India-Bangladesh power JV runs into Chinese wall
Bangladesh India Friendship Power Co Ltd (BIFPCL) – a 50:50 joint venture between Indian power generation major NTPC and Bangladesh Power Development Board (-BPDB) – is expected to invite bids for turnkey construction of 2×660 super-critical coal-fired thermal power plant at Rampal, near Mangala river port, soon. This should have been a matter of celebration for India. However, an undercurrent of worry is already evident.
According to sources, a pre-bid meeting held earlier this month was attended by six power gear majors including BHEL and L&T from India; Doosan and Hyundai from South Korea and two Chinese companies. It is likely that the Chinese companies may pip others to the post.
The two Chinese entities, China National Machinery Import and Export Corporation and China National Energy Engineering and Construction Co, already have an impressive presence in Bangladesh. Besides, China has emerged as a leading manufacturer of power equipment and its off-the-shelf deliveries are quicker and cheaper than those of its rivals.
According to former power secretary P. Umashankar, it was always agreed that there will be an international tender. The contract will be given to the best bidder. But if the project goes to China, there may be
a problem. The NTPC jv was meant to integrate the energy ties between the two nations. Though described as an equal JV, India is expected to play a lead role in financing the NTPC- operated project.
India and China are in a race for the world’s resources as they seek to fuel economic growth. India’s efforts to step up energy diplomacy by engaging with Myanmar, Bangladesh and Sri Lanka haven’t had the desired result though. China is becoming increasingly influential by wielding its growing economic might without being constrained by the need to consider its own local constituents. The Bangladesh project was meant to be a showstopper.
Estimated to cost ?7,000 crore, Mai- tree Super Thermal Power Project will be the largest in Bangladesh. More importantly, it will improve the share of cheaper coal-fired electricity from less than 2 per cent (210 MW) to nearly 12 per cent (1,530 MW) of total installed capacity. Apart from construction of the plant, the turnkey contractor would also be responsible for building a coal terminal at Mangala for importing a little over 4.5 million tonnes of fuel annually.
Experts stress the strategic importance of the project and the associated benefits from it. “The project has strategic importance for relationship
between the two countries,” says Umashankar. “It will be the largest such project in Bangladesh and its impact will be felt there as it has the potential to generate goodwill for India. Most of their capacity is from diesel units, which has a high cost associated with it. In comparison, the tariff from this project will be of optimal value,” he adds.
NTPC sources confirm that the JV has already completed site development work and the bids are scheduled to be opened in July with targeted commissioning in three years from the award of contract. According to information available on the Website of Indian High Commission in Dhaka, “Land filling at the site is 70 per cent complete. Site levelling of main plant area (identified as priority area) has mostly been completed and contract for main plant fencing activities has also been awarded.”
“Business Execution Concept of the company has been finalised. Global Expression of Interests (Eols) were invited from experienced consultants to provide Owner’s Engineer Services to the jv company for project development. Responses have been received and are being scrutinised for further action,” the Website adds.
BPDB has a generation capacity of 10,530 MW. However, the peak supply as on 24 May was about half at 5,457 MW – about 1,530 mw short of the peak demand of 6,987 mw. Nearly 10 per cent of the total availability (500 MW) in Bangladesh is met through import of cheap coal- fired power from India. This includes 250 MW at domestic regulated tariff and the rest, in open market purchase. An additional 100 MW will be supplied by the cheapest Indian gas based power producer, ONGC Tripura Power Co, soon.
Though Bangladesh is also setting up another 940 MW of gas- based facilities (in three locations), the NTPC-led jv is expected to help Dhaka in reducing its dependence on gas-based electricity (67 per cent of installed capacity) and imported oil (25 per cent).
♦ RAKESH JOSHI email@example.com