PC won\\\'t approve Rampal power plant

The Rampal 1,320-megawatt (MW) thermal power plant is now facing implementation delays as the Planning Commission (PC) has declined to approve it due to complexities over its funding and ownership, officials said Friday.
Power Division officials said the PC has sent back the project proposal seeking clarification on funding arrangement and the status of company ownership.
The PC has informed that since the Rampal 1,320MW plant will be set up by a newly-formed India-Bangladesh joint-venture private limited company, as per the government rules and regulations, the approval of the project is beyond its purview, a senior Power Division official said.
"The Bangladesh government does not have the full ownership of the company. So, the PC cannot consider the project as a public-financed scheme," he told the FE requesting anonymity.
Earlier a few months back, the Power Division sent a Tk 145.84 billion (US$1.82 billion) project proposal to the PC for getting its approval. The construction of the plant was to begin in the financial year (FY) 2009-10 for completion in FY2019.
The National Thermal Power Corporation (NTPC), India and the Bangladesh Power Development Board (BPDB) formed the joint-venture company, the Bangladesh-India Friendship Power Company (BIFPC) Private Limited, in January 2012 aimed at installing the coal-fired 2X660MW plant at Rampal.
According to the project proposal, the BIFPC would borrow 70 per cent of the total Tk 145.84 billion cost of the project from the Export Credit Agency (ECA). Out of the remaining 30 per cent, the BPDB will provide 15 per cent fund as its equity while the Indian company NTPC will provide the rest 15 per cent as its own equity.
A BPDB official said they would provide fund equivalent to 15 per cent equity for the Bangladesh side.
"How will the BPDB provide fund to a JV private limited company? Besides, when the BPDB, on behalf of the company, will go for borrowing ECA loans, it will require sovereign guarantee from the Finance Ministry. But the Finance Ministry cannot provide guarantee to a private limited company," said another Power Division official.
He said the Power Division would send a letter to the Finance Ministry requesting to provide sovereign guarantee for the ECA loan.
"As per requirement, we would send all the supporting documents with the project proposal to the PC for getting the approval of the executive committee of the National Economic Council (ECNEC)," he added.
When asked, a senior PC official said they could not proceed without a clear document of ownership and confirmed funding arrangements by the implementing agency.
"Besides, the BIFPC is a private limited company. The company should arrange funds necessary for constructing the proposed power plant. We are not any party to the project. So how will we consider it for approval?" he asked.
"This is why we sent back the project proposal to the Power Division," the PC official said.
The Power Division official said the BIFPC has recently appointed a consultancy firm for design and supervision of the proposed 1320MW coal-fired power plant at Rampal.
Meanwhile, the proposed Rampal power plant, situated 14 kilometres north of the world's largest mangrove forest Sundarbans, faced severe criticism from different Bangladeshi environmental and consumer rights organisations due to probable negative impact on the forest and a non-transparent deal with the Indian NTPC.
A Power Division official said when the BIFPC would borrow commercial loan from the international financial institutions, naturally production cost of the plant will be higher.
He said the BIFPC will not use the latest technology. "The company will use the 'super technology' for the coal-fired plant at Rampal. The 'ultra super critical technology' is the update one for the coal-fired power plant due to its higher efficiency."
According to the DPP, the Rampal plant will import coal for running the country's largest coal-based power plant. Some 12,236 tonnes of coal will be required daily to run the 1,320MW power plant.
Bangladesh has decided to reduce its dependency on natural gas and costly fuel-based power generation shifting its focus on setting up the coal-based power station.
The government has already undertaken another 1,200MW capacity coal-fired power generation project at Matarbari in Cox's Bazar with the financial support of the Japan government.
Bangladesh has a target to generate total 39,000 MW power by 2030 of which 50 per cent would be produced from coal.
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