China bank finances Rural Power’s coal project

At a time when the government is planning to abandon coal power projects due to a lack of financing, the Rural Power Company Ltd (RPCL) has secured a Tk14,000 crore loan for its 1,320MW coal power project in Patuakhali.

The Export-Import Bank of China – along with the Bank of China – will provide the syndicated loan at a 2.9% interest rate for 14 years' repayment, according to sources concerned, adding that the financial closure of this project will take place next June.

The project director of the coal power plant, Engineer Md Towfique Islam, told The Business Standard, "The RPCL coal plant project in Kalapara has already achieved 27% progress since it was launched in 2019, and this is a remarkable feat.

"The project made a progress of 8% last month alone."

The plant, scheduled to be completed in February 2023, will sell power to the Bangladesh Power Development Board at a rate of Tk6 per kWh. The RPCL-NORINCO Intl Power Ltd (RNPL) – a joint venture of equal partnership between the RPCL and China's Norinco Intl Cooperation Ltd – is implementing this project.

Sources at the Power Division, however, said the project's construction picked up pace at a time when the government began to think about reducing coal projects due to financing issues, environment, generation cost and commitment towards sustainable development goals. 

The government awarded some 22 coal projects to public and private companies till 2019.

However, apart from five such projects, the others showed almost no progress at all in the last few years. Most could not even manage to acquire land, while financing was the major issue for all of them.

In August last year, the Power Division, under the Ministry of Power, Energy and Mineral Resources, prepared a report on coal-based power plants in which it suggested keeping only five projects now under construction.

The 1,320MW coal power project in Patuakhali was not included among the five, said a Power Division source.

When asked whether the coal power plant in Kalapara picked up pace in a bid to avoid the government cutback on such projects, Project Director Md Towfique Islam said this particular plant was not included in the list of projects that the report suggested be abandoned.

He explained, "Besides, the Ministry of Finance has given its consent for providing Sovereign Guarantee to the investor. Therefore, the construction of the project is going on in full swing to make it operational by the next two years.

"Soil improvement in major areas, including in the cooling tower and coal yard, has already been completed. Resettlement of local people whose land was acquired is almost complete too. Apart from these, major equipment such as boilers, steam turbines and generators has been procured, which are scheduled for delivery at the site next year."

The plant will cost an estimated Tk20,000 crore. The Exim Bank, with the Bank of China, will provide 70% of the fund as a syndicated loan, while the RNPL will provide the rest of the amount.

For this project, 915.74 acres of land have been acquired at Londa, Dhankhali and Nishanbaria areas of Kalapara at a cost of Tk164.61 crore, said Md Selim Bhuiyan, executive director of the  RPCL.

Primary fuel for the coal power plant will be sourced from Australia and Indonesia. Project officials said 58% of the total coal will come from Indonesia and 42% from Australia.