The government must have to shut at least four of its most expensive diesel-fired power plants by the middle of this year as the country's energy regulator has set a June, 2018 deadline to terminate their operations.
These are Bheramara 60 megawatt (MW), Barisal 40 MW, Rangpur 20 MW and Syedpur 20 MW power plants, having a total electricity generation capacity of 140 megawatts (MW).
All these power plants were commissioned over 30 years ago.
State-run Bangladesh Power Development Board (BPDB) kept these old power plants running for long, although their electricity generation costs soared to around Tk 40 per unit (1 kilowatt-hour) which was around double the cost from new plants, a senior official of Bangladesh Energy Regulatory Commission (BERC) told the FE.
Spending on running these power plants was around Tk 6.0 billion every year, he said.
The BERC in its latest directive asked the BPDB to send these four diesel-fired power plants to retirement by June 30, 2018.
The commission also asked the BPDB to take measures to utilise manpower, currently involved with these power plants.
This will, however, be the first time in the country that any oil-fired power plant would be shut following regulator's order on consideration of 'high cost,' said a senior BPDB official.
The government launched a drive to install under the private sector a significant number of oil-fired rental-and quick-rental power plants from 2009, as a 'short-term' solution to a nagging countrywide electricity crisis.
The government also awarded private-sector sponsors several gas-fired power plants to be set up on rental basis.
Most of these power plants were awarded on the basis of unsolicited offers under the Speedy Supply of Power and Energy (Special Provision) Act 2010, having the provision of immunity to those involved with the quick-fix remedies.
The government also allowed private entrepreneurs duty-free import of furnace oil to run their power plants with 9.0 per cent service charge along with import costs as incentives.
The Power Division under the Ministry of Power, Energy and Mineral Resources (MPEMR) also then had planned to retire the oil-fired rental-and quick-rental power plants after expiry of their initial tenures and bring down the electricity tariffs as well, said a senior MPEMR official.
But instead of retiring 'expensive' oil-fired power plants, the government continued extending their tenures and installed more such plants with keeping the capacity-payment provision in the order intact, the official said.
Currently, the country has around half a century operational oil-fired power plants, of which some three dozen having a total generation capacity of 2,567 megawatts (MW) are furnace oil-fired and the remaining nine with a total capacity of 846 MW are diesel-based plants.
When contacted, energy adviser of Consumers Association of Bangladesh (CAB) Prof M Shamsul Alam said, "These power plants should have been shut much earlier as these were escalating the overall electricity generation costs, resulting in tariff hike."
The BPDB, as their owner, should terminate operation of these power plants on its own, he said.
When contacted, BPDB chairman Khaled Mahmood, however, said the board had a plan to shut these four power plants soon to save money.
