$ 3.5b credit for Rampal, Payra plants

Anisul Islam Noor :
The government has given approval to the terms and conditions of two separate credit deals of USD 3.5 billion for coal-fired power plants having combined generation capacity of 2640MW, ignoring vast criticism by environmentalists.
Of the two power plants, the Bangladesh-India Friendship Power Company Ltd will operate 1320 MW coal-fired power plant at Rampal Upazila in Bagerhat District, while the Bangladesh-China Power Company Limited will operate another power plant of same capacity at Payra in Patuakhali district. Both the power plants will depend on the imported coal, Power Division sources said. The cost of per unit electricity of Payra coal-power-plant will be Tk 6.65 but that of the Rampal power plant could exceed Tk eight per unit, sources said.
The government has approved the terms and conditions of two separate credit deals involving $3.5 billion for the construction of two large coal-fired power plants with 2,640 MW combined generation capacity to be financed by the Chinese and the Indian banks.
Standing committee on non-concessional loan, headed by Finance Minister AMA Muhith, gave the approval on September 15, officials said.
In India, officials of power division and Bangladesh-India Friendship Power Company finalised the terms of $1.6 billion credit deal with Indian EXIM Bank on August 26 and 27 for the construction of 1,320MW coal-fired power plant at Rampal in Bagerhat, some 14km from the Sunderbans.
They said that the Indian credit would carry one per cent interest and London Interbank Offered Rate (LIBOR) with a 20-year payback period and seven-year grace period.
Curent six-month LIBOR is about 1.24 per cent. The total project cost for Rampal Power Plant was estimated at $ two billion.
On July 12, the friendship power company, a 50-50 joint venture of Bangladesh Power Development Board and India’s National Thermal Power Corporation, signed a $1.49 billion contract with Bharat Heavy Electricals Limited for engineering, procurement and construction of the Rampal 1,320MW coal-fired power plant.
Under the contract, the Indian company will construct the power plant by 2019, ignoring criticism and protest at home and abroad.
Environmentalists say that the Rampal Power Plant would destroy the biodiversity of the Sunderbans, but the government does not agree with the claim.
In China, officials of Power Division and Bangladesh-China Power Company Limited finalised the terms for $1.9 billion credit with Chinese EXIM Bank on September 2-5 for the construction of the Payra 1,320MW coal-fired power plant near proposed Payra Sea Port in Patuakhali.
Company Managing Director AM Khurshedul Alam said that the Chinese credit would carry about two per cent interest and LIBOR with a 15-year payback period and a four-year grace period.
The company is a 50-50 joint venture between the state-run North-West Power Generation Company of Bangladesh and China National Machinery Import & Export Corporation.
The company is expecting to sell each unit of electricity from the Payra power plant for Tk 6.65 to the Power Development Board while the cost of electricity from the Rampal Power Plant could exceed Tk eight per unit, said the officials.
On March 29, a $1.56 billion contract was signed with a Chinese consortium for engineering, procurement and construction of the Payra Power Plant.
The 660MW first unit of the power plant at Payra is expected to supply electricity from June, 2019. Six months later, the second unit of the same capacity would start power supply, sources said.