UNB, Dhaka :
The equity participation in the Bangladesh-India joint venture coal-fired power project in Rampal, near the Sundarbans, has run into complexities as the existing policy does not support such a venture.
According to an official document obtained by UNB, an inter-ministerial meeting convened by the Power Division on December 28 witnessed a heated debate between officials of the power division, the finance division and planning commission, but failed to resolve the “equity-funding related problem”.
Official sources said, the proposed 1320 MW power plant project will cost a total of $1.68 billion as per an estimate based on a primary feasibility study.
But following completion of the environment impact assessment (EIA), officials apprehend the cost will exceed $1.82 billion (equivalent to Tk 145.84 billion), as the EIA report suggests a huge additional cost will be incurred for adequately protecting the environment.
Of the total project cost, 70 percent will come from multilateral lending agency, while the remaining 30 percent is supposed to be arranged through equity participation by both Dhaka and New Delhi on equal basis.
A top official at the Power Division said in order to meet their end of the equity funding bargain, Bangladesh will need to cough up Tk 1600-2000 crore in total.
To arrange this funding, Power Division sought a special allocation from the Finance Ministry, only to learn the money would be provided in phases on the basis of an approved DPP (development project proposal).
This is when things started getting problematic. When the Power Division proceeded the matter to the Planning Commission by submitting a DPP, the commission found the proposal ‘unusual’ and non-compliant with existing policy. The DPP failed to gain approval.
It was against this backdrop that the inter-ministerial meeting on December 28 was convened. It was chaired by the Power Division Secretary, and attended by representatives of different ministries including Finance, and Planning.
Both the finance and the planning ministry officials placed their counter-arguments against the power division’s argument in favour of the project.
The planning commission’s division chief told the meeting that the existing policy only supports projects of different government departments and agencies. But the Rampal project sought to establish a joint venture company, which isn’t covered by the existing policy. “So, it needs to amend the existing project approval policy,” he added.
During the said meeting, the power secretary responded that not everything is always contained within a given policy. He also reminded the others that the proposed Rampal plant is a top priority fast track project that the Prime Minister herself is monitoring, and quoted Sheikh Hasina as having said “where there is no policy, work must be done instantly for the sake of public interest”.
He also advised the planning commission divisional chief to forward the DPP to the Executive Committee of the National Economic Council (Ecnec). Nearly a month has now passed since that meeting. But still there has been no progress on the DPP, according to official sources.
UNB has also learnt that till now, the Finance Ministry had disbursed an amount of some Tk 10 crore against the Rampal project (of the Power Division’s estimated requirement of a minimum Tk 1600 crore).
The state-owned Power Development Board (PDB) and the Indian state-owned National Thermal Power Corporation (NTPC) will be implementing the Rampal power project under through the Bangladesh-India Friendship Power Company (Pvt) Limited (BIFPCL) – registered under Bangladesh law as a joint venture company on 50:50 equity basis.
The equity participation in the Bangladesh-India joint venture coal-fired power project in Rampal, near the Sundarbans, has run into complexities as the existing policy does not support such a venture.
According to an official document obtained by UNB, an inter-ministerial meeting convened by the Power Division on December 28 witnessed a heated debate between officials of the power division, the finance division and planning commission, but failed to resolve the “equity-funding related problem”.
Official sources said, the proposed 1320 MW power plant project will cost a total of $1.68 billion as per an estimate based on a primary feasibility study.
But following completion of the environment impact assessment (EIA), officials apprehend the cost will exceed $1.82 billion (equivalent to Tk 145.84 billion), as the EIA report suggests a huge additional cost will be incurred for adequately protecting the environment.
Of the total project cost, 70 percent will come from multilateral lending agency, while the remaining 30 percent is supposed to be arranged through equity participation by both Dhaka and New Delhi on equal basis.
A top official at the Power Division said in order to meet their end of the equity funding bargain, Bangladesh will need to cough up Tk 1600-2000 crore in total.
To arrange this funding, Power Division sought a special allocation from the Finance Ministry, only to learn the money would be provided in phases on the basis of an approved DPP (development project proposal).
This is when things started getting problematic. When the Power Division proceeded the matter to the Planning Commission by submitting a DPP, the commission found the proposal ‘unusual’ and non-compliant with existing policy. The DPP failed to gain approval.
It was against this backdrop that the inter-ministerial meeting on December 28 was convened. It was chaired by the Power Division Secretary, and attended by representatives of different ministries including Finance, and Planning.
Both the finance and the planning ministry officials placed their counter-arguments against the power division’s argument in favour of the project.
The planning commission’s division chief told the meeting that the existing policy only supports projects of different government departments and agencies. But the Rampal project sought to establish a joint venture company, which isn’t covered by the existing policy. “So, it needs to amend the existing project approval policy,” he added.
During the said meeting, the power secretary responded that not everything is always contained within a given policy. He also reminded the others that the proposed Rampal plant is a top priority fast track project that the Prime Minister herself is monitoring, and quoted Sheikh Hasina as having said “where there is no policy, work must be done instantly for the sake of public interest”.
He also advised the planning commission divisional chief to forward the DPP to the Executive Committee of the National Economic Council (Ecnec). Nearly a month has now passed since that meeting. But still there has been no progress on the DPP, according to official sources.
UNB has also learnt that till now, the Finance Ministry had disbursed an amount of some Tk 10 crore against the Rampal project (of the Power Division’s estimated requirement of a minimum Tk 1600 crore).
The state-owned Power Development Board (PDB) and the Indian state-owned National Thermal Power Corporation (NTPC) will be implementing the Rampal power project under through the Bangladesh-India Friendship Power Company (Pvt) Limited (BIFPCL) – registered under Bangladesh law as a joint venture company on 50:50 equity basis.
