Japan is unlikely to sign a loan deal on the coal-fired Matarbari 1200MW thermal power plant project during the visit of Prime Minister Sheikh Hasina to that country.
The possible negative impact of the use of coal on environment might have forced Japan to decide otherwise, officials said on Tuesday.
The Japanese donor agency, Japan International Cooperation Agency (JICA), however, is likely to sign loan deals worth US$1.2 billion for four other projects as part of the 40th Official Development Assistance (ODA) loan package, they said.
Thermal power plants use coal as a major source of fuel, which has negative impact on the environment.
On Tuesday, Prime Minister Sheikh Hasina left for Tokyo on a three-day visit, during which the 40th ODA loan package is scheduled to be signed.
"Japanese law is very strict when it comes to protecting the environment. The country won't support or promote the use of any coal-fired power station. Therefore, it will not sign any such deal within its territory," said a senior official of the Ministry of Finance (MoF).
However, the assured US$1.3 billion loan for the power station could be finalised later in Dhaka, he added.
The green activists in Bangladesh have also raised a question: when Japanese law does not allow financing the coal-fired power plant because of the environmental concerns, why Bangladesh is borrowing loans for such a project?
On Sunday last, Foreign Minister AK Abdul Momen at a press briefing said Dhaka is going to sign US$2.5 billion worth of loan deals for implementing five projects, including the Matarbari coal-fired power plant, under the 40th ODA package.
Also, the JICA had assured Bangladesh of extending some $2.5 billion worth of assistance for these five development projects, including Matarbari power plant.
Four other projects are Matarbari port development project (I), MRT line-1 from Airport to Kamalapur via Khilkhet, Notun Bazar, Badda and Malibagh and a connecting line from Jamuna Future Park-Bashundhara-Purbachal project (I), ongoing Foreign Direct Investment project (II), and the Energy Efficiency and Conservation Promotion Financing Project (Phase 2).
Another MoF official said although the loan for the Matarbari power plant may not be confirmed during the ongoing visit of the PM, it is likely to be signed in Dhaka later.
Under the 40th ODA package, the JICA is likely to provide JPY38,898 million (US$355 million) for the Matarbari port development project in the 1st tranche, JPY52,570 million ($480m) for the MRT line-1, JPY21,147 million ($193m) for Investment promotion project, and JPY19,000 million ($173m) for the Energy Conservation Promotion Financing Project.
The amount of the assured loan (5th tranche) for the ongoing 1200MW Matarbari ultra-super critical power plant project is JPY143,127 million ($1.3 billion).
The JICA is financing the Matarbari power plant project.
Bangladesh will have to repay the loan at 0.95 per cent rate in 30 years while the first 10 years will be considered as the grace period.
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