Matarbari Hub On Course: May Turn Into White Elephant

Matarbari Energy Hub, the second largest investment project of Bangladesh after Rooppur Nuclear Power Plant, has started getting visible on the coast of the Bay of Bengal. The multipurpose project involving an estimated cost of Tk 51,855 crore, including an imported coal-based power project, is being implemented with loans from Japan International Cooperation Agency (JICA) and the country’s own investment. The entire project is scheduled to be completed by 2026. It is expected that the first 600MW unit of the 1,200MW ultra-supercritical power plant will come into commercial operation in January 2024, followed by the second 600MW unit in July of the same year. The work of another 1,200MW coal-based power plant was originally planned to start before that. The work on this plant’s infrastructure was being developed along with the first unit. But its implementation became uncertain with the Japanese government’s recent announcement not to finance coal projects anymore.

Dr. Tawfiq-E-Elahi Chowdhury BB, Energy Advisor to the Prime Minister, has criticized the decision of the Japanese government at this matured stage of the project. Bangladesh has not yet announced targets toward the net-zero global goal. Bangladesh has no obligation to limit the use of coal power. Hence there was no reason why Japan withdrew from its financing commitment. The advisor made the observation at a recent stakeholders’ consultation on a comprehensive energy and power master plan.

Matarbari island is considered the most suitable location to develop a deep seaport. The original plan was to build 10,800-12,000MW coal-based power plants and 2,500-4,000MW LNG-based power plants at the two nearby Bay of Bengal islands of Matarbari and Maheshkhali. Primarily, developing a 14.3-Km long, 250-meter wide and 18.5-meter deep canal was planned to link the islands with the deep seaport. A coal jetty and a general merchandise jetty were also planned to be developed. A land-based LNG terminal (LBT), bulk LPG terminal, coal transshipment terminal (CTT) and a few special economic zones (SEZs) were also included in the plan. The estimated cost of the Matarbari project was Tk 35,984 crore. But later in consideration of developing a deep-sea terminal, the width of the channel was increased to 350 meters. The estimated project cost increased to Tk 51,855 crore as a result. Coal Power Generation Company Bangladesh Limited (CPGCBL) has recently signed an agreement with the Chittagong Port Authority (CPA) and other stakeholders to share investment in the channel. But suddenly in mid-2021, the government decided not to develop 7 out of 9 planned coal power projects at Maheshkhali and Matarbari. Five of these were planned at Maheshkhali and 2 at Matarbari. The two in Matarbari were CPGCBL–Sembcorp JV 1,200MW plant and CPGCL-Sumitomo JV 1,200-1,320 MW plant. Changing the Sembcorp plant to LNG, the work has started progressing. A decision has been finalized for transferring the land allocated to Sumitomo to Orion Group Bangladesh on lease for setting up their contracted coal power plant that was supposed to be constructed near Dhaka.

No analysis has been carried out yet about the generation cost of the 1,200MW coal power plant, following the decision that all the stakeholders would share the cost of developing the port channel. Experts believe that the cost of generation for the 1,200MW coal plant there will be higher than the estimate. This will put stress on the single buyer BPDB. Much before dropping the 10 proposed coal power projects from the plan, the decision to set up a Coal Transfer Terminal (CTT) was taken to cater to the needs of 19 coal power plants. Japanese company Sumitomo expressed interest in jointly developing this with Bangladesh. The 28 million tonnes annual capacity CTT was planned. It was supposed to be constructed by 2030. Coal is planned to be transferred in Matarbari by conveyor belts to all plants from the coal jetty now being constructed. Only three such projects are alive there at present. The first phase of the 1,200MW power plant is nearing completion. The government has not yet started thinking about alternate sources of financing for the second 1,200MW power plant. The EP came to know that Orion Group has expressed interest in using the Matarbari jetty if they implement their contracted coal power project at Matarbari.

The arguments in favor of the CTT at Matarbari were that it could facilitate coal supply to feed the 4,000MW capacity plants at Payra, 1,320MW at Rampal and 1,248MW at Bashkhali as the locations of the plants are not suitable for setting up coal terminals. The idea was that the transportation costs could be saved by transferring coal from the planned CTT at Matarbari. But there is doubt about the future of the CTT due to the government's decision to cancel 10 planned coal power projects. Bangladesh Petroleum Corporation (BPC) is working on a bulk LPG terminal at Matarbari so that it can use the port channel. Petrobangla company RPGCL is also working on a Land-Based LNG Terminal. Companies have been short-listed for EPCM-based implementation. RPGCL is optimistic about selecting an evaluated bidder, concluding an agreement by the end of 2022 and launching the project in 2023. EMRD has a target to bring the first 1,000 MMCFD capacity units into commercial use by 2027. The CPA has finalized a plan for a deep seaport along the sides of the port-connecting channel. A feasibility study has also been completed, but some complexities have surfaced about LNG and LPG terminal construction. The CPA is interested in constructing terminals for BPC and Petrobangla. If this is not resolved urgently, the construction of the LNG terminal may be further delayed. This may delay the commissioning of LNG-based power plants at Matarbari and Maheshkhali.

