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Coal power plants charge astronomical costs for fuel

Oct 3, 2024

| Emran Hossain | TNA

Coal-fired power plants enjoy free rein to unfairly influence the cost of its fuel on the one hand, while on the other, they burn coal having quality far less than the one the government has paid for, revealed official documents and interviews with officials of major coal power plants and Bangladesh Power Development Board.


The wrecking of the economy as well as the environment by coal power plants is occurring almost silently, energy experts said, thanks to the controversial power deals and the sheer monitoring failure of the Power Development Board.


The country’s coal power plants mostly import their own fuel and there are instances in which the power development board could not even ask about the source of the coal, paying whatever the power plants demanded, furnishing invoices that were often believed to be manufactured.


The private coal import, energy experts said, also offers a golden opportunity for under and over invoicing since the import often takes place by a company related to the company owning the power plant.


‘The coal power plants are holding people hostage. There will be no relief from the situation unless the government fixes prices for importing coal of certain qualities,’ said Hasan Mehedi, member secretary, Bangladesh Working Group on Ecology and Development, a platform of green activists.


India’s Adani Power Limited is considered a classic example of how far the coal power producers can go in manipulating their fuel price.


Adani produced per unit power spending Tk 7.54 for fuel last year, the second highest among the fuel cost charged by six major coal power plants in the country.


The 1,600MW Adani power plant in Godda has boilers designed to burn coal with calorific value ranges between 3,500 kcal/kg and 5,000 kcal/kg, showed a document.


The power purchase agreement, however, allowed Adani to charge for coal with the calorific value of 6,322 kcal/kg. The power development board was not able to ask Adani about the coal’s source as its power purchase agreement with the Indian company omitted the provision for it to be informed about the source of the coal.


Documents also revealed that coal with the same calorific value could be bought with varying prices on different markets.


Coal with the calorific value of 3,500 kcal/kg is the lowest quality of coal in the world, officials at coal power plants said, adding that the use of such low-quality coal is only viable when it is domestically sourced.


‘You never know. Maybe Adani is using coal mined in Jahrkhand, where the Godda power plant is located,’ said a power development board official seeking anonymity.


Jharkhand is one of the world’s largest coal miners.


On September 30, 2022, Adani floated an international tender for importing coal for the Godda power plant, selecting in December the same year the Adani Enterprise to import coal from the group’s Carmichael coal mine in Australia using sea port and railway owned, again, by Adani.


The highest fuel cost for producing a unit of power last year was reported by the 1320MW Rampal power plant, a joint venture between Bangladesh and India. Rampal spent Tk 8.16 for fuel in producing a unit of electricity, around 30 per cent more than the fuel cost spent by the 1200MW Matarbari power plant.


‘We import coal through open tender. There is nothing more to say about this,’ said Ziaur Rahman, chief procurement officer at Bangladesh India Friendship Company that owns Rampal power plant.


The Rampal plant’s boiler is designed to handle coal with calorific values ranged between 5,500kcal/kg and 5,800kcal/kg, plant authorities have said, claiming that they use coal with calorific values between 5,300 kcal/kg and 6,100 kcal/kg.


But New Age has obtained documents showing that the Rampal plant imported coal with calorific value of 5,036 kcal/kg in May and there were instances when it imported coal with less calorific value.


The documents also revealed that the Rampal power plant spent around $15 per tonne for carrying the imported coal from the Bay of Bengal to the power plant using lighterage vessels. PDB officials called the $15 freight charge as very high.


A lighterage vessel can carry 5,000 tonnes of cargo.


Bashundhara Group that imports coal for Rampal in 55,000-tonne capacity ships sends the cargo using lighterage vessels from the Bay of Bengal to the edge of the Sundarbans through 5–6 shipments every month.


‘High fuel cost could also imply lack of plant efficiency, suggesting waste of fuel,’ said Monowar Hossain, superintendent engineer of 1200MW Matarbari coal power plant.


At the Matarbari coal power plant in Cox’s Bazar, the boiler is designed to burn coal with calorific value between 4200kcal/kg and 5200 kcal/kg. The plant authorities say they mostly use coal with calorific value of 4600 kcal/kg.

Matarbari uses the least expensive fuel as it produced a unit of power spending Tk 6.13 last year.


At the 1320MW Payra power plant in Patuakhali, a mixture of coal is used as fuel. ‘We use a mixture of coal for power generation,’ said its plant manager Shah Abdul Moula.


Officials at major power plants interviewed for the report revealed that they all mixed coal for power generation trying to maintain an average calorific value in line with their design.


Coal prices greatly differ depending on their quality.


On October 1, the price range for five categories of coal in the Indonesian market was between $31.78 and $127.72.


‘Plants are expected to use the best quality coal,’ said Shafiqul Alam, lead energy adviser at the Institute for Energy Economics and Financial Analysis.


‘A higher calorific value coal will generate more energy compared with lower calorific value coal during combustion process. This means with a higher calorific value of coal, less fuel will be consumed,’ said Shafiq.


The power development board estimated that the fuel cost charged by the Adani Power could be lowered by a third by cutting off the unjust privileges awarded to them for importing fuel.


PDB officials refused to speak on record. A committee formed by the interim government is currently evaluating power deals signed during the tenure of the now ousted prime minister Sheikh Hasina’s repressive regime under the protection of an indemnity law.


The country’s power generation capacity increased by six folds over Hasina’s 15-year tenure, astronomically raising the power development board’s loss to 100 per cent.


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