Costly buyer's credit likely

The proposed 1,320MW coal-fired power plant project in Rampal of Khulna region might be implemented under costly “buyer's credit” financing.
The decision to go for this alternative financing was taken during the visit of a Bangladesh delegation to India last week, official sources said.
Rampal power plant is a joint venture project of Bangladesh's Power Development Board (PDB) and India's National Thermal Power Corporation (NTPC). They signed an agreement in this regard in January this year.
Sources said both the Bangladeshi and Indian sides had opted for buyer's credit financing after they sensed lack of interests of international donors like World Bank and Asian Development Bank to finance the project.
Under the buyer's credit financing system, the selected contractor would arrange the required finance for the project, but it is costlier than donor financing.
ASM Alamgir Kabir, chairman of state-owned PDB, led the Bangladesh delegation to India which included officials of the power ministry and Power Grid Company of Bangladesh (PGCB).
Official sources said different important issues like financing of the project, the modalities of the Implementation Agreement (IA) and the Power Purchase Agreement (PPA) for purchase of power from the proposed power plant dominated the talks with Indian side during the Bangladesh team's visit.
A top official, who was a member of the Bangladesh delegation, claimed that they made substantial progress in the way to sign the IA and PPA.
Recently, a joint venture company named Bangladesh India Friendship Power Company has been formed to implement the project, but the registration process of the company has not yet been completed.
After setting up the power plant, Bangladesh will buy entire electricity from the project.
Though Bangladesh and India signed an agreement about two years ago to build the power plant in Rampal, only 15 kilometres off the Sundarbans, the world's largest mangrove forest, its implementation has been facing serious hurdles from different sides.
Environmentalists are opposing the establishment of the power plant, claiming that it would harm the diversity of the Sundarbans and local ecology.
The environmental groups have also launched campaign against the Rampal power plant, fearing that it will be a serious blow to the ecology and environment for the world heritage site, the Sundarbans, as the plant's site is very close to the mangrove forest.
The main opposition BNP has raised its voice against the joint venture power project, terming it an anti-state deal, which would harm the country's environment and ecology.
While the Indian and Bangladesh sides signed the agreement, initially the project was planned to be implemented within 2-3 years and put in operation by 2013-14. But now both the Bangladesh and India authorities have deferred its implementation by two years and set a timetable of the project implementation by 2016.