British company Asia Energy Corporation, which recently tabled a development plan for the Phulbari open-pit coal mine, submitted a proposal yesterday to set up a 500-megawatt coal power plant near the mine.

The Bangladesh subsidiary of the company filed the proposal with the Board of Investment and the Power Development Board (PDB).

PDB sources said that the company proposed a 25-year levelised tariff of US 4.954 cents (Tk 3.18 at current exchange rate) per kilowatt hour. In contrast, the gas-fired AES Meghnaghat and Haripur plants charge 20-year levelised tariff of 2.79 cents and 2.73 cents.

“This proposal… aims to maximise the synergy of the Phulbari Coal Project with the rapidly growing energy needs of the country,” said Asia Energy Bangladesh's chief Gary Lye in

a press release.

The plant will use pulverised technology to generate 3,700 gigawatt hour (GWh) power a year by burning 1.5 million tonnes of coal, about one tenth of the 15 million tonne total annual output from the mine.

To be set up at a cost of 476 million US dollars, the plant will be situated at the mouth of the mine. The single unit configuration is the largest unit generator size currently planned for the power grid in Bangladesh.

Asia Energy did not disclose the proposed tariff to the press yesterday. Officials told The Daily Star that the tariff will be competitive and it will be disclosed after negotiations with the government.

Asia Energy will carry out the environmental and technical studies required for negotiation of final agreements, and in order to keep in step with the planned development of the mine, construction could begin in 2008, with power being delivered by 2011.

In view of the significant coal reserves in Phulbari and the future demand for power in Bangladesh, the plant design and layout allows for the addition of a second unit alongside the first for a total installed capacity of 1,000 MW.

Asia Energy submitted its Feasibility Study and Scheme of Development for its Phulbari Coal Project to the government on October 2, 2005 with a view to obtaining final approval to start mining activity in 2006.

Power shortage has been identified as a critical bottleneck to economic development in Bangladesh. The country has an installed electricity capacity of 4,800 MW, and demand is forecast to increase to more than 8,000 MW by 2011. Most of the country's power is generated from gas, and an increase in coal-fired power is seen as strategically important.