TDS Desk:

Bangladesh has initiated the move to re-negotiate tariffs with the power-plant owners to reduce “excessive” tariffs or “additional” costs as inscribed in the power-purchase agreements (PPAs) inked during the previous Awami League government.

State-run Bangladesh Power Development Board (BPDB) has picked the 718MW JERA Meghnaghat plant as the first one to initiate tariff re-negotiations, industry insiders said.

The BPDB has already sent a letter requesting the chief executive officer (CEO) of the plant to submit a tariff reduction proposal.

Japan’s Energy for a New Era, mostly known as JERA, is yet to submit the proposal to the BPDB, said sources.

This is the first such letter from the BPDB to any power plant sponsor to reduce tariff from the PPA.

Japanese energy biggie JERA has acquired the Meghnaghat plant from India’s Reliance and awaits a nod to initiate electricity generation commercially.

It carried out a test run of its plant in late October but did not get sufficient natural gas to initiate operations, it has been alleged.

JERA is, however, yet to initiate a reliability test.

Sources said JERA has been building pressure on the interim government to approve commercial operation date (COD) of the plant.

JERA would be the third large LNG-fired plant at Meghnaghat, although the current infrastructure lacks the ability to keep it operational alongside the two such already-approved plants, said sources.

The past Awami League government had previously approved the two similar unsolicited plants at the Meghnaghat site under contracts that provide for the much-talked-about capacity payment from the exchequer even if no power is produced or purchased.

After several failed attempts by the Meghnaghat 718MW plant owner, JERA, to attain a COD, the Ministry of Economy, Trade and Industry (METI) of Japan also wrote a couple of months back to Adviser Muhammad Fouzul Kabir Khan of Bangladesh’s Ministry of Power, Energy and Mineral Resources (MPEMR) to have the COD fixed at the earliest.

They said the incumbent government is now obligated to approve the COD, risking the BPDB to count capacity payment burdens although the power board subsequently would not be able to take electricity for supplying to consumers due to the country’s perennial gas crisis and pipeline bottlenecks.

“It is the burden left by the previous authoritarian Awami League government that awarded numerous power plants under unsolicited deals without considering feasibility,” a senior BPDB official.

Most of these plants were awarded on the basis of unsolicited offers under the now-defunct Speedy Supply of Power and Energy (Special Provision) Act 2010, which had a provision of immunity to those involved with the quick-fix remedies.

State-run corporation Petrobangla, which was “made to commit” to supplying natural gas to the gas-fired power plants, does not have sufficient gas to run the existing gas-fired plants, said a senior Petrobangla official.

Petrobangla is currently able to supply only less than half of the volume of gas required for feeding the gas-guzzling plants, to the tune of around 1,024 million cubic feet per day (mmcfd), against a total requirement of 2,420 mmcfd, according to official data as of May 15, 2025.

“JERA has already completed all the necessary work and is awaiting the opportunity to conduct the final commissioning test, which requires about 10 days’ gas supply. However, they have been on hold for more than two and a half months for the commissioning of the final test,” the METI letter read.

Although the project has yet to get a COD due to inadequate gas supply, two adjacent gas-fired combined-cycle power plants (CCPPs) – Summit’s Meghnaghat 589MW CCPP and Unique Meghnaghat 584MW CCPP – attained CODs during late April and late January, respectively, last year.

But due to gas scarcity and pipeline constraints, both plants are kept almost idle, mounting a capacity burden on the BPDB.

Sources said the BPDB inked a PPA in 2019 to buy electricity from the 718MW plant for 22 years at a levelised tariff rate of 7.3123 US cents (Tk 5.84) per kWh, which is higher than the tariff rates of Summit and Unique plants at the same location.

State-run Power Grid Company of Bangladesh (PGCB) could not construct six necessary substations, which is necessary for evacuating electricity from the three LNG-based power plants located near Meghnaghat.

The power substations are unlikely to be readied before August, said sources.

Energy expert Prof Mohammad Tamim accuses a vested interest group of projecting inflated electricity demand on money-spinning motives.

“This resulted in the installation of power plants having more capacity than the requirement and entailing huge capacity payments,” noted Mr Tamim, who was a former special assistant of a caretaker government.