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May 205 min read

Fenchuganj 163 MW (Kushiara) DFG Power Plant

Current Status: Operation

Source: EQMS


Fenchuganj 163 MW Power Plant, also known as Sylhet 163 MW Power Plant or Max Kushiara Power Plant, is a Combined Cycle (CC) power plant situated on the left bank of Kushiara River under Fenchuganj Upazila in Sylhet District of Bangladesh (Location: 24.6865, 91.9185). It is operated by Kushiara Power Company Limited (KUPCL), a Special Purpose Vehicle (SPV) of Max Group, as a private Independent Power Producer (IPP) for 15 years. The first unit (109 MW) of the power plant started commercial operation on 25 July 2017 while the second unit of 54 MW on 27 April 2018. As per schedule, the units will retire on 24 July 2032 and 26 April 2033. 


Capacity

The installed (gross) and derated (net) capacity of the power plant is 163 MW. 


Context

In 2013, the Bangladesh government took a significant initiative to address the country's growing energy needs by signing an agreement with Kushiara Power Company. The aim was to establish a 163-megawatt gas-fired combined cycle power plant in Fenchuganj, Sylhet. The Bangladesh Power Development Board (BPDB) made a contract to purchase electricity from the plant for a substantial period of 22 years at BDT 2.0157 per kilowatt-hour. 


The project involved a consortium comprising Shenzhen Nanshan Power Co and Kushiara DBPL, collectively forming Kushiara Power Company. Financing for the venture was structured with 80 percent of the project cost, amounting to BDT 1,500 crore, expected to come from non-resident Bangladeshis. The remaining funding would be provided by Kushiara Power (TDS, 2013). 


Construction of the power plant was executed by MAX Group's subsidiary, MAX Infrastructure Ltd, utilizing their expertise in engineering, procurement, and construction (EPC).  The simple cycle unit became operational within 17 months. Concurrently, a more complex combined-cycle unit reached its full commercial production capacity by the end of 2017, contributing an additional 54MW to the national grid (EP, 2017). The technology of the power plant was supplied by GE Power.  (FE, 2018). 


Land Acquisition

The land acquisition for the KPCL 163 MW Project is located in Garulikona Village, Fenchuganj Upazila, Sylhet District, involved the purchase of approximately 9.22 acres from private landowners. The project site, characterized as vacant land, is located about 3.5 km west of the Sylhet-Moulvibazar Road, roughly 28 km southeast of Sylhet, and approximately 8 km from Fenchuganj upazila. Notably, the Kushiara River runs adjacent to the project site. The surroundings feature settlements, agricultural land to the north, south, and east, while the western boundary is formed by the Kushiara River. Additionally, two religious structures, a mosque, and a graveyard are located near the project boundary (IDCOL, 2022). 


Finance

Infrastructure Development Company Limited (IDCOL), a government-owned financial institution specializing in financing private sector energy and infrastructure projects in Bangladesh, has recently entered into a mandate agreement with Max Group. This collaboration aims to secure a $95 million term loan facility to fund the establishment of 163 MW Gas-based Combined Cycle Independent Power Producer (IPP) in Fenchuganj, Sylhet, undertaken by Kushiara Power Company Limited (KPCL).


The overall project expenditure is anticipated to reach $139 million, covering the acquisition of new Gas Turbine, Steam Turbine, and Heat Recovery Steam Generator (HRSG) components—all constituting the entire power sourced from GE Energy. Max Infrastructure Limited has been entrusted with the role of the turnkey Engineering, Procurement, and Construction (EPC) solution provider for KPCL. This power plant is set to be developed on a Build, Own, and Operate (BOO) basis, operating under a 22-year Power Purchase Agreement with the Bangladesh Power Development Board (BPDB). T (NN, 2018). 


Sponsor

The primary sponsor of the 163 MW Gas-based Combined Cycle power plant in Fenchuganj, Sylhet, is a project company of MAX Group named Kushiara Power Company Limited (KPCL), a consortium formed by Shenzhen Nanshan Power Co and Kushiara DBPL. Tasked with implementing this significant energy project, KPCL has taken a leading role in its development. The financing structure involves a collaboration between non-resident Bangladeshis, who are set to contribute 80 percent of the project cost amounting to BDT 1,500 crore, and Kushiara Power, which is responsible for covering the remaining portion. (TDS, 2013).


Contractors

The construction of the 163 MW Combined Cycle Power Plant in Kushiara, Bangladesh, is facilitated by a consortium of contractors, each contributing specialized expertise to different facets of the project. Mammoet, recognized for its proficiency in heavy lifting and transport, has been entrusted with a critical contract for the installation of key components, such as the Heat Recovery Steam Generator (HRSG) modules, Steam Turbine Generator, and Steam Turbine (Mammoet, 2023).  


Max Infrastructure Limited assumes a central position as the Engineering, Procurement, and Construction (EPC) contractor. China Northeast Electric Power Engineering & Services Co. Ltd (NEPCS) tasked with the Mechanical Installation Scope. Further technical and engineering contributions come from Mott MacDonald Limited in the UAE, offering their services, while Tata Consulting Engineers Limited in India conducts rigorous plan reviews. The technical staffing for the project is facilitated by SEPCO1 Engineering India (Private) Limited (EQMS, 2018). 


Environment

According to Section 12 of the Bangladesh Environment Protection Act 1995, Environmental Impact Assessment (EIA) is obligatory for any industry (MOLJPA, 1995). The polluting industries, such as power plants, have to go through an Initial Environmental Examination (IEE) and EIA as directed in the Environmental Conservation Rules 2017 (MOEFCC, 1997). Environmental Quality and Management System Consulting Limited (EQMS) conducted the Environmental Impact Assessment (EIA) of the project. According to the EIA Report, the power plant draws around 234.3 cubic meters (230.10 tonnes) of freshwater from aquifers per hour which means it uses 2.02 million tonnes of water annually and 30.23 million tonnes in 15 years of operation period (EQMS, 2018). This can be harmful for the aquatic environment.  


Criticism

Despite the ambitious goals and successful implementation, the project encountered challenges related to foreign investment conditions and disagreements between Jalalabad Gas Transmission and Distribution System Ltd and Kushiara Power Company regarding liquidated damages. To navigate these hurdles, the government opted to relax foreign investment conditions, allowing the project to seek a bridge loan from local banks (DT, 2015). According to the environmental conservation rule 2023 the project falls in the “Red category” indicating it as a potential harmful project for the environment  (MOEFCC 2023).


References

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