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India-Bangladesh to sign deal for key joint venture coal power plant

Publication Date : 31-10-2012

 

India and Bangladesh are now ready to sign a joint venture agreement in November to set up a massive 1,320 megawatt coal power plant in southern Bangladesh district of Bagerhat near the Sundarbans, almost two years behind schedule.

Power division secretary A.K. Azad told The Daily Star that before signing the agreement, his ministry needed approval of the cabinet committee on economic affairs for a power purchase agreement under which the government would buy power from the plant.

The approval is expected in early November.

The US$1.5 billion private power plant was initially intended to be set up by 2015. But due to nearly two years' delay over the terms and conditions of the agreement the project may go into operation in 2016-2017.

The Power Development Board (PDB) of Bangladesh and the National Thermal Power Company of India would form the joint venture company, Bangladesh India Friendship Power Company (Pvt) Ltd.

The two countries have agreed on the appointment of VS Tamrakar as the first managing director. Tamrakar is now a general manager of National Thermal Power Company of India.

Like other private power bodies in the country, the power company would be exempted from corporate tax for 15 years. After 15 years, the PDB would pay the tax on behalf of the joint venture company.

The coal for the plant is planned to be imported from Indonesia or Australia, wherever the company could secure a long-term import agreement.

While environmentalists have expressed concerns about the coal power project being so close to the Sundarbans, a world heritage site, the government believes that its environmental impact would be minimal.

“The plant will be built 14 kilometres away from the forest, while it is recommended to keep it beyond just 7km,” said secretary Azad. “Besides the plant is not located within the airflow zone that might carry the plant's emission towards the forest.

The PDB acquired 1,800 acres of land for the project. The environmental impact assessment is now at its final stage.

“The plant will be built on fallow land opposite to the Chalna port. It has no economic use,” Azad added.

“Many have expressed fear that the plant might cause acid rain over the Sundarbans and therefore it should be moved elsewhere. My question is would it be more desirable if such acid rain fell on farmland? No. We believe we will be able to implement a clean project as we are determined to use supercritical technology where 99.9 percent ash will be captured before emission from the plant,” he pointed out.

According to the summery for the power purchase agreement of this project, the PDB would sign the agreement with the company to buy power for 25 years.

The agreement does not have a power tariff profile. Instead, it spells out a formula to fix the tariff annually.

The tariff structure has two components: one is capacity price component with fixed charges for capacity, operation and maintenance and the other is a flexible energy price component that deals with fuel charge to generate power.

Power secretary A.K. Azad said the government has also initialled an implementation agreement between the two electricity companies of the two countries.

 

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