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Oct 18, 20237 min read

Meghnaghat 584 MW (Unique) LNG Power Plant

Current Status: On Test


Meghnaghat 584 MW LNG Power Plant, also known as Meghnaghat 584 MW Gas Power Plant or Unique Meghnaghat 584 MW Power Plant or simply Unique Meghnaghat Power Plant, is a Combined Cycle (CC) power plant situated in Dudhghata, Korbanpur, and Chanderchak villages of Pirojpur Union under Sonargaon Upazila in Narayanganj District of Bangladesh (Location: 23.6182, 90.5915). It is sponsored by Unique Meghnaghat Power Limited (UMPL), a joint venture company (JVC) of Unique Group, General Electric (GE), Nebras Power and Strategic Finance Limited (SFL), as a private Independent Power Producer (IPP) for 22 years. As per the latest schedule, the power plant will start commercial operation in March 2023 and retire in March 2045.


Capacity

The installed (gross) and derated (net) capacity of the power plant is 586 MW and 584 MW respectively.


Context

On the right bank of the Meghna River in the Pirojpur Union under Sonargaon Upazila of Narayanganj District, are the villages of Dudhghata, Korbanpur, and Chanderchak, where the Meghnaghat 584 MW Combined Cycle Power Plant (CCPP) is located. The project area is close to the Dhaka-Chittagong highway in Sonargaon and beside the bank of River Meghna (Dhaka Tribune, 2014).


Unique Hotel and Resorts Limited (UHRL), General Electric (GE), Nebras Power, and Strategic Finance Limited (SFL) are the sponsors of the power plant, Unique Meghnaghat Power Limited (UMPL), which is also the company that owns the power plant. The two sponsors of the UMPL, UHRL, and SFL, seized 21.07 acres of land from local farmers in three villages at a variety of prices that did not line up with the going rate on the market or the terms of Bangladesh's 2017 Acquisition and Requisition of Immovable Property (ARIP) Act.


Under Bangladesh's Private Sector Power Generation Policy and making use of the Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act 2010, UHRL intended to construct a 600 MW CCPP on a Build-Own-Operate (BOO) basis in January 2018 (Dhaka Tribune, 2018). To carry out the power plant project, Unique Group established a new business, UMPL, in September 2019 as a Special Purpose Vehicle (SPV) under UHRL (UHRL, 2021). The Cabinet Committee on Government Purchase (CCGP) approved the proposal on 30 May 2018 (Daily Star, 2018).


As a result, on June 25, 2018, the Bangladesh Power Development Board (BPDB) issued a Letter of Intent (FE 2018), and on 24 July 2019, BPDB signed a Power Purchase Agreement (PPA) with Unique Group for 22 years starting on the Commercial Operation Date (COD). UHRL also signed an Implementation Agreement (IA) and a Gas Supply Agreement (GAS) with Power Grid Company of Bangladesh (PGCB) and Titas Gas Transmission and Distribution Company Limited (TGTDCL) respectively (Daily Star, 2019). TGTDCL a subsidiary of Petrobangla, signed the agreement to provide 96.19 Million cubic feet (MMscf) of DFG or LNG daily (UMPL 2022a,p 61).


Through a Statutory Regulatory Order (SRO) issued on 2 January 2020 under the Income Tax Ordinance of 1984, the UHRL is attempting to ensure COD before 31 December 2022 to benefit from the exceptional 15 years of tax exemption provisions provided to the Independent Power Providers (IPP) (Independent, 2020). Within 36 months of the PPA signature, the power plant must have to begin operating commercially under this SRO to enjoy the tax exemption provisions. However, due to a delay in the construction process, the power plant's original COD of 31 March 2022 was later revised to 31 July 2022 (UHRL, 2021). The Department of Environment (DOE) granted the UMPL site approval and environmental Environmental Clearance Certificate (ECC) on 1 October 2019 and 19 July 2020, respectively (UMPL 2022a).


