The joint venture between two state-owned power companies of Bangladesh and India to set up Bangladesh's largest coal-fired power plant is likely to be signed within the next three or four weeks, a top official of the Power Development Board said.
This would allow the two countries to jointly float a tender and complete the tender process within a year to construct the 1,320 megawatt power plant in Khulna at an investment ranging between $1.5 billion and 1.8 billion.
Tender for another similar coal power project in Chittagong with the private sector is expected to be complete before that time.
The joint venture agreement would be the result of the memorandum of understanding (MoU) signed by Bangladesh Power Development Board (BPDB) and Indian Thermal Power Company (NTPC) on August 31 in New Delhi.
The BPDB had then left a draft joint venture agreement with the NTPC hoping that India would give its feedback on it before the Eid holidays so that the agreement could be signed within this month.
However, India was taking extra time to review some additional Bangladeshi power related documents like the model Power Purchase Agreement or the Implementation Agreement.
"Once they send us their feedback, which we are expecting within the next few days, we will send the draft JVA to the power and law ministries to complete the process within two more weeks," said the top official.
The managing director of the NTPC was scheduled to arrive on September 29 to sign the deal. But this schedule may be delayed by a week or so accordingly.
The draft agreement outlines equal equity between the two countries in setting up the Khulna coal power plant, equal representation of two countries in the board of directors and the modalities of financing for the project among other issues. The chairman and the managing director's position will be periodically rotated between the two nations to maintain equality.
"India will play a vital role in arranging the finances," said the source.
Through the land ministry, the power board has almost completed acquiring 1,800 acres of land for the power project opposite to the Mongla Port in Khulna. All legal procedures regarding the land are expected to be complete by December.
"We are aiming to float the tender for engineering, procurement and construction of the power project by March and award the contract to the best bidder within next September," the official notes.
It will take around three years to complete the construction.
Coal power is considered one of the cheapest in the world but one of the unclean ways to produce electricity. This is why Bangladesh intends to build the plant using super-critical technology to keep the level of pollution as low as the current global technology allows.
The country would set up another 1,320MW such plant in Chittagong under a private-public partnership. Under this deal, the PDB is likely to hold 30 percent share, leaving the rest to the private sector.
The tender for the Chittagong plant is likely to be complete before the Khulna plant as it involves the private sector, PDB officials said. Acquisition of land for this project is also near completion.
At the request of PDB, the NTPC has been conducting a feasibility study for both these plants. Another agency is preparing an environmental impact report for both the sites. The primary reports of both these studies would soon be available to the PDB.
The Infrastructure Investment Facilitation Centre is conducting a study on how coal would be handled for both these plants. This is important as Bangladesh would have to import hundreds of thousands tonnes of coal each month to run these two plants. Transportation and storage of the coal are two vital issues that must be addressed before project implementation.
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