Banshkhali coal-fired power plant in Chattogram is facing a serious threat to its fuel supply due to delays in financial transactions by Islami Bank Bangladesh PLC.
If the issue is not resolved promptly, this vital source of affordable electricity could be compromised, raising concerns among stakeholders.
The plant, which has enough coal reserves to operate for a maximum of 12 days, could face significant challenges if it shuts down. The interim government, newly formed following recent political upheavals, may struggle to manage the resulting energy shortfall. The cost of generating electricity at the Banshkhali plant is approximately Tk7.56 per unit, while using furnace oil would escalate the cost to around Tk18 per unit.
If the plant were to switch to furnace oil, the government would incur an additional cost of Tk950 crore per month, presenting a formidable challenge both financially and technically.
Tan Zhelin, managing director of SS Power One Limited, said that operations at the plant have been running smoothly since its commissioning.
However, despite bringing in 162,200 metric tonnes of coal from Indonesia via three ships, the unloading has been stalled due to the bank's failure to release funds. This has occurred despite the opening of a fully margined Letter of Credit (LC) prior to the coal import.
Tan clarified that SS Power has no loans with Islami Bank, or any other Bangladeshi bank, in Bangladeshi taka.
All existing loans are long-term project loans from China-based international banks.
Islami Bank's Gulshan Circle-1 branch holds a current account with approximately Tk165 crore in deposits, from which the bank has not released funds.
Consequently, this has impeded the payment of foreign loan instalments, the opening of new LCs for coal import, customs duties, and salaries for Chinese engineers.
With the ships idling at the port, daily fines of nearly $20,000 are accumulating.
Despite repeated follow-ups, there has been no response from the Gulshan branch, leading to a formal written complaint to the bank's head office on 12 August.
Tan has now escalated the issue to the new governor of the Bangladesh Bank.
Located in Gundamara, Banshkhali, the power plant is a significant project with investments from Chinese companies SEPCO III and HTGC.
The financing comes from foreign banks, and Chinese firms are responsible for the project's operation and maintenance.
A milestone in the country's power sector, the plant holds records for both private investment and foreign funding, with an investment of $1.78 billion.
It marks the first large-scale privately owned coal-based power plant in Bangladesh, joining the government-owned Payra and Rampal plants.
Banshkhali power plant's ongoing operation is crucial for maintaining affordable energy costs.
With coal-based power costing less than half compared to furnace oil and around one-third of diesel-based power, its potential shutdown could exacerbate the financial strain on the Power Development Board and the government.
