Unique Meghnaghat LNG Power Plant: Building on Fabricated Causes and Draining Bangladesh's Economy

14 December 2022
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Published by

Bangladesh Working Group on External Debt (BWGED), CLEAN (Coastal Livelihood and Environmental Action Network), NGO Forum on ADB and Recourse

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Summary

The Unique Meghnaghat 584 Megawatt (MW) liquefied natural gas (LNG)-based power plant is being developed by Unique Meghnaghat Power Limited (UMPL), a Special Purpose Vehicle (SPV) of Unique Hotel and Resorts Limited (UHRL), GE Capital Global Energy Investments, Nebras Power Investment Management, and Strategic Finance Limited (SFL). The power plant is situated in Dudhghata, Korbanpur, and Chanderchak villages on the right bank of the Meghna River in Pirojpur Union under Sonargaon Upazila in Narayanganj District of Bangladesh.

After obtaining approval from the Cabinet Committee on 30 May 2018, UMPL signed a Power Purchase Agreement (PPA) with Bangladesh Power Development Board (BPDB) on 24 July 2019 for 22 years of operation from the Commercial Operation Date (COD). Titas Gas Transmission and Distribution Company Limited (TGTDCL) signed another agreement on the same date to supply 96.192 million cubic feet (mmscf) of Domestic Fossil Gas (DFG) or LNG per day.

The initial budget of the project was BDT 4,368 crore (USD 515.7 million), of which BDT 3,276 crore (USD 386.8 million) loan was provided by four state-owned banks led by Agrani Bank Limited. The budget was recalculated as USD 503 million (BDT 4,225.2 crore) in March 2022. The budget was again recalculated as USD 613 million (BDT 6,320 crore) in November 2022. UMPL has not given any explanation for additional expenditure. Standard Chartered Bank (SCB) has been appointed as the Financial Advisor for the project.

In March 2022, UMPL applied for an additional loan of USD 30 million (BDT 285.33 crore) from the Infrastructure Development Company Limited (IDCOL), which is financed by the Asian Infrastructure Investment Bank (AIIB). AIIB included the project in its pipeline in February 2022 for another loan of USD 75 million (BDT 773.25 crore). The amount increased to USD 110 million on 30 November 2022. The project is scheduled to be approved in December 2022 with financing expected to start in the first quarter of 2023.

Key Findings

• The current capacity of the power sector of Bangladesh is 22,512 MW. On the day so far this year with the highest demand for electricity was 14,782 MW (16 April 2022), which means 7,730 MW, or 34.3% of the capacity was kept idle in 2022. This power plant will thus contribute to increasing the existing massive margin of overcapacity;
• The current demand for fossil gas in the power sector is 2,197 million cubic feet per day (mmscfd) while Petrobangla is capable of supplying 964.9 mmscfd on average, which is 44% of the demand. Petrobangla is not in a position to supply the additional demand of 96.192 mmscfd of fossil gas for the project. o, the power plant can only be expected to end up as another stranded asset, and the Bangladesh Government will have to pay an additional capacity charge for the project;
• The current price of DFG for the power sector is BDT 4.45 per cubic meter, while the price of LNG is BDT 27.08 per cubic meter. Meanwhile, the generation cost of electricity from the Unique Meghnaghat Power Plant will be at least BDT 19.10 (USD 0.21) per unit while the latest agreement for solar power was signed at a rate of BDT 6.37 (USD 0.07). In addition, the lack of fuel and the exorbitant fuel rates will create uncertainty about the cost and power supply of this power plant;
• The power plant could take BDT 905.64 crore (USD 87.84 million) as capacity charge annually and BDT 43,024.92 crore (USD 1.93 billion in the variable exchange rate) in its lifetime. To compare, the Government could build one more Bangabandhu Karnaphuli River Tunnel or another Dhaka Metro Rail with this amount of money;
• The power plant will consume 6.875 cubic feet (cft) of gas to generate each unit (kWh) of electricity, which is the highest among the largest gas power plants and 61% higher than the Bibiyana-III combined cycle power plant. As a result, the power plant will emit 2-3 million tonnes of CO2e annually and 47-66 million tonnes in its lifetime which will put Bangladesh in serious carbon lock against the Paris Agreement goals;
• According to the UMPL, the power plant is built on 21.07 acres of land taken from 343 landowners and 7 residents. But the total land taken by the power plant is at least 27.95 acres. It means at least 6.88 acres (32.7%) of land is taken illegally. Out of the land area, at least 3.41 acres are taken from the Meghna river;
• The local landowners were cheated by the sponsors and lost at least BDT 96.22 crore (USD 11.24 million). They were compelled to leave their land by taking an average rate of BDT 4.58 lakh (USD 5,354.11) per decimal while the power plant bought the land from sponsors at a rate of BDT 9.15 lakh (USD 10,686.76) per decimal;
• The project would undermine Bangladesh’s national agenda to shift towards 100% renewable energy (RE) by 2050 under the Mujib Climate Prosperity Plan (MCPP), acting as a clear barrier to this achievement given its technical lifespan will overshoot this timeline.

