WB, ADB unlikely to support power generation with imported coal

Though the government has drawn up a plan to set up 13 imported coal-fired power plants in seven locations with the total capacity of 7,800 MW by 2015, two leading funding agencies – the World Bank and the Asian Development Bank (ADB) - are unlikely to support the plan.

The reluctance of the two major lending agencies to finance any coal-fired power plants in Bangladesh was revealed in a study carried out by Japan International Cooperation Agency (Jica) in January this year.

In the Jica study report, titled ‘Data Collection Survey on Coal Power Master Plan Follow-up in Bangladesh’ reveals that “the loan for the imported coal-fired power generation is not expected from the World Bank and the ADB.”

The study further mentions, “The World Bank and ADB have no plan to assist directly coal-fired power development since coal-fired power is not suitable for their stance toward environmental issue.”

According to the Jica study, the planned 13 coal-fired power plants are 600-MW capacity of two plants each in Khulna, two plants each of 600-MW capacity in Chittagong, one 600-MW plant in Chittagong South, four plants each of 600-MW capacity in Materbanri (Chittagong), one 600-MW plant in Meghnaghat near Dhaka, two each 600-MW capacity plants in Mawa near Dhaka and one 600-MW plant in Zajira (Shariatpur).

Of the plants, the government has so far struck deals for three plants -- one 600-MW in Khulna under a joint venture with India while another two plants in Mawa and Chittagong private sector. But no deal was signed for other plants. The financing mode of the deal with India has not yet been determined.

Jica says Bangladesh has planned to boost its power generation to 35,000 MW by 2021 as part of the Vision 2021 of which 30 percent power generation will come from coal-fired plants.

The Japanese agency’s study report also mentioned that the World Bank and the ADB will not even provide any financial support for transmission lines which will be connected with the coal-fired power generation plants.

Under the circumstances, it is not clear as how the government will execute such a mega plan for power generation with imported coal.

Referring to ADB’s tough stance against coal fired power plants, either it is imported coal-based or domestic coal-based, the Jica report says “ADB recognises that there are environmental problems regarding domestic coal production in Bangladesh. It is considered that it is an important to make the balance between energy development and environment.”

About the alternative financing of the imported coal-fired project, the Japanese agency says, “Jica, KfW (German donor agency), the European Bank for Reconstruction and Development (EBRD) can be selected as donor for coal-fired power projects. However, the study team does not interview KfW and EBRD regarding the coal-fired power generation in Bangladesh.
About the Jica study report, Power Secretary Abul Kalam Azad or any top official of Power Division could not be reached for comments.