Iconic Power Project Sets New Benchmark

Bangladesh has set a new benchmark in implementation of a mega project ahead of schedule. It successfully implemented the 1,320 MW coal-fired power plant at Payra, Patukhali in a record time. Bangladesh China Power Company Ltd (BCPCL), a joint venture of NWPGCL, Bangladesh and CMC China, constructed the ultra supercritical (USC) technology using High Efficiency Low Emission (HELE) plant, demonstrating exemplary leadership and great innovative team works. The imported coal-based state-of-the-art project was set up within four years of signing the EPC contract (March 2016 – November 2020). The success is a unique example of the endeavor by a committed group of patriotic Bangladeshis. It deserves special accolades for boosting confidence of Bangladeshis for successful implementation of the other mega projects.

The US$ 2.0 billion project is implemented with foreign direct investment in terms of loans and equity, and its implementation strategy would act as the guiding principles for any similar projects in the developing country across the world. If the Bangladesh Power Development Board (BPDB) and Power Division could timely implement the PGCB-managed 400 KVA power transmission line from Payra to Aminbazar via Gopalganj and the Payra Port Authority could at least implement timely the capital dredging of 90 KM channel connecting the plant site, the power could be evacuated to the power grid now. The full benefit of the successful mega project could not be derived without timely implementation of the associated projects. The BPDB and Power Division should closely monitor implementation of the power transmission projects to avert such situations. They will also have to cautious about making ready the transmission system to evacuate power to be generated from the other under construction mega power projects like Rampal, Matabari and Rooppur. Options for coal imports and transportation must also be carefully assessed for adopting the economically sustainable option. The technology transfer and capacity development initiatives of Bangladeshi technical and managerial groups must also be carefully monitored.

Success Factors

Strategic Partnership 

·       Ownership model: Instead of traditional contractor supplier;

·       Equity Investment: (NWPGCL 50% and CMC 50%), risk and profit sharing;

·       Synergy Partnership: Technology transfer and experience sharing, collaborative approach;

·       Financing of the Project: ECA financing of the coal plant where successful loan was not available. Securing FDI.

Support from Government / Stakeholders

·       Supportive and leading stakeholders. Full support of government, Prime Minister’s Office, Power Division and BPDB.

·        Securing Trust of Civil Society / Media: Regular consulting and knowledge sharing;

·       Community Support: Extended Corporate Social Responsibility (CSR) activities, employment opportunities, local and regional development;

·       Effective Management of Resources and Schedule: Planning and managing implementation of several works in parallel, dedicating and managing resources effectively facilitated achieving milestones on time;

·       Optimum Management of Time: Efficient planning, schedule compression and parallel activities as much as practicable, schedule control by Critical Part Method (CPM); and

·       Significant Saving of Time and Money: Saving of IDC, savings from price escalations of materials and savings from inflation.

Thinking Outside the Box and Creating Difference 

Financial closure is usually a major challenge in any ECA project. It often takes one year or more. The effectiveness of a contract gets delayed.

·       Appreciating this challenge, the Payra project introduced 15% work done under contractor financing without any advance payment in the interim period of contract signing to financial closure. This worked as the game changer.

·       Payra project introduced milestone payments unlike most of other mega projects. The milestones were very carefully developed. Management had greater control over the progress of the EPC works.

·        Perhaps this is the most important lesson that other mega projects in typical developing countries should take.

Advanced Technology (Ultrasuper Critical) and Additional Safeguards for Restricting Emissions.

As a trendsetter, the first USC coal power plant of Bangladesh incorporated additional features in the design to restrict emissions well below permissible level.

Payra Power Plant is High Efficiency Low Emission (HELE) Type Coal Power Plant. Higher thermal efficiency significantly reduces emissions.

·       Advanced Fuel Gas Desulfurization (FGD) operating at 93% reduced SO2 (SOx) emissions.

·       Low NOx burner reduces NOx emissions.

·       High Efficiency (99.6%) dust collector (ESP) almost eliminates dust emission.

·       The part of civil society, which engages in uninformed debate, must visit Payra power plant under operation to see for themselves their unrealistic concerns. Technologies are there for addressing challenges.

Eco Friendly Ash/Gypsum Disposal

The power plant signed contracts before the completion of the project with PVL-ICM JV and RNPG Alliance for Ash disposal. That contract is in operation since September 2020.  The power plant is also selling Gypsum collected as by product from FGD to Medina group.

As a contingency measure, the power plant has ash pond of over 56 acres for temporary storage of ash.

Payra Plant Unit 1 has already achieved SOx emissions 92.04 microns / cubic meter, well below the threshold limit 200 microns/ cubic meter set by IFC. NOx emission is 189mg/cubic meter against the IFC standard of 500-mg/cubic meter set by IFC. Particulate meter emission is only 50 mg/ cubic meter against set standard of 150 mg / cubic meter of Bangladesh. These eliminate all unrealistic concerns of uninformed anti-coal activists.

New Benchmark in Resettlement of Affected Community

The project created a new benchmark in resettling the directly-affected community.

Resettlement at a Glance

The resettlement area is also provided with school with large playground, mosque, cemetery, 48 nos of tube wells, community center and health clinic.

As part of Corporate Social Responsibility (CSR), Bangladesh China Technical Institute has also been set up for vocational training of the people of the region on various skills and different language proficiency. The institute has started providing SSC level vocational education including 3 trade courses.

