The imported liquefied natural gas (LNG)-based power plants would be much more costly than coal-based plants, but could be a little cheaper than fuel-based power plants. The price of power generated by the LNG-based plant would be Tk. 7–8 per unit, but the price would change if LNG prices go up.   
An inter-ministerial negotiating team recently realised this fact after holding a series of meetings with the Indian power giant Reliance Group, which is interested in setting up a 750-MW LNG-based power plant at Meghnaghat in Narayanganj district, some 40km south-east of the capital. The negotiating team was flustered when it went into the cost price list, more specifically the capacity payment of 750 MW plant, which requires investments of USD 1.3 billion.
“Reliance Power offered 2.28 US cents per unit as capacity charge before the government’s team, headed by the power secretary, fixed a price of 1.7 US cents per unit. This was conveyed to the Reliance delegation,” said a member of the negotiating team.
After holding a series of meetings last week, both parties disagreed over the component price, and the Reliance team left Dhaka without indicating anything, sources told The Independent.
“The capacity payment was one of the key issues at the meeting. The price gap was huge between the parties, as a single US cent can lead to costs of billions of dollars being incurred for the country in 20 years of the plant’s lifecycle. Hence, it was a tough job to conclude the deal from both sides,” said a member of the team.
“Yes, we held a series of meetings with Reliance. We see that LNG-based power should be cheaper. We are trying to do that,” Dr Ahmad Kaikaus, the power secretary, told The Independent yesterday.
“It is not easy to reach any conclusion in one or two meetings. The party needs more time to understand as it is going to be the biggest LNG-based independent power producer (IPP) in the country. On the other hand, Reliance requires some more time to invest in a mega project like that,” BPDB’s chairman, engineer Khaled Mahmud, told The Independent.
The negotiating team, comprising the director-general of the Prime Minister’s Office (PMO), the chairman of the Bangladesh Petroleum Corporation (BPC), the chairman of the Bangladesh Power Board (BPDB) and representatives of the law and finance ministry. The government official said both parties have agreed on most issues barring the capacity payment of the power plant. The Power Division indicated it would close the deal if Reliance accepts the government’s offer.
Reliance Power had signed a memorandum of understanding (MoU) with the Bangladesh government last year to develop 3,000 MW of capacity in phases with a potential investment of USD 3 billion.
“In the first phase, a 750-MW plant will be set up at Meghnaghat with a floating storage and regasification
terminal at Maheshkhali Island in the Cox’s Bazar district
of Bangladesh,” said Reliance Power’s statement during
a visit of Indian prime minister Narendra Modi to Dhaka in June last year.
“If we calculate the existing price of LNG in the international market, the cost of LNG-based power would be more than 10 US cents (more than Tk. 8) per unit. This is
higher than coal-based plants, but lower than furnace oil-based plants, which cost Tk. 11 per unit right now,” Khaled Mahmud said.
“Our experience says the price of LNG-based power would be Tk. 7 to 8 per unit. This depends on the international market price.”
The local gas-based IPPs’ sales to the BPDB come at Tk. 4 Taka per unit, whereas the government’s gas-based plants cost Tk. 2.50 per unit.
“But it is obvious that the cost of imported gas-based power would be much more higher,” pointed out a BPDB official.
If Reliance finally agrees to invest in Bangladesh
at the proposed price, the plant would be the first LNG-based plant in the country among the other offers to the
Power Division.
The government is planning to generate more than 10,000 MW of LNG-based power by 2025.
Bangladesh will import LNG as the nation has been facing a huge gas crisis for the past five years.
Petrobangla will be able to import LNG in 2019 to meet the demand.
Reliance is also interested in installing a floating regasification unit (FSRU) at Maheshkhali area to import LNG for the proposed power plant.
The gas gasification price has not been fixed yet, which is supposed to be fixed by Petrobangla in consultation with the Indian giant.
Reliance has evinced interest in importing 500 MMCF of gas per day. Of that, 115 MMCF gas will be used for the 750 MW Megnaghat plant, BPDB and Petrobangla sources said.