The Financial Express

Switch to underground power substation halts for high cost

PC rejects two overpriced projects for the capital

| Updated: October 24, 2017 07:53:26

Evaly and Fianancial Express Evaly and Fianancial Express
Photo collected from internet has been used for representational purpose only Photo collected from internet has been used for representational purpose only

A switch to rich-country practice of having underground power-transmission system received a blow with the rejection of two substation projects for the capital for their bloated costs.

Officials said Friday the Planning Commission (PC) refused to approve the couple of underground power substations' installation projects in the city for their nearly five times higher costs than that of the usual ones.

The Commission has sent back both the projects and asked the Power Division to rationalise the abnormally higher cost before seeking their approval.

Government officials said as per instructions from the government high-ups, Dhaka Power Distribution Company Limited (DPDC) and Dhaka Electric Supply Company Limited (DESCO) had taken up the two projects.

The state-owned DPDC has undertaken a Tk 10.03 billion project and the DESCO another involving Tk 10.85 billion for installation of two underground substations at Karwanbazar and Gulshan.

"We are forced to undertake the project as the Prime Minister has instructed the Power Division to install the power substations in the capital underground," a Power Division official said.

"The power-distributing agencies have to spend nearly five times higher cost than project costs for the overhead substation-installation schemes. Usually, we install overhead substations in Bangladesh," said the official, close to the project.

He said underground substation is highly technical which some developed Asian nations like Japan and Singapore have undertaken.

In his opinion such underground substation installation is not financially viable at this moment in Bangladesh as it is too expensive to build.

The Prime Minister at an ECNEC meeting few months back had directed the Power Division to shift the overhead substations underground.

Asked, a PC official told the FE that they had sent back the project proposals of the DPDC and DESCO due to their higher costs and non-viability.

"The Project Evaluation Committee at the PC has asked the Power Division to form a committee comprising experts from the DPDC, DESCO, IMED, PC and other agencies concerned to find details on the viability and to rationalise the cost of the two projects," he said.

The PC official said the Net Present Value (NPV), Benefit-Cost Ratio (BCR) and Internal Rate of Returns (IRR) of both the projects showed that the project would not be viable financially.

"Since Bangladesh is still a poor country, the ambitious and highly cost-intensive projects like underground power-substation installation will be a distant dream. Only financially and economically viable priority projects should be taken first instead of the dream projects," another senior PC official told the FE.

He wondered if only two underground substations required Tk 20.88 billion, how DESCO and DPDC would set up their nearly 40 substations across the capital.

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