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Khulna 115 MW (KPCL) HFO Power Plant (Unit 2)

  • 4 days ago
  • 6 min read

Current Status: Retired

Source: Summit Power



Khulna 115 MW Furnace Oil Power Plant, also known as KPCL Khulna Rental Power Plant or KPCL-II, is a reciprocating engine-based power plant situated in Goalpara under Khalishpur Thana in Khulna District of Bangladesh (Location: 22.8663, 89.5388). It is sponsored by Khulna Power Company Limited (KPCL), a Joint Venture Company (JVC) of Summit Group and United Group, as a Quick Rental Power Plant (QRPP) for five years. The sponsors declared its Commercial Operation Date (COD) on 1 June 2011 and, as per schedule, the power plant was to retire on 31 May 2016. However, the phase-out date is rescheduled to 2022 after 10 years of operation. Again, the government has extended the tenure of the power plant for another two years in 2022 so the power plant is now scheduled to retire on 30 May 2024.


Capacity

The installed (gross) and derated (net) capacity of the power plant is 119 MW and 115 MW, respectively.


Context

Khulna Power Company Ltd (KPCL), the first private company in Bangladesh, was established as a private limited company in October 1997. On October 13, 1998, the company began its first commercial operation with Unit I, which has a capacity of 110 MW. Khulna Power Company Unit II Ltd. (KPC Unit II) was established on June 22, 2010, in accordance with a contract with the Bangladesh Power Development Board (BPDB) signed on June 23, 2010, for the construction of a 115 MW power plant. The contract calls for providing electricity on a rental basis for at least 5 additional years (Summit Power, 2023).  


The power purchase agreement for KPC Unit-2, a 115MW plant, expired on May 31, 2021. The Bangladesh Power Development Board instructed KPCL to shut them down by June 1 (BI, 2021) after the Ministry of Power, Energy, and Mineral Resources (MOPEMR) said in March 2021 that it would not extend the lease of any rental or rapid rental power plants (DT, 2021). 


The sponsor applied for an extension of the Power Purchase Agreement (PPA) to the Ministry of Power, Energy, and Mineral Resources (MOPEMR) even after the completion of 5 additional years of operation (Rahman, 2022). According to the recommendation of MOPEMR, the Cabinet Committee on Government Purchase (CCGP) extended the period of the Power Purchase Agreement (PPA) for another two years on 23 March 2022 under the “No Electricity No Pay” (NENP) policy (FE, 2022a). Under the new agreement, BPDB will purchase electricity from the power plant at a rate of BDT 16.40 per kWh. As a result, it has to pay BDT 12.95 billion to KPCL in the period (FE, 2022b). However, the government has extended contracts for two years in 2022 (FE, 2022). 

Following the expiry of the extended Power Purchase Agreement (PPA), which remained valid until 30 May 2024. The 115 MW KPC Unit-II plant ceased supplying electricity to the national grid in March 2024 after the government's power purchase arrangement expired (Rising BD, 2024). Subsequently, BPDB allowed the plant to resume operation under a “No Electricity No Payment” (NENP) arrangement without any guaranteed off-take for an additional two years from April/May 2024 (The Financial Express, 2024). However, no long-term PPA was executed and BPDB did not issue dispatch orders for electricity generation. As a result, KPCL reported in October 2024 that Unit-II remained shut down due to the absence of demand from BPDB (Daily Star, 2024) .Subsequently, in May 2025, KPCL disclosed that the electricity supply contract for the plant would not be renewed, resulting in the cessation of power supply to the national grid and effectively leading to the retirement of the plant (Daily Star, 2025).


Land Acquisition

The power plant is situated in the extended premises of KPCL. The entire KPCL area covers around 21.25 acres of land according to an estimation from google earth.


Finance

The power plant was financed by Deutsche Investitions (DEG), FMO (a Dutch Entrepreneurial Development Bank), and the Consortium of Local Banks (United Group, 2023). 


Sponsors

It is sponsored by Khulna Power Company Limited (KPCL), a Joint Venture Company (JVC) of Summit Group and United Group, as a Quick Rental Power Plant (QRPP).