Key Demands

1. Considering the environmental, social, and economic impact of the project, the AIIB must withdraw Unique Meghnaghat Independent Power Plant (Meghnaghat IPP) urgently from the proposed list of AIIB projects and decline on-lending to IDCOL for this project as part of its already approved loan to the IDCOL Multi-Sector On-Lending Facility;
2. Focus further energy sector financing for Bangladesh on developing decentralized RE so that the country can achieve 100% RE by 2050, as per its own Mujib Climate Prosperity Plan (MCPP);
3. Exclude funding for all fossil fuel projects, including gas projects, from AIIB’s Paris alignment methodology;
4. Reevaluate the actual scenario of overcapacity, availability of fuels, the burden of the capacity charge, emission, and potential of RE in Bangladesh; and
5. Publicly clarify whether the project is being considered for fast-tracking via provisions of the Accountability Framework of the Bank.

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Energy Data Management: Challenges in Bangladesh

12 December 2022

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Find the Press Release here

Accurate data is critically important for instant decision-making, trend projections, and future planning in the energy sector. It is a key element that forecasts capital expenditures, balances demand and supply management, and assesses generation capacity. It also assists with the analysis of transmission & distribution, and pollution control measures and provides the factual basis for effective communication. Historical data on solar irradiation, wind speed, and velocity of water flow is obligatory to assess and predict the potential of renewable energy also. This baseline data is also the key prerequisite for designing upstream, midstream, and downstream services to meet current demands and project future requirements.

Several agencies under the Bangladesh Ministry of Energy, Power and Mineral Resources (MOPEMR) are responsible for accumulating, analyzing, and disseminating energy data. An assessment of available data from these agencies found missing data, errors, and conflicting information. MOPEMR is the key governing agency of the energy sector in Bangladesh. The Energy and Mineral Resource Division (EMRD) is responsible for supplying primary energy data such as coal, fossil gas, and petroleum while the Power Division is responsible for secondary energy such as electricity. Petrobangla deals with the production, transmission, and distribution of domestic energy resources, particularly coal and gas through its subsidiary companies.

There are 1,013 cases found where more electricity is being generated than the capacity to generate the power. In the most extreme cases, the power generation to power capacity mismatch was more than 200%. BPDB (2020-21) stated that 80,423 gWh (million units) of electricity was generated, while grid-connected power plants generated 80,294.75 million units. However, BPDB never mentioned the source of the additional 128.25 million units of electricity.

BPDB Monthly Progress Report of July 2022 showed the total generation capacity of grid-connected power plants was 22,482 MW, while the Daily Generation Report on 30 June 2022 shows the total capacity was 21,396 MW. This is 1,086 MW less than the amount mentioned in the Progress Report. Meanwhile, the Power Division reports that the total installed capacity of the country is 25,700 MW including off-grid and captive power plants. Meaning there are major inconsistencies in data within the entities.

The published renewable energy data highlights several inconsistencies in the amount of actual installed power production capacity. If the installed capacity of off-grid renewable energy is 359.24 MW as the Sustainable and Renewable Energy Development Authority (SREDA) reported, plus another 3,184 MW from captive power plants as reported by ADB Institute and 249.15 MW (BPDB reported as 253 MW) according to BREB Annual Report, the total installed capacity could be 25,188.39 MW to 26,278.24 MW respectively. The inconsistencies in the amount of actual installed power production capacity reported by these agencies indicate that there is no reliable, verified capacity baseline.

Fossil gas contributes to 61% of the primary energy mix in Bangladesh. Hence, the accuracy of data on fossil gas is much more important than any other sub-sectors of energy. Petrobangla is mandated to collect, compile, analyze and publish respective information on the production, import, and distribution of petroleum and mineral resources including Domestic Fossil Gas (DFG) and Liquefied Natural Gas (LNG). However, no data on petroleum is available on the website of Petrobangla. In reality, none of the agencies provide real-time data on coal, Heavy Fuel Oil (HFO), and High-Speed Diesel (HSD).

Petrobangla listed 71 DFG-based power plants with an installed capacity of 12,734 MW. However, this list excludes power plants such as Ashulia 11 MW Power Plant, Chandina 11 MW DFG Power Plant, etc. although, according to the Daily Generation Report of BPDB and PGCB, these power plants are generating electricity regularly.

Ensuring transparency, and integrity in energy sector data collection, compilation, and dissemination, investing in financial implications of erroneous or manipulated data, including the private sector in updating reports is critically important. We further recommend establishing automated software-based data management systems, delaying the formulation of the Integrated Energy and Power Master Plan to ensure effectiveness based on updated energy and economics data.

