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125 MW coal-fired power plant through open tender likely

Sharier Khan
As coal production at Barapukuria coal mine showed an upward trend for the last one year, the government is considering setting up a 125 megawatt third unit of the coal-fired power plant at the mine site through open tender for the first
While this plan was not chalked out on the basis of any long-term production forecast for Barapukuria mine that is presently Y supplying up to five lakh tonnes of ' coal a year to the 250 MW two-unit power plant at the site, the power ministry believes that the mine can supply enough coal also for the 125
MW third unit.
"We shall install a new power plant through open tender, and not any other means," says Power Secretary Fauzul Kabir Khan, who discussed the matter with the Petrobangla chairman. "We have requested the government to build this plant either by using our own resources or by taldng loans from donors."
About unsolicited negotiations, the secretary said, "We shall not do anything other than through open tender."
The power ministry has written to the planning ministry and Economic Relations Division (ERD) to find funds for this project.
"Time limit for this project can be fixed upon positive feedback from them." said the secretary.
The country's lone 250 MW coal-fired power plant at the mine site was built with a Supplier's Credit deal with China at a high cost of $260 million. A Chinese consortium led by the CMC built the plant that is not performing optimally since its inception in December 2005.
Local representative of the Chinese companies and chief of Hosaf Group Moazzem Hossain has been trying to make the government agree to build a third unit of the coal-fired Chinese-built
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power plant since 2006. At that time, the proposal was put aside because of a staggering cost of Tk 1,000 crore, and also because the mine was not producing enough
Petrobangla sources say under a better management and favourable mining condition, the coal mine is now producing coal more than the 250 MW plant can consume.
'Given the present trend of this plant where the two units do not operate all the time, the mine's coal production may support a new 125 MW unit. But, if any one thinks that the present coal production can support continuous operation of 375 MW (250 MW existing plus 125 MW new) power plant, it is wrong, " said a Petrobangla official.
The existing plant is supposed to consume 6.6 lakh tonnes of coal annually, which is approximately 66 percent of the mine's annual production target of one million tonnes (presently the target is eight lakh tonnes). A third unit mathematically demands another 3.3 lakh tonnes, which the mine cannot guarantee.
In reality, this plant cannot perform optimally, and the two units can consume up to five lakh tonnes. Sources noted that this low
quality plant would never be able to perform optimally.
Since the plant is unable to consume the mine's present level of coal production, the mine’s coal yard has been filled up with surplus coal. By December, the mining authorities fear that the coal yard's 2.35 lakh tonne capacity will be exceeded by two lakh tonnes of coal, which must be sold to other buyers. "We have floated a tender and found offers of $116 a tonne for 34,000 tonnes from bnck kiln owners and others," said amine source.
In such a situation in July, the CMC wrote to the power secretary that Bangladesh may find more coal mines in its northern region, and can therefore plan for more coal-based power plants. It said even with the present coal production at Barapukuria--4,000 tonnes a day-- it is possible to add a 125 MW plant within a maximum of 18 months.
The CMC is ready to negotiate for that project which, the Chinese company says, would be cheap to implement as much of the infrastructure is already there at the existing plant site. The existing plant consumes 2,200 tonnes of coal a day, and adding the new unit will raise the total to 3,300 tonnes. The CMC is flexible about financing this project, and it is even open
about a joint venture.
The PDB reviewed and seconded this proposal. It even suggested yet another Supplier’s Credit from China, which the government's procurement policy discourages. The PDB also suggested that CMC should implement the project in line with the existing units as that would eliminate any problems relating to "interfacing" ofthe three 125 units.
"They are trying to say that this unsolicited deal will be cheap. But when we reviewed the investment for a third unit in 2006, the cost came to Tk 1,000 crore. This cost does not justify building such a plant on the basis of an unsolicited negotiation." said an official. "An open tender will ensure cheaper, yet modem and efficient power plant"
The existing plant was built at a total cost of $260 million in 2001 whereas engineering, procurement and construction cost of the 450 MW Meghnaghat power plant was $180 million in 1998.
Contract for the Meghnaghat project was awarded through an open tender, followed by open negotiation. Barapukuria plant was built on the basis of an unsolicited and secretive negotiation with a supplier's credit, which primarily benefited Hosaf as representative of all the