Mr AK Azad Power division secretary said that before signing the agreement, his ministry needed approval of the cabinet committee on economic affairs for a power purchase agreement under which the government would buy power from the plant.
The approval is expected in early November.
The USD 1.5 billion private power plant was initially intended to be set up by 2015. But due to nearly two years’ delay over the terms and conditions of the agreement the project may go into operation in 2016-2017.
The Power Development Board of Bangladesh and the National Thermal Power Company of India would form the joint venture company, Bangladesh India Friendship Power Company Ltd.
The two countries have agreed on the appointment of Mr VS Tamrakar as the first managing director. Mr Tamrakar is now a general manager of National Thermal Power Company of India.
Like other private power bodies in the country, the power company would be exempted from corporate tax for 15 years. After 15 years, the PDB would pay the tax on behalf of the JV company. The coal for the plant is planned to be imported from Indonesia or Australia, wherever the company could secure a long term import agreement.
While environmentalists have expressed concerns about the coal power project being so close to the Sundarbans, a world heritage site, the government believes that its environmental impact would be minimal.
Mr Azad said that “The plant will be built 14 kilometers away from the forest, while it is recommended to keep it beyond just 7 kilometers. Besides the plant is not located within the airflow zone that might carry the plant’s emission towards the forest.”
He said that “The plant will be built on fallow land opposite to the Chalna port. It has no economic use.”
He added that “Many have expressed fear that the plant might cause acid rain over the Sundarbans and therefore it should be moved elsewhere. My question is would it be more desirable if such acid rain fell on farmland? No. We believe we will be able to implement a clean project as we are determined to use supercritical technology where 99.9% ash will be captured before emission from the plant.”
According to the summery for the power purchase agreement of this project, the PDB would sign the agreement with the company to buy power for 25 years. The agreement does not have a power tariff profile. Instead, it spells out a formula to fix the tariff annually.