In August, Bangladesh’s Ministry of Power, Energy and Mineral Resources sent a letter to the Prime Minister’s Office. The letter, which The Third Pole has seen, seeks approval to convert 13 coal-fired power plants, which are currently in the pipeline, into liquefied natural gas-based plants.
The previous month, Nasrul Hamid, Bangladesh’s minister of power, energy and mineral resources, said during a webinar that the country intended to “review” all but three of 29 planned coal plants that had been granted a licence. Of the 29, work on 18 is underway. The letter proposes that five of these 18 be completed as coal-fired plants.
This leaves 11 projects that have a licence but have not been started. Officials told The Third Pole that these are sitting idle for the time being and that the government might gradually cancel their approval.
The main issue, according to the letter, is the inability to finance the coal-fired plants.
“Due to insecure financing in the coal-based plants, we needed to reconsider their future,” Hamid said in July. “But the shifting is dependent on the directives of the premier.”
In 2010, Bangladesh’s Power System Master Plan was prepared by the Japan International Cooperation Agency, which allocated government-sponsored funds to developing countries including Bangladesh. Under this, the 18 licensed coal projects were to provide 35% of the country’s total energy. The projects were being delivered through public, private and joint ventures.
China is the country’s largest developer and funder. But now, neither it, nor Japan – which has been instrumental in Bangladesh’s energy planning – are interested in investing in coal-fired energy projects, The Third Pole was told by industry insiders. This was also stated in the letter, which a government source showed The Third Pole on condition of anonymity.
The Third Pole’s source said that those who have already secured investment will run their projects. The contracts of those who have not already got finance will be dropped.
The cost of coal
Industry insiders said that the production cost of coal power is higher now than in 2010 because of the expense of importing and managing the storage of coal, land acquisition and delays in implementing projects. The fact that power production exceeds demand has also hampered profit margins.