Operational Challenges of Payra Power Project

The smart implementation of the project has outpaced the execution of linked projects. The delays in Payra port development and delays in commencing capital dredging of 90km long port channel restricts all season draft to 6 meters. The transportation of important coal would be smoother and cheaper when these are done.

The delay in implementation of power substation at Gopalganj and construction of Gopalganj to Aminbazar section of 400 KV power transmission line also restricts power evacuation from the plant.

Coal Requirement and Supplier

Each of the 660 MW units of USC plant requires 195,000 million tonnes superior quality low ash, low sulfur coal per month. For the 1,320 MW power plant the annual coal requirement is 3.98 million tonnes per annum. The contract for coal supply and coal transportation was signed with PT Bayan, Tbk resources, Indonesia and Olendorff GMBH, Germany respectively. Later the revised coal supply contract has been signed with CMC. For restricted draft coal is transported from Indonesia now through half full Supramax type coal transporters. This adds to the cost of transportation, which in turn increases the cost of generation.

Challenges of Coal Transportation

The Payra project management identified the challenging scenario of coal transportation and the consequential impacts.

Monsoon Scenario: During high monsoon from May to September, the draft is generally higher due incessant rainfall, high sea swell, cyclone, storm etc. Vessel berthing at jetty, discharging of coal, un-berthing/sailing are hampered and delayed on several occasions causing severe disruptions in normal schedule.

Impacts: Due to the above reasons, there may be frequent vessel congestion at port causing financial implications. The plant may not have adequate supply of coal for uninterrupted operation.

Dry Season Scenario: During December to February, the workable permissible draft in the channel drops to 6.0 meters.

Impacts: At this draft level, the maximum shipment size will be 18,000 MT approx. The plant may not have adequate supply of coal for uninterrupted operation.

Options for Coal Transportation: Payra project management conceived the following four options as possible redress to coal transportation challenges.

Option A

Fully Developed Payra Port with minimum all season draft of 10.5 meters. Mother vessels can enter and berth at plant jetty. It will require regular maintenance dredging of the channel. The coal transportation cost will be greatly reduced.

Option B

Bringing fully loaded Supramax vessel to Deep Sea and doing lightering. Supramax can bring up to 50,000-60,000 MT, discharge 50% in lighterage vessels. Mother vessel and lighterage vessels can enter channel and unload at plant jetty. Possible except high monsoon time during May to September when due to turbulent sea lightering would not be possible.

Option C

Bringing partially loaded Supramax vessels directly to the plant jetty. Partially loaded Supramax can transport up to 20,000 MT directly to plant jetty excepting during force majeure conditions like Tidal surge, tornadoes. Good for transporting coal as interim measure from nearer sources like Indonesia.

Option D

Developing Floating Transhipment Facility in a Sheltered Place. Project management envisions this option for transporting coal by large carriers like Capesize or Panamax from distant sources like Australia, South Africa and Mozambique. The nearbly sheltered places in their vision are Matarbari, Andaman, Dhamara and Singapore.

Our Observation

Option C as an interim measure may serve the purpose. But over long term, it may not be sustainable. Option A will be the right choice. But given the present state of Payra port development, it may take 3-5 years for a fully developed Payra port with dedicated coal terminal. Even then regular dredging of 90 KM link canal would be cumbersome. The other feasible option appears Option C with fully developed Matabari Coal port.  A study may be conducted on local coal extraction and transporting coal to Payra and Rampal.

Challenges of Power Evacuation

Power evacuation from Payra power plant is handicapped for delays in construction of 400 kv (double Ckt) power transmission line. Till now only first part from Payra to Gopalganj is ready. Till the completion of substation at Gopalganj and power transmission line from Gopalganj to Aminbazar (a section along Padma Multipurpose Bridge), Payra power plant may now even evacuate more than 600 MW power.

Observation and Recommendations

Implementation of the project within 3 years is a demonstration of excellent leadership, well coordinated visionary leadership, exceptional innovative managerial flair. It has amply demonstrated how a properly conceived and ideally partnered mega project can be delivered in a remote place like Payra. The HELE coal power plant is an ideal example for negating various misconceptions of environment activists and uninformed section of the civil society. The strategy adopted for planning milestones and working parallel on different segments of work can be replicated in other projects. The 15% works done with EPC contractors’ own finance without providing any guarantee is a very exceptional innovative strategy. The unique stakeholders’ engagement, state-of-the-art resettlement process and CSR activities are also exemplary. The school and vocational institute for the rehabilitated community and local community are great works done.

The recruitment of talented technical manpower and exposing them to every aspect of project implementation is also exemplary. The Payra Project Management, MWPGCL in particular, and MWPGCL–CMC richly deserves accolades.

However, this project also underlines the absence of integrated approach of the government for developing parallel all segments of the power value chain and associated activities. Delay in Payra port development with coal terminal is a serious impediment. Delay in 400 KV power transmission line is another draw back. For all these, however, Bangladesh cannot fully benefit from such a wonderfully executed project. We will suggest for expediting Matarbari port development and expanding capacity of coal port rationally to support not only plants at Matarbari and Anowara but also Payra and Rampal.

We also suggest that the technical and managerial manpower in Payra must be given regular care and incentives. Maintenance and operation of this iconic plant will act as a game changer for the power sector and energy sector of Bangladesh and would act as eye opener. We deeply appreciate the “Can DO” project implementation attitude and required implementation aptitude of NWPGCL.

Finally, credit must also go to Bangabandhu’s daughter Prime Minister Sheikh Hasina and her steered Ministry of Power, Energy and Mineral Resources for delivering the first Mega Power Project a unique example in South Asia.