Construction of Orion’s coal power plant stalled for 8 years

Orion Group, one of the leading conglomerates in Bangladesh, took the initiative to build a 635 MW coal-based power plant at Gazaria in Munshiganj a decade ago but failed to meet the goal.

The Power Development Board (PDB) signed an agreement with Orion on April 21 2016 to purchase power from the plant.

The power plant was initially slated for construction within 45 months. However, eight years have elapsed, and the company has yet to commence construction on the project.

Even the location of the power plant has not been finalised, adding to the uncertainty surrounding the project. Additionally, there are lingering questions regarding the financing of the project.

According to sources, a 25-year power purchase agreement was signed with the Orion Power Unit-II (Dhaka-II) power plant located in Gazaria.

The electricity price or liberalised tariff was fixed at $ 0.0837 or Tk 6.69 paisa. However, it was mentioned that if the price of coal decreases, the price of electricity per unit will come down to Tk 5.86 paisa from Tk 6.69.

Separate agreements have been inked with General Electric company of the United States for the acquisition of boilers, turbines, and generators, and with China's Guangdong Electric Power Design Institute for construction purposes.

The Environmental Assessment of the project was carried out in 2018. However, its construction never started due to unknown reasons.

Meanwhile, a PDB report in February 2022 said that the power plant will be shifted to Matarbari from Gazaria.

According to another report of the PDB, an alternative place has been fixed for the construction of the power plant in Matarbari.

At least 30 acres of land will be required for setting up the power plant and in this case, the Orion Group intends to secure a long-term lease from the PDB for the land in Matarbari.

According to the source, originally the plant was supposed to shift to Matarbari to facilitate the transportation of coal.

Because the coal brought by sea is very complicated and expensive to transport by road to Gazaria in Munshiganj.

However, although the land has been fixed in Matarbari, it is not certain when the construction of the power plant will start.

On the other hand, The Orion Group had proposed to build the coal-fired power plant on a Public-Private Partnership (PPP) basis with the PDB.

The proposal was made because Orion Group wants to build the power plant on the PDB's land. However, the PDB did not agree to construct the power plant in PPP.

In this case, the PDB recommends building the power plant by Build Own Operate (BOO) method.

The source said that an agreement was indeed signed to operate the power plant using imported coal. However, the group has not yet determined the source for importing the coal.

Additionally, plans were initially made to secure foreign loans for the construction of the power plant.

However, due to the global efforts to discourage coal-powered projects, many institutions ceased lending to the sector. Consequently, an alternative approach was adopted, leading to the initiation of a syndicated loan amounting to Tk 7,500 crore from the state-owned Rupali and Agrani Banks, bypassing the need for foreign financing.

According to the recently published report by the Global Energy Monitor titled 'Boom and Bust Coal 2024', Orion Group’s proposed power plant still lacks concrete financing.

Despite the 45-month construction contract stipulating an initial production start in early 2020, subsequent delays have occurred.

Originally it was rescheduled for 2023, but the projected date was further postponed to 2026 last year.

Most recently, it has been pushed back another step to December 2027 as the probable date for the commencement of production of the power plant.

The reporter attempted to contact Salman Obaidul Karim, the managing director of the Orion Group but was unable to reach him. Additionally, Karim did not respond to some questions after sending to him through WhatsApp.

Despite visiting Orion's head office in Tejgaon area of the capital Dhaka, for several days in pursuit of comments, the reporter was unable to meet any senior officials, including the managing director.

Earlier, the Orion Group initiated plans to construct another 565 MW coal-based power plant near the Sundarbans. However, due to difficulties in securing finance, the project remained dormant for several years.

Subsequently, in June 2021, the government revoked approvals for a total of 10 proposed coal power plants, including the Khulna Power plant owned by the Orion Group.

Courtesy Share Biz