Power Div seeks $252m interest-free loan from MoF for Rampal plants

Syful Islam and Rezaul Karim | Published: February 24, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

The Power Division has sought US$252 million from the Ministry of Finance (MoF) as interest-free loan to build the coal-fired power plants at Rampal in Bagerhat district, officials said.
"The Bangladesh Power Development Board (BPDB) has no capacity to finance the project from its own fund. So, we have sought the money from the public exchequer," a senior Power Division official told the FE.
He said the BPDB has been spending money for the project from its own fund since 2010-11 fiscal year (FY). "The money will be considered as equity of the BPDB in the power plant."
The BPDB and the Indian National Thermal Power Company (NTPC) are jointly implementing two power plants with a total capacity of 1,320 megawatt under the banner of Bangladesh-India Friendship Power Company Ltd.
Environmentalists have been vehemently protesting the setting up of the power plants very close to the Sundarbans, the world's largest mangrove forest and a World Heritage Site.
They feared that the biodiversity of the Sundarbans would face huge challenges once the plant goes into operation. The ecosystem and wildlife of the forest will also face disasters due to the impact of the power plants.
The BPDB and the NTPC have already invested Tk 80 million each as paid-up capital in the company. Owner's engineer will be appointed soon to implement the project which is expected to be completed by 2019, officials said.
The feasibility study report shows that implementation of the project will cost $1,688.90 million. According to the joint venture agreement of the project, the debt-equity ratio of the project will be 70 and 30. The BPDB and the NTPC will equally share the equity cost of the project which is $252.03 million each.
The BPDB will have to pay the money in nine installments to implement the project. Until FY 2013-14, the BPDB has already allocated $14.25 million from its own fund for land development, environmental impact assessment study, feasibility study, and consultancy services for coal sourcing, handling, transportation and administrative cost.
In FY 2014-15, the BPDB will have to pay $56.15 million for land development, consultancy services and portion of civil works. In FY 2015-16, it will have to pay $53.59 million, $51.97 million in FY 2016-17, $46.53 million in FY 2017-18, and $ 29.53 million in FY 2018-19 for various construction work of the project.
Officials said efforts are there to encourage implementation of coal-based power plants in the country since power generation from gas and fuel oil is much costlier.
The government has announced a 15-year tax waiver to attract private companies for setting up coal-fired power plants. The companies which will sign contracts with the government by June 30, 2020 will enjoy the waiver provided they start generating electricity by June 30, 2023, they said.