Coal crisis compels Bangladesh to shut down largest power plant

Bangladesh’s largest power plant – 1,320MW Payra power plant – switched off its second unit on Monday, less than two weeks after shutting down the first unit, because of a coal crisis triggered by outstanding energy bills.

‘We have closed the second unit at 12:10pm because of a coal shortage,’ Shah Abdul Moula, the power plant’s manager, told New Age, expecting to resume operation on June 25 after fresh coal supplies arrived.

Bangladesh owes about $200 million to the power plant authorities – Bangladesh-China Power Company Limited, a joint venture between Bangladesh and China – even after paying $100 million recently to keep the power plant in operation.

Bangladesh failed to pay the energy bill for the Payra power plant, which brought its first unit into operation in December 2020 and then the second unit in May 2021, for almost a year until the coal crisis shut the plant completely.

Energy experts described the closure of the power plant amidst a searing heat wave as an indication of a grave dollar crisis, warning that the existing power crisis was unlikely to be over anytime soon.

On Monday, hours before the second unit was shut down around 12:00pm, Bangladesh saw the power shortage touch a new record of 3,215MW at 1:00 am.

‘The dollar crisis brought Payra power plant down, and the crisis is clearly deepening,’ said energy expert M Tamim, who found the government failing to take appropriate steps to come out of the dollar crisis.

‘We have no idea when this crisis is going to end,’ said Tamim, adding that only rain could give people some relief.

The new power shortage record was set when the electricity demand was 14,900MW but Bangladesh could produce 11,533MW, 48 per cent of the country’s existing installed capacity of 24,143MW, excluding about 3,000MW of captive power.

Even amid all these troubles, the government showed its strong commitment towards further expansion of imported fossil fuel-based power generation capacity, increasing it by almost 50 per cent by 2030.

‘A third of the current dollar crisis is the making of power and energy sector, I would say,’ said Ijaz, categorically referring to capacity charge, a payment mandatory under unsolicited power deals ensuring private investors profit whether or not electricity is produced.

Bangladesh paid $9 billion in capacity charge over the past decade, and the capacity charge had to be paid in dollars.

Even if the Payra power plant sits idle for a month, producing no power and leaving people baking in the sweltering summer, the plant would have to be paid more than Tk 166 crore a month in capacity charge.

Like Payra, all private and joint venture power plants enjoy capacity charges.

Power Development Board member SM Wazed Ali Sardar, who is in charge of electricity generation, however, does not think the closure of Payra will impact the existing power crisis.

‘We ordered increasing generation from oil,’ he said, expressing his ignorance about a dollar crisis leading to the fuel shortage at the Payra power plant.

The cost of power production may increase slightly, he said.

Bangladesh has already increased its power price three times this year.

Despite paying increased energy bills, which led to the worst food and non-food inflation in a decade, people experienced hour-long power cuts at alternate hours.

The elderly and children faced the biggest health threat from heat-related diseases, particularly in cities and towns, where water supply became increasingly scarce with the temperature rising.

‘It feels like living in a desert outside and living inside an oven at home,’ said Sajedul Karim, a resident of Mirpur.

On Monday, Bangladesh’s highest maximum day temperature of 40.7C was recorded in Rajshahi, with a severe heatwave sweeping over the northern district and Pabna.

Mild to moderate heatwaves with temperatures ranging between 36C and 40C affected 13 other districts, including Dhaka, where the highest maximum day temperature was recorded at 38.6C on Monday.

‘The prevailing heatwave is likely to continue for three more days,’ said meteorologist Abdul Hamid.

New Age