A genuine concern for environment, mixed with a generous dose of emotion and misinformation fanned by interest groups, has gripped the proposed 1,320 MW Indo-Bangla joint venture for coal-fired power generation in Bangladesh.

Timed with the award of the turnkey contract in July, the protests are mostly restricted in social media and do not pose any immediate threat to the estimated $2 billion NTPC-operated project, backed by easy (Libor plus one per cent) finance from India.

But the general aversion of the Bangladeshi government to participate in debates is giving the protesters a free run.

Background

At the heart of the debate is an imported coal-based 2 x 660MW super-critical project, taken up by a 50:50 JV of State-owned NTPC and the Bangladesh Power Development Board (BPDB) at Rampal, some 14 km north of the outer periphery of the Sunderbans mangrove forests and nearly 70 km from the world heritage sanctuary.

This is the first power project of its size in Bangladesh that can generate 12,000 MW electricity from nearly 90 sources, by using subsidised $1 a mmBtu gas (62 per cent) and fuel oil (22 per cent) and diesel (8 per cent). The economy is bleeding from the dual heavy subsidy burden both at fuel and electricity end.

As a previous effort for domestic coal based generation was nixed by the environment lobby opposing economically viable opencast exploitation, Dhaka went for imported coal-based projects. Bangladesh India Friendship Power Company (BIFPCL) was formed in 2012 as part of a cooperation treaty in 2010.

Why Rampal

The location was a Hobson’s choice. Globally, such capacities are port-based. Bangladesh has two ports and rudimentary rail infra. NTPC wanted it near Chittagong, a low-draft sea port (not meant for bulk cargo) and can accommodate feeder vessels.

Dhaka failed to offer land at Chittagong and offered river-based alternatives in the upstream of the only other port at Mongla on Passur river on the edge of the Sunderbans.

Environment impact assessment (EIA) study launched by Bangladesh (through a trust that offered services to multilateral agencies) narrowed down the search to Rampal, 14 km north of Mongla. Other locations were either thickly populated or lacked navigability.

Technically, even Rampal is not suitable as the river has only three metre draft in low tide. But Bangladesh promises to keep the 14-km channel open for barge movement by dredging.

“For a small country with limited coastline and inadequate port infrastructure, the choices are limited,” said MA Faruque, former managing director of the State-owned E&P company, BAPEX. He is not linked with the power project.

Controversy

The primary concern against the project is it is too close to the ecologically sensitive zone and will harm the environment as well as the interests of the local people. But the arguments soon veered to host of other issues questioning the interests of India.

“The plant will sell electricity at an exorbitant Taka 8.85 a unit (approximately ₹7.50) which is nearly as costly as solar power,” said Amu Muhammad, secretary of the “National Committee to Protect Oil-Gas-Mineral-Resources-Port and Power, Bangladesh” that is spearheading the protests.

Many bloggers toe this line.

Meanwhile, a June 2016 study by the Ohio-based Institute for Energy Economics and Financial Analysis (IEEFA) says Delhi gave $988 interest subsidy to the project and estimates the tariff at Taka 7.8 (₹6.65).

A BIFPCL official estimates the tariff to remain within Taka 7 (₹5.97) at the prevailing cost of fuel. It could have been lower had the company not gone in for stricter environment mitigation measures than demanded in the EIA.

Regulation is key

Top environmental impact specialists in India doesn’t find reason to oppose the project. Regulation, they say, is the key to ensure that the company lives up to its promises.

“Globally, a good part of coal move by barges. No one throws the $80 a tonne fuel to the river. All that is required is strict air and water quality monitoring by Bangladesh to ensure that the emission control equipment are in operation,” said Nandini Choudhury, Managing Director of Greencindia Consulting Pvt Ltd.

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