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Coal power plants’ operation under threat over dollar crisis

Originally posted in The Business Standard on 18 January 2023

  • Rampal power plant has already halted operation, Payra power plant is facing closure over coal shortage
  • Owners of the country’s two biggest coal-fired power plants cannot import coal without clearing $168 million outstanding bills

After the Rampal power plant halted its operations for coal shortage on 14 January, the Payra power plant is also facing closure owing to the same problem stemming from the crisis of dollars needed to pay coal import bills.

Payra power plant’s current stock of coal will be exhausted within 10-12 days, said AM Khurshedul Alam, managing director of Bangladesh-China Power Company Limited (BCPCL) which owns the plant, on Monday.

“We are trying to resume coal imports soon by clearing the dues,” AM Khurshedul Alam told The Business Standard.

The BCPCL needs to open 12-13 letters of credit (LCs) involving around $70-80 million each month to import coal for the Payra plant, according to sources with knowledge of the matter.

Bangladesh Power Development Board (BPDB) officials said the BCPCL owes $151 million to the suppliers for the coal they received last year.

The Payra power plant authorities cannot open new LCs to import more coal from suppliers as they already have a large amount of unpaid coal import bills, said sources.

Payra 1,320 MW Thermal Power Plant and Maitree Super Thermal Power Project – known as the Rampal power plant – are the country’s two biggest coal-fired power plants which run on coal imported from Indonesia.

BPDB officials fear the closure of the two large coal plants could lead to a severe load-shedding in the south-western part of the country and in the capital as well.

The plants will need around four million tonnes of coal each annually to run on full capacity, but due to the dollar crisis, banks have been refusing to generate the bills despite repeated requests.

Because of the outstanding bills, the Payra power plant could not import a single shipment of the coal since the beginning of this month.

Meanwhile, Rampal power plant has been importing coal from Indonesia under a short-term contract for the pre-commission operation of the plant.

The Bangladesh-India Friendship Power Company (Pvt) Ltd (BIFPCL), owner of Rampal plant, yet to have a long-term coal supply contract for running operation commercially.

Under the short-term contract, BIFPCL has imported around 1.5 lakh tonnes of coal and is supposed to import additional 1.5 lakh tonnes

Rampal power plant began electricity generation on an experimental basis on 15 August last year and owes around $17 million to the suppliers for the coal they have already imported.

Anwarul Azim, deputy general manager of Maitree Super Thermal Power Project, told The Business Standard that the plant has shut down as we could not import coal due to the dollar crisis.