Dhaka, Delhi ink initial deal on 1320MW power plant

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Dhaka, Delhi ink initial deal on 1320MW power plant
Shamim Jahangir

Bangladesh Power Development Board (BPDB) and National Thermal Power Company (NTPC) of India signed an initial to install a joint venture 1320MW power plant at Bagerhat last week, a senior official said.

“We have signed an initial on Friday last in India to establish indo-Bangla power plant,” Power Division joint secretary Md Mofazzel Hossain told daily sun on Wednesday.

BPDB chairman ASM Alamgir Kabir, power division joint secretary Md Mofezzel Hossain and BPDB member (generation) Md Abul Kasem and senior officials of NTPC were present during signing the initial.

Md Mofazzel Hossain said the schedule for signing the final deal to install the plant is yet to be fixed. The joint venture agreement (JVA) on installation of the plant is likely to be signed during the coming Indo-Bangla joint working group meeting, the official said.

”We may need to wait another month to determine the per unit cost for electricity generation from the proposed power plant as it depends on coal prices and it’s sourcing, transportation fare and capital cost of infrastructure,” another official said.

The government appointed Centre for Environmental and Geographic Information Services (CEGIS) for coal sourcing and the company and would be able to submit the report within this month, he added.

He said it’s not possible to assess the plant installation cost and per unit production cost without appointing an evaluation and procurement committee (EPC).

According to the 46-page draft copy obtained by daily sun, a joint venture company (JVC) comprising six to ten directors will be constituted including chairman for eight years term from Bangladesh side and managing director for eight years terms from India. Each of NTPC and BPDB will nominate equal number of directors.

The draft has been prepared on install the 1320MW Bagerhat coal-based power plant between Bangladesh Power Development Board (BPDB) and Bangladesh and National Thermal Power Company (NTPC) of India. NTPC and BPDB will agree to jointly set up the JVC as per applicable laws with a minimum paid up capital in 50:50 ratio, the draft JVA said.

The BPDB shall make available the support infrastructure facilities outside the project boundary such as approach road, port handling facilities, dredging etc for proper handling of equipments and also fuel required during construction stage and operation stage of the project as per schedule, the draft said. “Bangladesh shall facilitate and provide all assistance to the JVC.

JVC shall be responsible for financial closure of the project and Bangladesh shall provide reasonably requisite support and facilities for the JVC to attain financial closure of the project.

As per the draft, Bangladesh shall provide the sovereign guarantee to the JVC securing the JVC from default of BPDB towards BPDB’s payment obligations under Power Purchase Agreement (PPA). The government may consider exemption from corporate income tax for the remaining period of the PPA.

Foreign lenders to JVC shall get exemption from income tax or withholding tax on interest payments on loans given to JVC in Bangladesh as per applicable law.

Repatriation of equity along with dividends will be allowed freely to the foreign investors in the JVC as per the law, the draft said adding the foreign shareholders shall be allowed to transfer shares held by them to the local investors as per the applicable law.

The PPA shall be for an initial period of 25 years from commencing commercial operations date with a provision of extension thereafter, on mutual agreed terms and conditions, at the relevant point of time, the draft JVA said. The entire available capacity as well as the electricity generated by the project shall be purchased by BPDB and payment mechanism in the form of letter of credit (LC) as per PPA.

According to the draft, the tariff payable by BPDB to JVC shall comprise of two parts—the fixed charge and the energy charge payments for start-ups, shall be made by BPDB.

Capital cost of the project shall be determined on the basis of actual expenditure incurred by the JVC till commissioning of the last unit.

The energy charge shall be subject to minimum guaranteed under the provisions in the fuel supply agreement. Capacity charges shall be payable to the JVC by BPDB based on availability irrespective of actual dispatch. “All taxes, including sales taxes, income tax, duties, royalty etc., as payable by the JVC as per the applicable laws, shall be passed through in tariff,” the draft said.

The total project cost for the Bangladesh-India joint venture project estimated at around Tk 112 billion, officials said.

Last year, the government took initiative to install the 1,320MW import-based coal-fired power plant on 2,309 acres of land at Rajnagar in Rampal upazila of Bagerhat district.

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