After Adani Power and SP Infra, Reliance Power is the third Indian private company that is going to build its maiden power plant in Bangladesh amid a surplus of electricity generation capacity in the country.
Bangladesh Power Development Board (BPDB) is set to sign the final agreement on the 750MW (megawatt) project on September 1.
BPDB’s move comes at a time when almost 35 percent (5,000MW) electricity generation capacity in the country remains idle.
It also contrasts with the suggestion of the Power Cell, the policymaking unit of the Power Division, as it opined that the country does not need to establish new power plants right now due to the adequacy of the generation capacity.
Dr Ahmad Kaikaus, senior secretary of the Power Division, told reporters on Monday: “The power system master plan was prepared considering future investments and economic growth. We have enough capacity at this moment but that does not mean demand for electricity will not grow in the coming days. So, new plants are part of the master plan.”
Reliance’s 750MW Liquefied Natural Gas (LNG)-based combined cycle power project will be constructed in Meghnaghat, on the outskirts of Dhaka.
This is the first phase of the 3,000MW power generation projects in Bangladesh proposed by the company. In 2015, Reliance inked an agreement with the BPDB, expressing its interest in installing four gas-based power plants, each with a capacity of 750MW.
At that time, it also signed a deal with Petrobangla to set up a 500MMSCFD (Million Standard Cubic Feet Per Day) LNG terminal on the Kutubdia island near Chittagong.
The company planned to invest $3bn in all its projects.
The import of LNG, use of the required gas in the power plant and also selling of the remaining portion of the imported gas to the Bangladesh government were all part of Reliance's initial plan.
"After some changes in its proposal, the Indian conglomerate has got the nod to set up a 750MW gas-fired power plant in Meghnaghat near Narayanganj, instead of the 3,000MW plant. The government has agreed to supply gas to run the power plant,” said BPDB Chairman Khaled Mahmood.
Power Division sources said as per the latest proposal, the BPDB will buy electricity from Reliance for Tk5.85 per kilowatt-hour (unit cost) for the next 22 years.
During this period, the government will have to spend a total of Tk80,945 crore (about $8bn) to buy electricity from the plant.
At present, two Indian companies are setting up two power plants to generate electricity for Bangladesh. Of them, Shapoorji Pallonji Infrastructure Capital Company Private Ltd (SP Infra) is building a 220MW dual-fuel combined cycle power plant in Bhola. The BPDB will purchase electricity from this plant for 22 years.
On the other hand, Adani Power (Jharkhand) Limited is implementing a coal-based plant in India’s Jharkhand which will have a capacity of 1,600MW (2*800). Bangladesh will import the power through a cross-border transmission line. The first unit of the plant will go into operation by January 2022.
Adani is planning to build its second power plant in Bangladesh but the site has not been decided yet.