Matarbari coal power project back on track

The Japan funded massive Matarbari 1,200 megawatt coal power plant project near Maheshkhali was stalled following the Holey Artisan Bakery militant attack in July but it is now moving forward with just two Japanese bidders taking part.

Marubeni and a consortium of Toshiba-Sumitomo have submitted technical and financial bids in late January for the $4.5 billion project.

It is one of the costliest coal power plant projects in the world, industry insiders said.

These two companies were selected through a prequalification process in August 2015 but the bidding process stagnated after that.

The technical evaluation committee (Tec) of the project is evaluating whether the bidders qualify for the project. The Tec would open their financial bids afterwards and recommend the lowest competitive bidder for the construction of the plant that would use imported coal.

Sources said offers of both the bidders have some shortcomings but the project's financier Japan International Cooperation Agency (Jica) wants to go ahead with the bids anyway. Jica would provide $3.8 billion as soft loan.

According to the bid criterion, the bidder must have sound financial position now and in the coming years.

One of the bidders has a net income loss of 460 billion yen as of December 2016. “The Tec has sought clarifications from the bidders on such matters,” said an official.

Around $3 billion would be spent for the power plant construction and the remaining money would be used for building a deep sea terminal to facilitate import of coal, a township, a high-voltage power line, developing local infrastructure, and rehabilitation of people and purchase of land. 

Keeping future expansions in mind, 1,500 acres of land has been selected. The cost of the land has been estimated at Tk 350 crore. Japanese developer Penta Ocean is developing the site and building an embankment. This development is expected to be completed soon.

The power plant was scheduled to be completed by 2023. The government expected that it would be able to begin primary production at half the capacity by the end of 2018, which is now highly unlikely given that the implementation had been delayed by nearly a year.

The delay was largely due to the Holey Artisan attack where militants killed seven Japanese nationals among other foreigners.

The deceased Japanese nationals included experts for the Dhaka Metro Rail project.

After the attack, all Japanese nationals involved in various projects returned to Japan and they did not come back until recently, upon gaining some confidence that the government was seriously dealing with militancy.

This would be the first venture of the newly formed Coal Power Generation Company of Bangladesh.

The company is expected to float separate tenders to construct a deep sea port which would have the ability to handle ships as large as 80,000 tonnes capacity, a 400kV power transmission line between Maheshkhali and Anwara, and the township with residential alongside non-residential facilities.

A buffer zone would be built in the deep sea port for storing coal. The excess coal of the plant would be shipped to other coal-based power plants.

According to project documents, a 2km long, 250-metre wide, and an 18-metre-deep channel would be prepared between the deep sea port and the jetty. The silt would be used for development of the port.

The cost of electricity from this plant would be close to Tk 7 per kilowatt hour, which is considered high.

The power plant would have two units, each with 600MW generation capacity.

About the high cost of the project compared to others, the project document said it was due to inclusion of various components. It said the power plant would be equipped with ultra-super critical technology.

The document said the cost of per megawatt electricity would be higher than that produced in other plants.

The Matarbari project cost is strikingly higher than that of the Indo-Bangla joint venture 1,320MW Rampal coal power plant that would need around $1.6 billion to build.

But Matarbari project's loan terms are way friendlier than that of the Rampal project.