Contractors

The total EPC works were accomplished by Neptune Commercial Ltd. (NCL), a subsidiary of United Group  (United Group, 2023). The BERC gave the license to KPCL for generating 115 MW of electricity from HFO commercially on 26 April 2018 (BERC, 2018).


Fuel Supply

The plant utilizes Heavy Fuel Oil (HFO) as its primary fuel, supplied by Summit Asia Pacific Pte Ltd and United Energy Trading Pte Ltd under the Fuel Supply Agreement (KPCL, 2020).

Power generation

The power plant's scheduled Commercial Operation Date (COD) was 30 April 2011 (BPDB, 2010). With a total capacity of 115MW, the power plant uses 7 units of Wärtsilä 18V46 DG Sets (KPCL, 2020). The plant can generate 115 MW of electricity with a 27.46% plant load factor (PLF) which produced 283,597 MW in FY 2019-2020 according to the annual report 2019-2020 (KPCL, 2020). The estimated cost for BPDB to get electricity from the power plant for the upcoming year will be BDT 499.88 crore (USD $45.7 million, 1 USD = BDT 109.33 according to 23 September 2023).


Capacity charge

Despite having abundant electricity generation capacity, the government still extended the tenure of rental and quick rental power plants which caused a hiking capacity charge. BPDB had to pay the sponsor a total of BDT 1835.50 crore or USD $217.86 million  (When USD $1 = 84.25 BDT as per 31 December 2021) capacity charge from it’s Commercial Operation Date (COD) tIll FY 2020-2021 as capacity charge. The total power generation of this power plant was 5000.22 gWh and the per unit cost was 12.41 BDT until FY 2020-2021. 

Year

Generation (gWh)

Total Cost (crore BDT)

Unit Cost (avg BDT)

Capacity (crore BDT)

FY 2020-2021

433.65

499.88

11.53

151.97

FY 2019-2020

280.09

390.73

13.95

160.15

FY 2018-2019

326.93

478.75

14.64

163.94

FY 2017-2018

558.44

574.85

10.29

161.34

FY 2016-2017

517.53

466.62

9.02

192.73

FY 2015-2016

596.66

488.00

8.18

198.31

FY 2014-2015

567.32

751.87

13.25

202.54

FY 2013-2014

550.33

907.39

16.49

194.99

FY 2012-2013

463.51

805.36

17.38

199.08

FY 2011-2012

608.44

882.67

14.51

195.86

FY 2010-2011

97.32

70.92

7.29

14.59

Total

5000.22

6317.04

12.41

1835.50



Year

Generation (GWh)

Total Cost 

(BDT crore)

Unit Cost (BDT)

Capacity charge (BDT crore)

FY 2020-2021

433.65

499.88

11.53

151.97

FY 2019-2020

280.09

390.73

13.95

160.15

FY 2018-2019

326.93

478.75

14.64

163.94

FY 2017-2018

558.44

574.85

10.29

161.34

FY 2016-2017

517.53

466.62

9.02

192.73

FY 2015-2016

596.66

488.00

8.18

198.31

FY 2014-2015

567.32

751.87

13.25

202.54

FY 2013-2014

550.33

907.39

16.49

194.99

FY 2012-2013

463.51

805.36

17.38

199.08

FY 2011-2012

608.44

882.67

14.51

195.86

FY 2010-2011

97.32

70.92

7.29

14.59

Total

5000.21

6317.04

12.63

1835.50

Environment 

According to Section 12 of the Bangladesh Environment Protection Act 1995, Environmental Impact Assessment (EIA) is obligatory for any industry (MOLJPA 1995). Polluting industries, such as power plants, must undergo an Initial Environmental Examination (IEE) and EIA as directed in the Environmental Conservation Rules 2017 (MOEFCC 1997). But, to date, an IEE or EIA report has yet to be conducted for the power plant. HFO based power plants emit pollutants such as sulfur dioxide (SO2), nitrogen oxides (NOx), particulate matter, and carbon dioxide (CO2). These emissions contribute to air pollution and can have adverse effects on local air quality, human health, and the environment. According to the environmental conservation rule 2023 the project falls in the “Red” indicating it as a potential harmful project for the environment (MOEFCC 2023).



References

 
 
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