Richest Indian Mukesh Ambani-owned Reliance Group's 718 MW natural gas-fired combined cycle power plant project on the outskirts of Dhaka has failed to make any significant progress in the past one year.
In September 2019, the Indian oil-to-telecom conglomerate signed agreements with the Bangladesh government to build, own and operate the power plant at Meghnaghat, some 40 km from Dhaka. August 2022 is the deadline for the project.
However, more than a year on, the project has seen barely 9% progress, an official document accessed by UNB has revealed.
Officials of the Reliance Group have attributed the project's poor progress to the Covid pandemic and consequent lockdown, but expressed confidence of completing the remaining 91% work in less than two years.
"Due to Covid-19 lockdown, we had to suspend our work in March in compliance with the government's directive," said Ranjan Lohar, the CEO of Reliance Bangladesh LNG and Power Limited (RBLPL), a special purpose vehicle formed for execution of the project.
He, however, said that the pilling work of the project has now resumed. Reliance, Lohar said, also recently inked loan agreements with different financiers, including Asian Development Bank, for the project being developed on the banks of the Meghna River.
As per the agreements, the financing agencies will provide USD 642 million, of which USD 200 million will come from ADB, while Japan Bank for International Cooperation will give USD 265 million and Nippon Export and Investment the remaining USD 177 million.
Meanwhile, Reliance Power has also signed a joint venture agreement with JERA, a Japanese energy company, settling the share ratio at 51% for its own and 49% for the foreign investor.
The company has also signed an agreement with General Electric (GE), which is going to supply major equipment to the project, and appointed Samsung C&T as its Engineering, Procurement, & Construction (EPC) contractor to build the gas-fired power plant.
As per deal, the Meghnaghat power plant will be powered by two GE 9F gas turbines, one GE D11 steam turbine and three H53 generators.
Earlier, a total of four contracts were signed by Reliance Bangladesh with different entities of the government to implement the project.
Of the four agreements, officials said, the Power Division signed the implementation pact while state-owned Bangladesh Power Development Board inked the power purchase agreement and land lease agreement and Petrobangla signed the gas supply agreement.
Under the agreements, the government will purchase electricity from the project for a 22-year period at a rate of 7.3123 US cents per kilowatt hour (equivalent to Tk 5.85 each unit) with 82% plant factor and 12% discount factor.
Reliance will use imported re-gasified liquefied natural gas (R-LNG) for its proposed plant, which will be supplied by state-owned Petrobangla at a rate of USD 7.2625 per mmbtu. In the contract, the US dollar rate was calculated to be Tk 80, sources said.
Officials said the government will have to spend a total of Tk 80,945 crore (about USD 8 billion) over the 22-year period for buying electricity from the plant.
Power Division officials said that the Reliance Group signed an MoU during Indian Prime Minister Narendra Modi's Dhaka visit to invest about USD 3 billion in the power and energy sector in Bangladesh that also include setting up of a 500 mmcfd LNG terminal.
But over the period, the Indian conglomerate had not been able to roll out the investment as it could not sign any final deal with the government due to disputes on different issues with different official agencies.
The import of liquefied natural gas (LNG), use of the required gas at the power plant and also selling of the remaining portion of the imported gas to Bangladesh government were parts of Reliance's initial plan.
"But, frequent changes in its proposal and mismatch with the government's terms and conditions put Reliance on the backfoot in pushing forward its project in Bangladesh," said a top official at the Power and Energy Ministry.