Matarbari power plant and associated infrastructure are being constructed on 1,608 acres of land acquired in Matarbari and Dholaghata Union of Maheshkhali Upazila in Cox’s Bazar. The project was launched after the completion of a feasibility study in 2013. The actual construction started after the acquisition of land, rehabilitation of affected communities and land development. Sumitomo-Toshiba-IHI JV is working as an EPC contractor of CPGCL. 37 companies from Japan, Korea and China are working as subcontractors of the EPC company. A joint venture of Japan's Tokyo Electric Power Services Company Ltd (TEPSCO) and Nippon Koei Company Ltd, Germany's Fichtner GmbH & Company KG and Australia's SMEC International is working as Engineer for CPGCBL. The works of the project could continue during COVID-19 with a view to stick to the project completion target. Engr. Md. Abdul Mottalib, Managing Director, CPGCBL informed the EP that they are optimistic about completing the project on time.

Executive Engineer Rafique informed the EP during a recent visit to Matarbari that 77% of physical infrastructure construction is now complete. Work on clearance of equipment for coal jetty, diesel and other machinery has also been completed. 93 mother vessels have so far come to the jetty for disposing of equipment and machinery. Chimney construction is complete, other works are proceeding smoothly. Covered coal storage will require two months of capacity for the plant. Engr. Rafique and his colleagues with all confidence told the EP editor that by July 2023, it will be possible to make the first 600MW unit ready for testing. A contractor will supply the coal required for the test run.

It was found during the visit that the entire work of the 100-meter widening of the channel has been completed. Two jetties are also ready in all respects. The infrastructure required for coal delivery at the coal terminal and conveyor belt installation should be completed on time. Pipeline construction for water intake and discharge is also complete. Turbine and boiler house construction are also completed. Engr. Rafique mentioned that the plantation of trees for greening the area will start next year. He informed that 10,300 skilled and unskilled people are working on the project now – 8,000 of them are Bangladeshis. They are getting more experienced and more skilled. They can make greater contributions to similar projects in the future.

The entire capacity of Payra 1,320MW power plant cannot be utilized even now for delays in the construction of evacuation facilities by PGCB. There is reasonable doubt whether PGCB can complete evacuation facilities when the Rooppur Nuclear Power Plant will come into operation as well. But that facility for Matarbari power plant is now ready. Work at the substation is also advancing smoothly. Hence the power evacuation facilities will be ready when Matarbari Power plant starts generation.

Engr. Abul Kalam Azad, Project Director of Matarbari, while talking about the power plant informed that they are following strictly all international standards and norms at every stage of power plant construction. By the end of 2022, their plant will be more visible. Managing Director Engr. Md. Abdul Mottalib is also happy with the overall progress. The Project Engineer said the joint venture of Japan's Tokyo Electric Power Services Company Ltd (TEPSCO) and Nippon Koei Company Ltd, Germany's Fichtner GmbH & Company KG and Australia's SMEC International is working on coal sourcing and supply. The MD informed that by December a report may be available from them. Initiative for coal purchase will be taken on the basis of the report. He said that a decision about CTT will be taken upon receipt of the JICA-financed study report. But a definite timeline cannot be given now.

Many companies will use the channel. So, for channel operation, the formation of a separate unit under CPGCBL is being contemplated. None of the companies could give an opinion on whether the government will have to bear any financial burden if the second 1,200MW coal plant is not eventually constructed. But a responsible office of the Power Division informed the EP that many associated infrastructures for the second phase will be completed along with the works of the first plant. Hence the government can invest money from its sources. Prof Dr. M. Tamim also agreed that the government has the capacity. But to avoid the present stress on foreign currency reserves the decision must not be taken straight away now.

We can flash back to memory stating that 3 years from now the EP carried a cover story titled Dream Island Matarbari-Maheshkhali. In the context of present reality, Maheshkhali remains a dream while the dream is coming true for Matarbari. It is no longer a vision now. Matarbari is opening windows for Bangladesh to the world. With successful implementation, Matarbari will grow like the Port of Kashima, Japan as a deep seaport with an energy hub. Industrial zones will be developed in the adjoining areas. Experts strongly believe that given the present global context, the policymakers should get back to the original plan for Matarbari-Maheshkhali comprehensive development. These two islands still have all potential for developing into a major coal hub for the sustainable energy security of Bangladesh.