Bangladesh yesterday signed two memorandums of understanding with Malaysia to set up a 1,320-megawatt coal-based power plant in Maheshkhali at an initially estimated cost of around $2 billion. The final cost of the thermal power plant in the country's future energy hub in Cox's Bazar will be known after a feasibility study. The plant on 550 acres of land will include two units with a production c
apacity of 660 megawatt each, and could start commercial production any time after 2019. Of the two MoUs, one is government-to-government deal and the other is public-private agreement. Nasrul Hamid, Bangladesh state minister for power, energy and mineral resources, and Samy Vellu, Malaysian prime minister's special envoy on infrastructure to India and South Asia, inked the government to government MoU at Sonargaon Hotel in the capital. The other MoU was signed at the same venue between Bangladesh Power Development Board (BPDB) and a consortium of Malaysian power companies -- Tenaga Nasional Berhad (TNB) and Powertek Energy Berhad. Officials present at the ceremony didn't mention the cost of the project, but Bernama, the state-run Malaysian news agency, said it could be about $1.85 billion. Advertisement BPDB, TNB and Powertek will provide 20 to 30 percent of the project cost, while the rest will come from bidders. The plant will be a fifty-fifty joint venture between TNB-Powertek and BPDB. Under the agreement, a joint venture company will be formed by BPDB and TNB-Powertek consortium. Nasrul Hamid, state minister for power, and Samy Vellu, a special envoy of the Malaysian prime minister, shake hands after signing a memorandum of understanding at Sonargaon Hotel in Dhaka yesterday to set up a coal power plant. AMA Muhith, finance minister, was also present. Photo: Star Vellu said the MoU is valid for two years unless extended by mutual agreement or when the parties sign a definitive joint venture or shareholder agreement concerning project development. “With this MoU, the parties will jointly conduct a project feasibility study and come up with a proper project development programme,” he said after the signing ceremony, according to Bernama. If the parties decide to go ahead with the project after the completion of feasibility study, they will form a joint venture company and conduct international tender to appoint the engineering procurement and commission (EPC) contractor for the project. The TNB-Powertek consortium would provide technical leadership and coordinate the feasibility study of the project while BPDB would provide land for the project, he said. The project would be developed on a non-recourse financing basis and the JV company would sign a long-term power purchase agreement with BPDB as the sole off-taker of power from the project, Vellu said. On the project's timeline, he said the feasibility study is likely to be conducted in six to nine months. It would take three to six months to float tender for the EPC contract and nine to 12 months to complete project documentation on financing. It will require four years to complete the construction work, he added. The plant will consume 11,000 tonnes of coal a day, and the coal might be sourced from Indonesia, South Africa, Australia and Mozambique. Driven by strong economic growth, Bangladesh's power demand is growing sharply and is expected to rise further, prompting the government to diversify electricity generation. The government plans to produce 40,000MW of electricity by 2030, half of which will be generated from coal. The government has already signed a number of deals with India and Japan to set up coal-based power plants in the country. According to the government's plan, Maheshkhali Island is set to become the country's energy hub. It will have coal-based power plants capable of generating 10,000MW of power, a major liquid natural gas (LNG)-based power plant, and an LNG terminal. The government has acquired 5,000 acres of land for the projects. Speaking at the signing ceremony, Finance Minister AMA Muhith said Bangladesh would have to choose coal to produce electricity, as it is the cheapest source of energy next to gas and is available on the international market. Tawfiq-e-Elahi Chowdhury, energy adviser to the prime minister, urged all parties involved to expedite the process so that the plant starts operation before the time limit. Vellu said the agreement would pave the way for meeting Bangladesh's growing energy needs. The bidder would be selected through an open tender, Power Secretary Monowar Islam told The Daily Star. Power from this plant might cost between Tk 6 and 7 per kilowatt-hour, almost similar to the power production cost at nearby Matarbari coal-based power plant to be financed by Japan. The final price will be known after the feasibility study. BPDB Chairman Abduhu Ruhullah, TNB Vice President Nazri Shahruddin and Powertek Chief Executive Officer Ong Peng Su signed the other MoU on behalf of their companies. Malaysian High Commissioner to Bangladesh Norlin binti Othman also spoke on the occasion. TNB is the largest electricity utility company in Malaysia and a leading utility firm in Asia. Though the Malaysian government owns the majority of shares, the rest are publicly traded on the Kuala Lumpur Stock Exchange. It serves an estimated 8.3 million customers in Peninsular Malaysia, Sabah and Labuan. Powertek owns and operates nine power plants, and has investments in power plants across six countries -- Malaysia, Egypt, Bangladesh, Pakistan, Sri Lanka and the United Arab Emirates -- with a net generation capacity of 3,981MW, according to the company's website.
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