The state-owned Coal Power Generation Company Bangladesh Limited (CPGCBL) has agreed to build two coal-fired power plants, each with capacity to generate 600 mega watt (MW) of electricity on Moheskhali Island in the Bay of Bengal off Cox's Bazar coast, officials said.
These will be the largest coal-fired power plants in the country involving an estimated cost of some $4.6 billion and will help meet an ever growing power demand. The plants will be set up at Matarbari and Dhalghata Union on the island, some 65 km southeast of Chittagong port.
Construction on the two power plants is scheduled to start in March next year and the plants are expected go for generation in August 2022, the officials said.
These power plant projects will include construction of jetty and coal handling facilities for coal import, coal storage, township development, rural electrification and construction of transmission facilities and road communication.
CPGCBL officials said the company will borrow $3.7 billion from the Japan International Cooperation Agency (JICA) at an annual interest rate of 0.1 per cent over 30 years, with an initial ten-year grace period. The rest of the money will be financed by the government.
These power plants will be the giants in the power sector in terms of both investment and power generation capacity in Bangladesh's history.
Two Japanese companies, Sumitomo Corp and Marubeni Corporation, have bid to participate in the construction project and the results of the bid are yet to be published.
Despite spectacular success in power generation over the past six years there is a shortfall of 1,500 MW as the country produces around 800 MW of electricity against the need of 9,500 MW.
Nasrul Hamid, State Minister for power, energy and mineral resources, said unless the country can boost its energy production it will fail to achieve a target of becoming a middle-income country by 2021.
"If we want to raise our economic growth to 8 per cent from 6.5 per cent now, then our power generation (growth) should be 15 percent," Hamid told reporters recently.
Bangladesh's power capacity growth is currently about 10 per cent a year. The government plans to turn the Moheskhali island into an energy hub.
Plans for the island include development of a port to unload up to 4 million tonnes of coal a year from Australia, Indonesia and South Africa for the power plants.