Comments on: All That Glitters is Not Gold

By: Mohammed Munim

Mohammed Munim — Wed, 16 Dec 2009 18:33:26 +0000

I have looked at the FERC website but could not find any energy pricing formula (breakdown of cost from raw materials to distribution). Please direct me to a particular link. A gallon of petroleum can produce about 33 kWh of electricity. With a $1.5 per gallon cost (assuming companies buy crude oil in bulk) , raw material cost for electricity is about 4.5 cents/kWh. I don’t know how US companies can afford to sell electricity to end users at a rate of 8 cents/kWh. Like BD, meter readers have to travel house to house to get meter reading, and they are paid as least $15/hr. It has always puzzled me how electricity is so costly in BD and we count on having an agricultural and industrial growth based on costly electricity. Wind and solar powered electricity in mass scale is a thing of distant future and we cannot count on that.

I am aware of the problems regarding the Chinese built power plants in BD. What I don’t know the problems were due to poor equipments from China or mismanagement of BD officials. US based Enron tried to produce and sell electricity in India back in 2001, but their immediate selling price was 10 Rs./kWh which were to be lowered to 5 Rs./kWh. Both the rates were far higher than usual price range and the whole deal collapsed. I don’t know the details of the pricing calculations, but I assume Enron operating cost (employee salary and corruption factor in India) was the cause. Having an US or European company producing electricity and selling at a cheap does not look like a viable option. Your thoughts on that?

By: Engr Khondkar Abdus Saleque( Sufi)

Engr Khondkar Abdus Saleque( Sufi) — Wed, 16 Dec 2009 09:01:17 +0000

Thanks Mr Munim. Price of energy does not depend on cost of fuel only.Several other elements control that.You may check Energy Pricing formula in USA if you browse FERC web site. Bangladesh needs to bring almost every bits and pieces of power plant- technology , finance from abroad.Building power plants in Bangladesh is costlier for many other logistic and administrative reasons.
You can not compare China with any other country. Many of its development has mystry. You have propsed Co-operation with China for power projecst.Are you aware of two Chinese plants at Raujan and Barapukuria? Do tou how Bangladesh continues to suffer with Chinese power plants?
Anyway thanks for your interest.If you try to know you can find out g how energy pricing is made in USA and other western countries.

By: Mohammed Munim

Mohammed Munim — Wed, 16 Dec 2009 04:15:36 +0000

I came to USA as a student almost ten years ago. After getting my first utility bill, I was surprised to see that cost of electricity in USA was actually cheaper than Bangladesh (6 cents per kWh). Although it rose up to 15 cents in subsequent years, after the collapse of gas bubble last year, it has come down to as low as 7 cents. As far as I know, US power companies are all privately owned, thus profit is their main motive. If a privately owned company can supply electricity that cheap (relying on imported natural gas and petroleum), what is wrong with PDB? Why it has to charge Tk. 5.5 per kWh for electricity produced with local natural gas? As natural gas and electricity production and distribution system are all owned by public companies, corruption seems to be principal reason of such a high price of electricity.

Fast growing countries like China are also facing the challenge of ever growing electricity demand and they are coping with the problem pretty well, even with imported fuel. In BD, even with the high cost, demand for electricity is pretty high. Adding couple of thousands MW per year with distribution infrastructure is nothing for a Chinese company, even with imported petroleum or gas. Looks like some kind of cooperation between China and Bangladesh government will be a good solution to the energy crises.

By: Nasif

Nasif — Wed, 02 Dec 2009 15:18:00 +0000

Nice article…