Power Development Board (PDB) signed a power purchase agreement (PPA) with Nutan Bidyut Bangladesh Limited on Monday to set up a 220MW power plant in Bhola.
Nutan Bidyut is a subsidiary of the Indian corporate giant Shapoorji Pallonji Infrastructure Capital Company Ltd.
The combined-cycle power plant will be an independent power producer which will sell electricity to PDB for 22 years. Authorities estimate the plant will supply the national grid by December 2019.
The plant will produce 220MW using natural gas, and 212MW with diesel in case there is a gas shortage.
The agreement was signed by PDB Secretary Masud-uz-Zaman and Nutan Bidyut Bangladesh Limited Director J Sinha Mahapatra yesterday.
The deal with Shapoorji Pallonji was struck under the Speedy Supply of Power and Energy (Special Provisions) Act 2010.
According to the agreement, PDB would purchase per unit at US Cent 3.9830 or Tk3.24 from the gas production and US Cent 16.9621 cent or Tk13.8 from the diesel unit.
Currently, PDB operates a 194MW combined cycle gas-based power plant in Bhola while a private firm called Venture Energy Resources Company Limited supplies 33MW power from its own plant on a rental basis.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid attended the ceremony with Power Division Secretary Dr Ahmad Kaikaus, Petrobangla Chairman Abul Mansur Md Faizullah and PDB Chairman Khaled Mahmood.
The state minister praised the conditions which is encouraging greater foreign investment in Bangladesh. He emphasised that Germany and Sweden and several other European countries are also interested in investing in the power sector in Bangladesh. The interest is not without its reasons, as the minister stated that power demand is rising by 10-20% or 2,000MW per year.
State Minister Nasrul Hamid also hailed the project as the first power plant to be fully funded by an Indian company.