The government is showing interest in taking out a loan from China at a lower rate to build mega coal-based power plants in the country.
“We are interested in China as it has invested a lot in coal power plant construction. If other countries come forward we will welcome them,” State Minister for Power, Energy and Mineral Resources Nasrul Hamid told the Dhaka Tribune.
The government has already signed two deals to build 1,320 megawatt (MW) coal-fired power plants through the latest ultra-supercritical technology at a cost of $4 billion while another state-run power generation company has started contacting a Chinese company to that end.
China will continue facilitating Bangladesh’s three fast-track high-profile projects including the deep-sea port, Padma Bridge and metro rail for communications.
Nasrul Hamid said: “China is technologically advanced and we hope standard work from them. Bangladesh can tremendously benefit from the Chinese experience in power sector.”
“I do not think the bad experience of 250MW Barapukuria coal-based power plant will repeat in the new projects,” he added.
But a section of insiders in the power sector warned that in many cases the performance of Chinese companies was below average and in future, the country might encounter trouble with the power plants.
They suggested that the government should choose other countries rather than China.
Northwest Power Generation Company Managing Director AM Khurshedul Alam told the Dhaka Tribune, “China is providing us with fast loan and we have visited their power plants which meet standards.”
“Eighty five percent of the expenditure on the power plant will come from the loan and 15% from equity,” he added.
Khurshedul said China would provide the loan at a rate of 3% interest and without Libor.
China had constructed many power plants before as contractor, the power company official said, adding that this was the first time it would work as an investor.
Normally, an investor never wanted to build a below average power plant, he maintained.
Managing Director Mostafa Kamal of Electricity Generation Company of Bangladesh Ltd told the Dhaka Tribune, “We have already started contact with some firms in China and other countries and feasibility study to build an 800MW coal-based power plant in Munshiganj.
Md Nurul Alam, managing director, Ashuganj Power Station Company Limited, admitted that experience in coal-based power plant construction is not long. We have just started searching for land in Barguna and after feasibility study, we will go for construction of a 1,320MW power plant there,” said.
Bangladesh and China signed two MoUs to set up two 1,320 megawatt coal-fired power plants in Moheshkhali Island in Cox’s Bazar and Patuakhali.
The first one was signed between China’s state-owned China Huadian Hong Kong Company Limited and Bangladesh Power Development Board and the second one between the state-owned Northwest Power Generation Company and China National Machinery Import Export Corporation.
The government has prepared a road map to generation of around 20,000MW of electricity from the coal-based power plants by 2030.
Of the total power generation target, 11,250MW would be produced by using local coal while the rest by imported coal.