Indian Reliance Group is lobbying hard with the government to sign a Memorandum of Understanding (MoU) during Indian Prime Minister Narendra Modi's visit next Saturday to let it relocate a three-year-old massive power plant from South India to Bangladesh.

But for now, the government might sign an MoU with Reliance to set up a 3,000 megawatt (MW) power plant to be fuelled by imported Liquefied Natural Gas (LNG) at an unspecified location. The MoU would not be about relocating the old South Indian plant, which Reliance had been asking for since last year.

"We are not interested in any old power plant. Thus the MoU with Reliance will not mention where the LNG-based power plant would be built," said Chairman of Power Development Board Shahinul Islam Khan.

The government would also sign another MoU with Indian Adani group to install a 1,600MW coal power plant in Maheshkhali.

Two other MoUs which were earlier planned for signing with these two companies have been dropped in the last moment. These deals were: Adani group committing to import power from a coal power plant in India to Bangladesh and Reliance group committing to import hydro-power from eastern India.

Bangladesh last year had asked Reliance to sell a good part of power from its upcoming 1,200MW hydro power plant in Arunachal Pradesh.

To mount pressure on the government, Reliance notes in a letter to the power ministry in April, "Our proposal regarding sale of power from Kalai Hydro Project at Arunachal Pradesh is interlinked with the proposal for 3,000MW gas-fired combined cycle power project in two phases, and may please be considered for combined approval by the government of Bangladesh." 

RELIANCE PLANT RELOCATION

Since last October, Reliance has been pursuing a proposal to build a two part power plant totalling 3,000MW. The first part would be built by relocating its existing 2,400MW gas-fired plant from Samalkot in South India to Meghnaghat (which would have an installed capacity of 2,250MW); and the second part in Maheshkhali.

Reliance zeroed in on Meghnaghat because it is already a developed site connected to the national grid and has all facilities to quickly install a power plant, whereas building a plant in Maheshkhali would take extra few years time as it has no readymade infrastructure.

The Prime Minister's Office (PMO) is overseeing progress regarding Reliance's proposal, which has already been evaluated.

According to Reliance, the first large power plant was built in Samalkot in 2012 but was never used due to unavailability of gas supplied by the Indian government. It provided a certificate from the equipment builder General Electric in this regard.

Reliance has also proposed to build a floating terminal in Maheshkhali to facilitate the import of 500 million cubic feet per day (mmcfd) of LNG from the Middle East. This would be parallel to another similar project under the Petrobangla.

Reliance would unload the LNG and convert it into natural gas at Maheshkhali but would require a pipeline from Maheshkhali to its power plant location in Meghnaghat.

As per Reliance's estimate, the first phase of the plant would need 330 to 390 mmcfd gas.

In its correspondences with the government, the Reliance further said, "In addition to gas turbines and steam turbine supplied by GE, all the other equipment required by the project, including Heat Recovery Steam Generator and the balance of plant equipment, are also readily available and new and unused."

The Indian company pointed out that since the equipment was already available, it could be relocated to Bangladesh in the shortest possible time.

Reliance proposed a tariff of US 3.793 cents per kilowatt hour of power (excluding the energy cost) and it asked for LNG price at 6.7 cents per kilowatt hour. The total per kilowatt power cost would be 10.55 cents.

For such a large plant, this tariff seems high but not unreasonable. Chairman of PDB Shahinul Islam Khan, however, adds that this was just a reference price. "The actual price of power would be decided through negotiations and upon completion of various formalities," he said.

On April 9, Reliance wrote to the PDB requesting for allocation of land at Meghnaghat for setting up the phase one of the proposed LNG based power plant. In its proposal Reliance noted that at present there were a number of power plants in Meghnaghat and there was 78.5 acres of land under possession of the Power Grid Company of Bangladesh (PGCB) available for future projects.

"Our proposed project of 1,500MW can be set up in the 78.5 acres of land available," it added. "We firmly believe that to avail benefits of common infrastructure, which could result into considerable capital cost advantages, the adjoining land at Meghnaghat can be appended to set up an additional 750MW very quickly taking total capacity at Meghnaghat to 2,250MW. We are confident that first 1,500MW capacity can be set up in 30 months from the zero date and the balance 750MW can be set up in 36 months. Another unit of 750MW can be set up at Maheshkhali in the future."

According to power ministry sources, the government has decided to provide Reliance with 78 acres of land in Meghnaghat; build a pipeline from Maheshkhali to Meghnaghat to facilitate transport of gas converted from LNG and also build necessary infrastructure to transmit power from Meghnaghat.

Industry insiders say that they could not understand why Reliance seeks to relocate its plant from South India when it could have built an LNG terminal there to feed gas to the same plant.