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Infrastructure & PPPs in Bangladesh - Q22021 Update

BANGLADESH government took a major decision in Q2-2021 to scrap 10 coal power projects, as an important step to promote renewable energy growth in the country. Further, the status of PPP projects expected to be tendered in 2021 will depend on the economic recovery from the pandemic.

Read more about key developments in Infrastructure and PPPs in Q22021 in Bangladesh in our latest insight.

June 2021

BANGLADESH SCRAPS 10 COAL POWER PROJECTS

Bangladesh has scrapped 10 of its coal-based power projects with an estimated generation capacity of 8.5 GW. Previous approvals given to the projects were cancelled because the projects were facing technological and environmental concerns.

The 10 projects are:

1. Patuakhali (120 MW)

2. North Bengal (1.2 GW)

3. Mawa (522 MW)

4. Dhaka (262 MW)

5. Chittagong (262 MW)

6. Khulna (575 MW)

7. Maheshkhali project - 1 (1.32 GW)

8. Maheshkhali project – 2 (1.32 GW)

9. Ultrasuper critical coal-fired power plant, Bangladesh-Singapore 600MW

10. Ultrasuper critical coal-fired power plant, CPGCBL-Sumitomo 1200MW

All the projects have been awarded to private sector in 2009. They were set to sell power to the government for a period of 20 years from the start of commercial operations. Bangladesh plans to generate about 40% of its electricity from renewable energy by 2041 from only 3% at the end of 2020 and also increase the use of liquefied natural gas (LNG) in the power generation mix. The country will also import hydropower from Nepal and Bhutan.


BANGLADESH AUTHORITY SEEKS CONSULTANT TO ASSESS WIND POWER POTENTIAL

Bangladesh’s Sustainable & Renewable Energy Development Authority (SREDA) called for expressions of interest (EOI) from consultants to assess the potential for wind power generation. SREDA has identified two locations in coastal areas where road infrastructure is good, wind speeds are enough for power generation and where a grid line is available.

The state-run agency intends to appoint a consulting firm to establish meteorological masts at both locations to collect wind data. The duration of the assignment is 28 months and will start from October 2021. The study will be financed by the World Bank as part of a larger programme aimed at developing renewable energy in Bangladesh. The country’s installed renewable energy generation capacity is 461 MW and its share in grid supply 1.5%.


May 2021

MARUBENI TO DEVELOP 100 MW SOLAR FARM IN BANGLADESH

Japanese trading house Marubeni has agreed to a memorandum of understanding to co-develop a 100 MW solar farm in Bangladesh together with a local utility. The partner, the Electricity Generation Company of Bangladesh (EGCB), is a unit of the Bangladesh Power Development Board (BPDB).

The project will be one of the biggest solar power plants in Bangladesh and the first independent power producer project for Marubeni in the country. The MoU has been approved by the Bangladesh Ministry of Power, Energy and Mineral Resources, which is keen to boost the ratio of renewables in the country's energy mix. Both the EGCB and the BPDB operate under the ministry.

Marubeni, which has 12 GW of electric power generation capacity around the world, has already installed 1.3 GW of gas-fired power facilities in Bangladesh.


BANGLADESH USD 558Mn COAL PROJECT REACHES FINANCIAL CLOSE

Transport-to-renewables company PowerChina has reached financial close for a USD 558Mn coal power plant in Bangladesh. Bank of China and the Export-Import Bank of China have provided the first batch of US dollar-denominated loans for the 350 MW Barisal coal-fired power project.

The transaction marks the first financial close that PowerChina has reached for its Bangladeshi projects. The power plant is 70%-financed through bank loans and the remaining through equity.

The project financing process involves more than 29 sponsors, lenders, advisors as well as government authorities across six jurisdictions including Bangladesh, mainland China, Hong Kong, and Singapore.

The Barisal plant in March signed a power purchase agreement (PPA) with Bangladesh’s Ministry of Power, Energy and Mineral Resources and other government agencies to sell electricity to the country's state-owned utility at a base tariff of BDT 6.77 (USD 0.08)/kwh under the 25-year PPA. The target commercial commissioning deadline of the build-own-operate project is January 2022, with a total construction period of 45 months.


April 2021

BANGLADESH COAL PROJECT TARGETS FINANCIAL CLOSE BY END-2021

Chinese engineering company Norinco International aims to reach financial close for its USD 2.5Bn coal-fired power plant in Bangladesh by the end of 2021. The 1.32 GW Patuakhali plant signed a USD 1.78Bn syndicated loan with a China Eximbank-led consortium in February 2021, but the dispersal is dependent on certain procedural requirements being fulfilled and financial close is expected in 2021.

The plant, which is 210km from the capital city of Dhaka, is 30%-backed by equity and 70% by debt. For future investments, the overseas unit of state-owned China North Industries Corporation will look at both developing and developed Belt and Road countries and evaluate risks on a project and country basis.

The company currently operates the 84 MW Nam Phay Hydropower Station in the central Xaysomboun province in Laos. The USD 210Mn project commenced operations in 2017.The company plans to expand the Laotian plant in the next five years with a total investment target of USD 300Mn. Norinco is also looking to commission its 156 MW Croatian wind power plant - which is backed by both bank loans and convertible bonds issued in China - and start collecting revenue from electricity sales.


BANGLADESH AUTHORITY REWORKING FEASIBILITY STUDY FOR 10KM BRIDGE

Authorities in Bangladesh are redoing a feasibility study for a 10km bridge project. The Bangladesh Bridge Authority (BBA) expects the report to be ready in about six to eight months. The need for a new study arose because the government has not yet decided the procurement model and has not begun the bidding process.

The 10km bridge, running over the Tentulia and Kalabadar rivers, will link the Bhola and Barishal districts that currently do not have any direct road connectivity. A Japanese company had earlier submitted a proposal to build the project, which the BBA will send to the cabinet committee for approval under a government-to-government framework for public-private partnerships.

The country’s PPP Authority is also keen on considering proposals from more firms for the project. The policy for implementing PPPs in Bangladesh through government-to-government agreements provides the framework for engagement for implementing projects with the support of other governments, to be executed through their state-owned or private sector entities.


DHAKA TRANSPORT AUTHORITY PLANS BUS DEPOT PPPS

The Dhaka Transport Coordination Authority (DTCA) plans to construct four new bus depots in a public-private partnership (PPP). The project will cost an estimated BDT 50Bn (USD 590Mn), deputy transport planner at the DTCA. The authority aims also to procure 4,000-5,000 new buses, which will cost approximately another BDT 50Bn (USD 590Mn).

The DTCA is currently preparing the design document for the project which will be completed in year 2021. It aims to call for bids to develop the depots sometime in the first half of 2022.

The authority has called for expressions of interest from international consultants to plan, design and map a bus route network. The work includes rationalizing and restructuring the current bus routes based on traffic demand, as well as developing a plan to scrap old buses. Buses cater to about 57% of the total trip demand within Dhaka city.


List of Key Transactions - Bangladesh Q2-2021


Source: Inframation, YOG INFRA analysis

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