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Gazaria 635 MW (Orion) Coal Power Plant

Updated: Feb 27, 2023

Current Status: Announced

Gazaria 635 MW Coal Power Plant, also known as Dhaka Coal-fired Power Station or Orion Coal Power Plant (Unit-II), is a proposed Ultra-supercritical (USC) thermal power plant to be situated at Khajar Gao and Char Betaki of Hosendi Union under Gazaria Upazila in Munshiganj District of Bangladesh (Location: 23.57992, 90.57074). It is proposed by Orion Power Dhaka-2 Limited (OPDL-2), a subsidiary of Orion Group, as a private Independent Power Producer (IPP) for 25 years. In February 2022, Bangladesh Power Development Board (BPDB) suggested shifting the power plant from Gazaria to Matarbari or Maheshkhali area. As per the latest schedule, the power plant will start commercial operation in December 2026 and retire in December 2051.


Capacity

The proposed installed and net Capacity of Gazaria coal power plant is 700 MW and 635 MW respectively.


Context

According to the projections of the Power System Master Plan 2010 (PSMP 2010), the Government of Bangladesh (GOB) planned to shift the energy mix in the power sector from Domestic Fossil Gas (DFG) to coal. Several public and private companies got approval to install coal-fired power plants in different zones of the country. Orion Group is one of the companies allowed to install several coal power plants including the Chittagong 282 MW Coal Power Plant, Dhaka 282 MW Coal Power Plant, Mawa 660 MW Coal Power Plant, Mongla 660 MW Coal Power Plant, and Gazaria 635 MW Coal Power Plant. The Cabinet Committee on Government Purchase (CCGP) approved the proposal for the Gazaria Coal Power Plant on 29 September 2013. Accordingly, BPDB signed a Power Purchase Agreement (PPA) with Orion Power Dhaka-2 Limited (OPDL-2) on 21 April 2016 (BPDB 2020). According to the PPA, the Commercial Operation Date (COD) of the power plant was scheduled for 20 June 2023. But it was delayed several times and rescheduled to 20 December 2026 (BPDB 2023). Recently, Bangladesh Power Development Board (BPDB) suggested OPDIIL shift the power plant from Gazaria to any suitable place in Moheshkhali or Matarbari area (BPDB 2022).


Land Acquisition

Orion Group acquired 112 acres of land from local farmers in Khajar Gao and Char Betaki of Hosendi Union under Gazaria Upazila in Munshiganj District of Bangladesh.


Finance

Orion signed initial agreements with Poland-based Export Credit Agency (ECA) Korporacja Ubezpieczeń Kredytów Eksportowych (KUKE) and China Export & Credit Insurance Corporation (Sinosure) to arrange necessary finance for the project (Orion 2022). On 26 July 2020, Orion applied for a loan of USD 906.17 million (BDT 7,684.32 crore) from the Foreign Currency Reserve (Forex) of Bangladesh Bank through the state-owned Rupali Bank Limited (Uddin 2020). In January 2021, Bangladesh Bank (Central bank of Bangladesh) refused to provide any loans to private projects from Forex (Rony 2021). On 1 November 2021, Orion signed a Syndication Project Loan Facility Agreement with the state-owned Agrani Bank Limited and Janata Bank Limited for a loan of BDT 7,497 crore (USD 884 million, when USD 1.00 is equivalent to BDT 84.81) to implement the project (TBS 2021b).


Contractors

After signing the PPA, Orion signed a Memorandum of Understanding (MOU) with General Electric (GE) on 28 April 2016 to supply the necessary equipment for the power plant. It appointed Denmark-based Ramboll as the owner’s engineer (BPDB 2020, Orion 2022). Orion also assured that it collected equipment e.g. boilers, turbines, and generators from Europe (Orion 2022).


Environment

Adroit Environment Consultants Ltd (AECL), a Bangladeshi Consultancy firm, conducted the initial Socio-Economic Environmental Assessment (SEEA) of the project. Architecture Engineering Construction Operations and Management (AECOM) India Private Limited to conduct the Environmental Impact Assessment (EIA) of the project. According to the EIA Report, the power plant may require 100 cubic meters (98.20 tonnes) of water per hour from the Meghna River which means it will draw 860.24 thousand tonnes of water annually and 18.93 million tonnes in 25 years of operation.


Cancellation Risk

In June 2021, the State Minister for the Ministry of Power, Energy and Mineral Resources (MOPEMR) of Bangladesh declared the cancellation of approved 10 coal power plants and declared that Bangladesh would not build any more coal power plants in the country (TBS 2021a). Out of 10 canceled coal-fired power plants, the Government planned to convert the fuel of 5 plants from coal to Liquefied Natural Gas (LNG). Gazaria 635 Coal Power Plant is one of those power plants (Rahman 2021). On 21 September 2021, Chinese President Xi Jinping announced in the United Nations General Assembly (UNGA) that China would help build green energy production and halt the construction of coal power plants abroad (FE 2021b). Bangladesh’s top investors Asian Development Bank (ADB), World Bank Group (WBG), Prudential (UK), Citi Bank, Hong Kong Shanghai Banking Corporation (HSBC), and Standard Chartered Bank (SCB) also announced exit from coal financing (FE 2021a). Even GE declared its exit from new coal power plants (GE 2020). This power plant might be canceled if there is no finance for coal. BPDB kept the power plant on the planned power plants list even after the commitment of the Government not to set up any new coal power plant. Recently the Bangladesh Power Development Board (BPDB) took the decision to shift the power plant from Gazaria to Matarbari (BPDB 2023).


Reference

  • BPDB 2020. Power Sector Progress Report. Bangladesh Power Development Board: 2 March 2020

  • BPDB 2022. Power Sector Progress Report. Bangladesh Power Development Board: 13 February 2022

  • BPDB 2023. Power Sector Progress Report. Bangladesh Power Development Board: 10 January 2023

  • BPDB 2023. Power Sector Progress Report. Bangladesh Power Development Board: 27 February 2023

  • FE 2021a. “ADB, Citi, HSBC, Prudential hatch plan for Asian coal-fired closures”. The Financial Express (FE): 3 August 2021

  • FE 2021b. “China's overseas coal power retreat could wipe out $50b of investment”. The Financial Express (FE): 1 October 2021

  • GE 2020. "GE to pursue exit from new build coal power market". General Electric (GE): 21 September 2020

  • Orion 2022. “Orion Power Dhaka Unit-2 Ltd.”. Orion Group: undated (accessed on 22 July 2022)

  • Rahman, M Azizur 2021. "Five coal plants set to run on gas". The Financial Express (FE): 25 June 2021

  • Rony, Mahbub 2021. "বেসরকারি বিদ্যুৎকেন্দ্র মালিকরা রিজার্ভ থেকে ঋণ চান". The Daily Ittefaq: 9 January 2021

  • TBS 2021a. "10 coal projects scrapped as govt focuses on region-based generation". The Business Standard (TBS): 27 June 2021

  • TBS 2021b. "Orion Group to get syndicate loan for coal-based power generation". The Business Standard (TBS): 2 November 2021

  • Uddin, AKM Zamir 2020. "Target forex reserve". The Daily Star: 28 October 2020


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