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Nawapara 105 MW (Quantum) HFO Power Plant

Dec 3, 20235 min read

Current Status: Retired

Figure: Representational Photo (Source: The Business Post)


Nawapara 105 MW Furnace Oil Power Plant, also known as Quantum Nawapara Rental Power Plant, is a reciprocating engine-based power plant situated in Nawapara under Abhaynagar Upazila in Jessore District of Bangladesh (Location: 23.0176, 89.4135). It is sponsored by Quantum Power Systems Limited (QPSL), a Joint Venture Company (JVC) of Otobi Group, as a Rental Power Plant (RPP) for five years. The sponsor declared its Commercial Operation Date (COD) on 26 June 2011 and, as per schedule, the power plant was to retire on 25 June 2016. However, the power plant was scrapped in February 2014 due to its substandard machinery.


Capacity

The installed capacity of the power plant is 105 MW.


Context

A subsidiary of the well-known furniture company Otobi, Quantum Power, entered into a five-year agreement in February 2010 to provide 105 MW of electricity generated from a heavy fuel oil (HFO) powered temporary plant located in Nawapara, Jessore (Daily Star, 2013). In a communication dated February 9, 2010, Quantum Power expressed its intention to the Power Development Board (PDB) regarding the Nawapara project. Initially, the company had proposed to construct the plant as a combined cycle power plant. However, it now desired to develop the plant using "Reciprocating engines with co-generation capability." The Nawapara project is scheduled for commissioning in November (Daily Star, 2010). The plant commenced operations on August 25, 2011, but consistently fell short of its production targets (Daily Star, 2016). Unfortunately, this power plant's performance has been very poor, resulting in a penalty of $34.2 million (Daily Star, 2013).


A situation prevails with Quantum's Nawapara 105 MW plant, which began commercial operation 18 months after the contract signing instead of nine months. It produces just around 15-20 MW of power and most of the time remains out of operation. Interestingly, Quantum Power chose not to pay the penalty for delaying and, instead, took legal action by seeking injunctions from the High Court. These injunctions prevent the Power Development Board (PDB) from collecting the fine but obligate them to pay for the electricity purchased (Daily Star, 2013).


Quantum Power Systems Ltd (QPSL), a subsidiary of the furniture giant Otobi, dismantled all the machinery at its 105-megawatt Nawapara rental power plant without prior notification. This poorly constructed plant had been non-operational for approximately three to four years. As a result of its failure to deliver power in accordance with the contract, Quantum Power owes the government over $63 million in penalties. According to a source from the Power Development Board (PDB), the contract with Quantum, which was renewed in 2014, is set to expire in a couple of months. The power plant consistently fell short of its production targets (Daily Star, 2016). Nevertheless, in April 2017, BPDB recommended the Power Division extend the tenure of the power plant for five additional years (Imtiaz 2017).


Land Acquisition

BPDB was set to provide the required land as per the agreement (IDCOL, n.d.). A land area of around 5.7 acres was taken to install this power plant (Measured with Google Earth).


Finance

The total budget of the power plant has not been disclosed. Quantum Power Systems Ltd (QPSL) has sought financial aid from Infrastructure Development Company Limited (IDCOL), and recognizing the significance of the project in addressing the power demand, IDCOL has consented to extend financial assistance through a collaborative financing arrangement (IDCOL, n.d.). IDCOL had provided a Loan amount of BDT 1000 million (IDCOL, 2023). With the setting up of two power plants with a production capacity of 100 MW each in Bheramara at Kushtia and Nawapara at Jessore in an area of 5 acres, the Otobi company invested worth USD 8.0 billion (BDT 800 crore) there (StudyMoose, 2020).


Sponsor

The borrower of the power plant was Quantum Power Systems Limited (QPSL) and the sponsors were Otobi Limited, Shantou SEZ Gas Turbine Power Plant Company Limited, East Bay Investments Limited, and Supreme Marketing Company Limited (IDCOL, 2023).


Contractor

Tellhow SCI-Tech Co. Ltd., a Chinese company, served as the EPC contractor for the project. They provided a total of 8 Nigata engines and 5 NKK engines for the project (IDCOL, 2023).


Fuel Supply

Heavy Fuel Oil (HFO) was used as the fuel for the power plant. It is supposed the petrobangla is the fuel supplier of the power plant. Not much data was found about the fuel supply of the power plant.


Power Generation

The scheduled Commercial Operation Date (COD) of the power plant was 31 March 2011 (BPDB 2010).


Environment

The power plant project undertaken by Quantum Power Systems Ltd (QPSL) in Bangladesh is designated as "Red" due to its significant environmental impact, whereas Asian Development Bank (ADB) guidelines typically classify similar projects as "Category B." In order to adhere to environmental standards, QPSL has prepared an Initial Environmental Examination (IEE) report, following ADB guidelines. The primary environmental concerns revolve around issues like air pollution, noise pollution etc. QPSL is obligated to conform to Bangladesh's national standards wherever they exist, and in cases where these standards are not available, they are required to adhere to the best practices outlined by the International Finance Corporation (IFC). Public consultations have determined that there are no disputes over land for the project. The majority of respondents express support for the project, but they request that the power generated initially serves the local area before being distributed to other regions. IDCOL places a high priority on environmental and social safeguards and is open to receiving feedback and addressing any concerns related to the project (IDCOL, n.d.).


Criticism

The country's leading furniture brand, Otobi lost its way after the passing of Nitun Kundu the founder of Otobi in 2006. Instead of focusing on its main business, Otobi made a series of flawed choices, such as venturing into the power sector, which led to the company's decline over the span of just a decade. In 2018, Otobi had an annual turnover of BDT 250 crore, but lately, its business has been on a downward trajectory (Business Standard, 2020).


Capacity Charge

BPDB had to pay the sponsor a total of BDT 185.79 crore capacity charge till FY 2015-2016. Total generation was 245.89 gWh and per unit cost was 13.75 BDT until FY 2015-2016.

References

 
 
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