 4 For further detail, please visit http://www.powerbangladesh.com/ This work is available via our Overseas Market nd 2. 2 Solar Bangladesh 2011 Introduction Service (OMIS) a chargeable th Date: 13 ? 15 October 2011 service which assists British-based companies For further detail, please visit wishing to enter or expand their business in http://www.solar-bangladesh.com/ overseas markets. To find out more about commissioning this work, or accessing other UKTI services and specialist advice, please visit the UKTI website Next steps - to find contact details for your local UKTI office. How UKTI can help British companies wishing to develop their UKTI contacts business in Bangladesh are advised to undertake as much market research and planning as possible in the UK. UKTI?s team in Qumrun Naher Bangladesh with its wide local knowledge and Deputy Director of UK Trade & Investment experience can provide a range of services to British High Commission British-based companies wishing to grow their UN Road, Baridhara business in global markets. Dhaka-1212 Tel: +88-02-8822705-9 Email: Qumrun.Naher@fco.gov.uk This can include: www.uktradeinvest.gov.uk ? Provision of market information ? Validated lists of agents / distributors / Partners ? Key market players or potential customers in the Bangladesh market Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & ? Establishment of interest of such Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as contacts in working with you to the standing of any individual, firm, company or other organisation mentioned. ? Arranging appointments and accompanying during the meetings Published in August 2011 by UK Trade & Investment. ? Organise seminars or other events for Crown Copyright © you to meet contacts and promote your company in the Bangladesh market ? Introducing your company to the local Press & Media 5
Posted: 16 September 2011, last updated 20 September 2011

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