Home ›› 30 Jan 2023 ›› Front
China National Machinery Import and Export Company (CMC), having a 50 per cent stake in the Bangladesh-China Power Company Limited (BCPCL), has suspended coal import financing for Payra Thermal Power Plant due to non-payment of dues.
As a result, the country’s largest power plant is under threat of closure.
BCPCL, the owner of Payra power plant, said these in an urgent letter sent to the Ministry of Power, Energy and Mineral Resources on January 25.
BCPCL says Payra power plant will shut down in the coming summer if BCPCL does not pay the coal bill amounting to $151.53 million on an emergency basis.
However, BCPCL Managing Director AM Khorshedul Alam told The Business Post on Sunday that PDB (Bangladesh Power Development Board) does not pay electricity bill timely and CMC’s partial bills have remained unpaid for a long time. For that reason, coal supply has remained suspended since January 1. Hopefully, the bill will be settled within a week.
When asked whether Chinese Exim Bank, the lender of Payra Power Plant, have any problem paying the loan, Khorshedul Alam said the last installment was paid in December. If the power plant is closed, the government will have to repay the loan as financial loss, he said.
The Payra 1320 MW coal-fired power plant in Patuakhali, jointly owned by China’s state-run CMC and Bangladesh’s state-run company North West Power Generation Company Limited (NWPGCL), was commissioned in 2020.
Recently, Bagerhat’s Rampal coal-fired power plant has been shut down just 27 days after its commissioning due to coal shortage. This project has been constructed in equal partnership between the Bangladesh and Indian governments.
It is learnt that as this crisis is not resolved as soon as early due to the dollar shortage, Indonesia has stopped coal supply to Payra Power Plant. However, this plant is still running with the previous coal stock.
BCPCL says if the CMC bill is paid in January and a new LC is issued, it will take 40-45 days for the coal to arrive in Payra. However, Payra has coal reserves for a month.
According to the letter signed by BCPCL MD AM Khorshedul Alam and sent to Power Division, 12,000 tonnes of coal are required per day to run the Payra thermal power plant at full capacity, which are 3,60,000 tonnes per month.
The huge amount of coal is constantly imported from Indonesia. Due to the multiple limitations of Payra port, coal has to be regularly imported by lighter carrier instead of bulk carrier.
As a result, it is necessary to ensure the funds for immediate payment of coal import charges, customs duty, port charges, handling charges etc.
The project lender EXIM Bank of China (CEXIM) has imposed conditions to ensure the coal supply for the power plant during its entire operating period. Accordingly, in June 2019, Indonesia’s PT Bayan Resources Tbk. signed a 10-year contract for uninterrupted coal supply.
Initially, BCPCL imported coal at the commissioning stage with its own financing, but due to the working capital crisis and the long delay in receiving power selling money, there was uncertainty in the regular coal import. In that case, 50 per cent shareholder of BCPCL ‘CMC agreed to pay the coal import cost to PT Bayan with a delay of 180 days for the operation of the power plant.
According to the agreement, CMC has made the payment till December 2022. In this situation, in a letter sent to BCPCL on December 29, CMC said the company will not pay any coal bills from January 2023.
The CMC wanted to inform later whether the re-supply of coal would be financed subject to payment of dues. In this situation, coal import has been completely stopped since January 1, 2023.
