Coal power loses steam

In the last six years, the Awami League government has made significant progress in the power sector virtually eliminating the phenomenon of load shedding. But this success may grind to a halt in the near future as the government's new plans to build two dozen large coal power plants are going nowhere fast.

In the last four years, the government rolled out plans and bids to build large coal fired power plants totalling 20 thousand megawatt capacity—which is almost three times the electricity available to the nation today.

Coal is cheap and it was chosen as an alternative to natural gas for power generation. As gas resources are depleting fast, the government wants one third of the country's power to be generated with coal by 2030.

Out of these two dozen coal power projects, only two are actually making physical progress. These are the Rampal and the Matarbari power projects.

Sources blame bureaucratic bottleneck, lack of strong leadership in the related authorities and lack of understanding about coal power among related offices for this sudden slow down in project implementation.

In October and December, while reviewing progress of coal power projects, the power ministry pointed out that none of the seven private coal power projects totalling 3500 mw capacity made any physical progress other than land filling although their initiatives have been taken two to three years back.

Similarly the government had entered into eight joint venture large coal power projects with different countries in the last one to three years totalling 8850 mw—of which, only the Rampal 1320 MW Power project has made some visible progress.

Besides seven public sector large coal power projects have been initiated. Of these only the Japan funded $4.5 billion Matarbari power project is going ahead.

Power ministry sources said among the seven private coal power projects, five were given to Orion and two to S Alam Group between 2012 and 2013. However Orion did not sign the final agreements of three of these projects. S Alam also did not sign the final agreements.

In addition, there is a move to build a 150 MW commercial coal power project where the power plant developer would enjoy the freedom to sell power at a market price fixed through negotiations with consumers. This move has made some progress.

PRIVATE COAL POWER: TOTALLY STALLED

Officials pointed out that two of the Orion's projects in Khulna and Mawa remained stalled although the company has developed the project sites and invested in building the plant's equipment. This delay is caused by a slow bureaucracy in getting environmental clearance for both the projects.

“At the review meetings it was overwhelmingly felt that there should be a One stop service for the power companies as these projects get tangled by issues with multiple authorities,” said an official.

“It was also felt that the officials of the Department of Environment (DoE) should be given training on coal power projects for their better understanding so that they do not sit on environmental clearance,” the official said.

A classic example of how the DoE delays environment clearance is issuing Orion Power with a conditional environment impact assessment (EIA). Orion applied for the EIA for its 522 megawatt Mawa Power plant in July 2013. The plant was supposed to go in operation from March last year.

But the EIA was issued in July 2015 with a host of conditions including that Orion must install flue-gas desulfurization equipment. Installing such equipment would increase project cost and therefore, Orion asked the government to provide it with a supplementary tariff saying that without this additional tariff, its project would not be viable.

Similarly Orion had also applied for the environmental clearance for its 565 mw Khulna power plant in July 2013—but till now the EIA has not been cleared. The Khulna project was supposed to begin operation from March last year.

“When the same authority cleared the EIA for the Rampal power plant, it naturally raises the question why are they sitting on the Orion project? If they have questions, they can simply get clarification and move forward,” said the official.

Orion's other three projects are in Meghnaghat and Anwara in Chittagong. 

Besides, the S Alam Group that was issued a Letter of Intent (LOI) in September 2013 completed the project's feasibility study only recently and has submitted its EIA for clearance.

JOINT VENTURES: NO STEAM

Amid controversies of being located too close to the Sundarbans, the 1320 mw Rampal power project is the lone joint venture coal scheme to make some visible progress. Project officials said that construction contract would be signed with a company this month. This project is a joint venture between the Bangladesh Power Development Board (BPDB) and National Thermal Power Company (NTPC) of India.

At this rate, the Rampal plant will start operation from December 2019.

But other than the Rampal plant, hosts of bids saw little progress.

The BPDB signed a memorandum of understanding (MoU) with Chinese CHDHK for a 1320 MW plant in April 2014. But they have yet to sign a joint venture agreement. 

Similarly the BPDB's MoU with Malaysian Tenega signed in September 2014 has not yet been followed up by any joint venture agreement.

Other joint venture projects that have not made visible progress are: South Korea Kepko & BPDB 1320 mw; Singapore & BPDB 700 mw in Maheshkhali;  North West Power Generation Company Ltd (NWPGCL) & CMC of China in Patuakhali 1320 MW; RPCL Munshiganj 350 MW; and Coal Power Co & Sumitomo Japan 1200 mw in Matarbari.

GOVERNMENT BIDS

Among the government bids, the very high priced $4.5 billion Matarbari 1200 MW power plant plus a deep sea coal terminal project has secured finances and EIA clearance. The consultant for the project is now being appointed and it would come into operation after 2022.

Other than this, a 1320 mw project in Maheshkhali has been given environmental clearance. The land for this project will be acquired soon and a consultant is being appointed.

Other projects that are moving at snail's pace are: ADB financed 1320 mw Chittagong plant; Pakua EGCB 1320 MW; Ashuganj 2X660 MW; North Bengal Super Thermal Power plant 1200 MW; and Barapukuria 275 MW Third Unit.