Download the full report here
Find the Press Release here

Challenges in Energy Data Management in Bangladesh: Media Release

12 December 2022

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Energy Data Mismanagement may increase the Current Electricity Crisis in Bangladesh: Unreliable and inconsistent data signals disaster for the long-term energy plans
Challenges in Energy Data Management in Bangladesh: Unreliable and inconsistent data signals disaster for the long-term energy plans

[12 December 2022, Dhaka] The recently published report on “Energy Data Management Challenges in Bangladesh'' by the Bangladesh Working Group on External Debt (BWGED) highlights the several agencies under the Ministry of Energy, Power and Mineral Resources (MOPEMR) responsible for disseminating misleading energy data. The report assesses available energy data from these agencies to find missing, erroneous, and inconsistent datasets. This conflicting data from different agencies under the same Ministry is misleading information for planners to use reliably to make future energy plans.

MOPEMR is the key governing agency of the energy sector in Bangladesh. The Energy and Mineral Resource Division (EMRD) is responsible for supplying primary energy data such as coal, fossil gas, and petroleum while the Power Division is responsible for secondary energy such as electricity. Petrobangla deals with the production, transmission, and distribution of domestic energy resources, particularly coal and gas through its subsidiary companies.

The report also emphasized that the recent electricity blackouts and grid failures are one of the signs that the foundation of accurate baseline energy information has been off for a long time in Bangladesh. Moreover, there are also severe concerns about credible governments or other entities reviewing and auditing the data for accuracy, transparency, and integrity along with erroneous data management.

The report found 1,013 cases of more electricity being generated than the capacity to generate the power. In the most extreme cases, the power generation to power capacity mismatch was more than 200%. BPDB (2020-21) stated that 80,423 gWh (million units) of electricity was generated, while grid-connected power plants generated 80,294.75 million units. However, BPDB never mentioned the source of the additional 128.25 million units of electricity.

The report shows, government entities often underreport the generation capacity of power plants compared to their actual capacities. The report highlights that the BPDB Monthly Progress Report of July 2022 showed the total generation capacity of grid-connected power plants was 22,482 MW, while the Daily Generation Report on 30 June 2022 shows the total capacity was 21,396 MW. This is 1,086 MW less than the amount mentioned in the Progress Report. Meanwhile, the Power Division reports that the total installed capacity of the country is 25,700 MW including off-grid and captive power plants. Meaning there are major inconsistencies in data within the entities.

The report further analyzes the published renewable energy data to highlight several inconsistencies in the amount of actual installed power production capacity. If the installed capacity of off-grid renewable energy is 359.24 MW as the Sustainable and Renewable Energy Development Authority (SREDA) reported, plus another 3,184 MW from captive power plants as reported by ADB Institute and 249.15 MW (BPDB reported as 253 MW) according to BREB Annual Report, the total installed capacity could be 25,188.39 MW to 26,278.24 MW respectively. The inconsistencies in the amount of actual installed power production capacity reported by these agencies indicate that there is no reliable, verified capacity baseline.

Moreover, the data management system has no mechanisms to calculate the generation from captive, commercial, and off-grid solar and hydroelectric power plants and hence is excluded from the national power generation records. This means that the power system utilization could be much lower than 40%, causing economic harm.

The report highlights that fossil gas contributes to 61% in the primary energy mix in Bangladesh. Hence, the accuracy of data on fossil gas is much more important than any other sub-sectors of energy. Petrobangla is mandated to collect, compile, analyze and publish respective information on the production, import, and distribution of petroleum and mineral resources including Domestic Fossil Gas (DFG) and Liquefied Natural Gas (LNG). However, no data on petroleum is available on the website of Petrobangla. In reality, none of the agencies provide real-time data on coal, Heavy Fuel Oil (HFO), and High-Speed Diesel (HSD).

Moreover, the report notes that Petrobangla listed 71 DFG-based power plants with an installed capacity of 12,734 MW. However, this list excludes power plants such as Ashulia 11 MW Power Plant, Chandina 11 MW DFG Power Plant, etc. although, according to the Daily Generation Report of BPDB and PGCB, these power plants are generating electricity regularly. Moreover, the list is not updated as retired power plants are not deleted from the database which makes it an even more unreliable source for future forecasting, preventing planners from making effective energy plans based on credible data.

The report recommends ensuring transparency, and integrity in energy sector data collection, compilation, and dissemination, investing in financial implications of erroneous or manipulated data, including the private sector in updating reports. The report further recommends establishing automated software-based data management systems, delaying the formulation of the Integrated Energy and Power Master Plan to ensure effectiveness based on updated energy and economics data.

The report is available in the link.