Equity funding of the Bangladesh-India joint venture coal-fired power plant in Rampal has run into complexities as the existing policy does not support such a venture.
According to an official document obtained by the news agency, an inter-ministerial meeting convened by the Power Division on December 28 witnessed a heated debate between its officials and officials of the Finance Division and the Planning Commission, but failed to resolve the “equity-funding related problem”.
Official sources said the proposed 1,320 MW power plant will approximately cost a total of US$1.68 billion based on a primary feasibility study.
However, following completion of the environment impact assessment (EIA), officials fear the cost will exceed US$1.82 billion (equivalent to Tk 145.84 billion), as the EIA report suggests that the project would incur a huge additional cost for adequate environment protection.
Of the total cost, 70 percent will come from multilateral lending agencies and the remaining 30 percent is to be arranged by Dhaka and New Delhi equally.
A top official at the Power Division said in order to meet their end of the equity funding bargain, Bangladesh needs to cough up Tk 1,600-2,000 crore in total.
To arrange the funding, Power Division sought a special allocation from the finance ministry only to learn that the money would be provided in phases on the basis of an approved DPP (development project proposal).
This is where the problem arises. When the Power Division submitted a DPP to the Planning Commission, the commission found the proposal 'unusual' and non-compliant with existing policy.
The inter-ministerial meeting was held to resolve the issue.
The planning commission's division chief told the meeting that the existing policy only supports projects of different government departments and agencies. But the Rampal project sought to establish a joint venture company, which isn't covered by the existing policy.
The power secretary advised the commission's divisional chief to forward the DPP to the Executive Committee of the National Economic Council.
Nearly a month has now passed since that meeting, but there has been no progress regarding the DPP, according to official sources.