Officials and Experts: Bangladesh Only Canceled Coal Power-Projects for Lack of Funding

Bangladesh this week canceled plans to build 10 coal-fired power plants because the commodity has become pricey and the country could not find funders for those projects, government officials and analysts told BenarNews.

The South Asian nation may have pitched the decision it announced on Sunday as a deliberate move away from fossil fuels as a source for supplying its energy needs, but the real reason was that no one was willing to finance their construction, analysts said.

In spite of scrapping those projects, they noted, the country still is going ahead with plans to construct at least five other coal-based power plants, many of them controversial – not just because they will be future sources of air and water pollution.

The canceled projects – including a U.S. $2 billion agreement with a Chinese company for the country’s largest electricity project – were scrapped for several reasons, said Mohammad Hossain, director general of the power cell at the Ministry of Power, Energy and Mineral Resources.

“In 2010, we planned to meet our growing demand for electricity from imported coal-based plants, as coal was the cheapest option. We proceeded in that direction. But now imported coal is not cheapest for us,” Hossain told BenarNews.

“Transportation and preservation of coal has been a big challenge for us and those two steps raise costs.”

Hossain was referring to projects initially approved after the Awami League party, which rules Bangladesh, won elections in 2009 under Prime Minister Sheikh Hasina. At the time, Bangladesh faced a huge shortage of electricity and planned multi-billion dollar projects to ramp up power production.

Construction had not begun on any of the 10 scrapped projects, because they had not been able to get funding, experts said.

A local news site quoted Nasrul Hamid, the state minister for power, as saying that the scrapped “plants failed to come into generation within their stipulated timeframe.”

Hossain said they were cancelled because “the implementation of these coal projects has been very poor.”

Saiful Hasan Chowdhury, spokesman for Bangladesh’s Power Development Board, said the 1,320-megawatt coal-fired project in Moheshkhali, the country’s biggest planned electricity plant, was canceled because it had been delayed.

The Power Development Board and the China Huadian Hong Kong Co. Ltd. signed an agreement in May 2018 to build that plant.

“We signed an agreement with the Chinese company to jointly implement the 1,320-megawatt coal-fired project in Moheshkhali,” Chowdhury told BenarNews.

“But its progress was slow. The government finally cancelled [it].”

The funding mechanism for the Moheshkhali plant had yet to be sorted out, he said, about the project for which the government had provided land and other administrative support.

‘No donor agency is interested’

However, Md. Abdul Mottalib, managing director of the Coal Power Generation Co. Bangladesh Ltd., which is under the ministry of power, acknowledged that the government could not find financiers for coal-based power projects.

“We undertook several coal-fired power plants in Bangladesh with the technical collaboration of foreign companies,” Mottalib told BenarNews.

“But we could not agree with any financier to invest in [such] projects in Bangladesh.” he said.

These projects “would never have been implemented,” according to Anu Muhammad, a professor at Jahangirnagar University in Dhaka who leads a civil-society movement against coal-based power plants.

“No donor agency is interested in investing in [such] projects because coal is harmful for the environment, for human health,” Muhammad told BenarNews.

For instance, in May, the Asian Development Bank said it would stop financing coal-fired power plants. The Asian Infrastructure Investment Bank said the same thing last September.

“The government actually has been forced to cancel the projects as they failed to find any funders. But the government hid the truth and tried to build its image as pro-environment,” Muhammad said.

‘Environmentally and socially disastrous’

Still, Bangladesh is going ahead with building big coal-fired projects for which it has secured funding, Muhammad noted.

These include the Chinese-financed Banshkhali and two-phased Payra projects, the India-funded Rampal coal-fired plant and the Japanese-funded Matarbari. These projects are expected to produce a cumulative 7,500 megawatts of electricity, and their implementation will continue, Hossain, from the power ministry, said.

He said that one of the reasons Bangladesh scrapped the 10 other plants was because the nation chairs the Climate Vulnerable Forum, a partnership of 48 countries considered the most threatened by climate change.

“So Bangladesh has the responsibility to get rid of coal which is detrimental to climate change,” Hossain said.

But allowing the under-construction coal-fired power plants to go on does not appear to reflect this intent, Julien Vincent, executive director at Market Forces, an Australian non-profit, told Eco-Business, a sustainable development news site.

“It is concerning to see several coal-power stations allowed to continue when these projects have demonstrated how environmentally and socially disastrous coal power is,” Vincent said.

In addition, Bangladesh produces more power than the country has demand for, M. Tamim, a former energy adviser to a previous government, told BenarNews last September.

The country’s electricity generation capacity was 20,000-22,000 megawatts, which was more than the demand of 11,000 megawatts, so there was no need for more electricity plants, especially coal-fired ones, he said then.

Jahangirnagar University’s Muhammad said he foresees that some projects that have not been canceled will eventually be scrapped.

“In the future, the government would be forced to cancel these big projects, too, as coal is not economically and environmentally sustainable. These projects would be a burden for us,” Muhammad said.

“Coal-fired plants have been polluting rivers, sea, aggravating air quality, causing diseases. The earlier the government scraps coal-fired projects, the better for the country.”