Land Acquisition

Initial reports state that locals sold 18.75 acres of land to UHRL and SFL (Daily Star, 2019). However, the ESIA report refers to the project's total area as 21.07 acres, of which 19.02 acres are designated as agricultural land and 2.05 acres as homesteads (UMPL 2022a, p93). On the other hand, it is clear from data from Google Earth on April 29, 2022, that the Meghnaghat 600 MW CCPP has occupied at least 27,95 acres of land along the Meghna river's bank (BWGED, 2022).


Finance

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 in two folds as USD 613 million (BDT 6,320 crore) in November 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). Standard Chartered Bank (SCB) has been appointed as the Financial Advisor for the project (BWGED, 2022). Unique Meghnaghat Power has also signed an agreement for a $463 million foreign loan with a 15-year repayment period. To fulfill the debt need for the power plant project, Standard Chartered Bank will contribute $270 million, Asian Infrastructure Investment Bank will contribute $110 million, DEG will contribute $45 million, and OPEC Fund for International Development (OFID) will contribute $38 million (FE 2023).


Sponsor

The power plant is sponsored by Unique Meghnaghat Power Limited (UMPL) a joint venture company (JVC) of which is 51% held by UHRL and 24% by Nebras Power Investment Management BV (NPIM), 20% by GE, and 4.96% by Strategic Finance Limited SFL (UMPL 2022a).


Contractors

GE (General Electric Company) will serve as the project's engineering, procurement, and construction (EPC) contractor and build it on a turnkey basis for US$350 million (BDT 3,835.65 crore). To carry out the project, GE will provide a 9HA gas turbine with the newest technology (FE, 2019).


Fuel Supply

Local gas or RLNG will be provided to the power plant by the government-run Titas Gas Transmission and Distribution Company Ltd (TGTDCL).


Power Generation

When producing electricity with gas, a kilowatt-hour (kWh) of power will cost 3.6923 cents or Tk 2.9538, whereas when using RLNG, the tariff will be 6.8098 cents or Tk 5.4478 (Daily Star, 2018). The Unique Meghnaghat Power Plant will generate energy at a cost of at least BDT 19.10 (USD 0.21 ) per unit. 6.875 cubic feet of gas will be used by the power plant to produce each kilowatt-hour (kWh) of electricity.


Environment

The development of the power plant by UMPL has detrimental consequences on the surrounding air, water, soil, and noise levels. A field study by CLEAN (Coastal Livelihood and Environmental Action Network) has revealed that cracks in the floors of surrounding homes are caused by piling work during the construction phase. Sand blown from the construction site has made the lives of nearby villagers miserable by contaminating meals and causing skin, eye, and respiratory illnesses. The Meghna river bank's water became filthy and odorous. The Meghna River's fish population has greatly declined. In addition, the soil's fertility has declined, which has reduced the yield of crops.


Carbon Footprint

AIIB claimed Unique Meghnaghat as Paris Aligned as it uses using GE 9HA.01 gas turbine which is much more efficient (AIIB, 2022) but compared to the top ten largest gas-based power plants in Bangladesh the fuel usage requirement per unit of electricity stands out as the highest in Unique Meghnaghat power plant which eventually will contribute to more Greenhouse Gas Emission (GHG). The direct leakage of gas is also a prominent factor in GHG emissions (BWGED, 2022).


Human Rights Violation

Before the start of construction, the majority of the residents of Dudhghata village were unaware of the power plant. The power plant purchased the land from the villagers at a cheap price and also seized the land from residents that was being utilized as grazing land for animals. Before receiving the Department of Environment's (DOE) environmental approval and even before building a boundary wall, UMPL began the landfilling and construction of the power plant. Agricultural lands were buried and the accumulated sand breached the surrounding territories. As a result, The local farmers have been unable to grow any crops since 2019. The Meghna River served as a place for locals to bathe, wash their clothing, and go fishing. The locals, especially the ladies, had to trek around one mile to reach the river after UMPL constructed a boundary wall to the power plant which caused frequent accidents.


Criticism

In Bangladesh, the power sector's capacity is 22,512 MW, but demand is only 14,782 MW, leaving 34.3% of capacity idle. Petrobangla's gas supply shortfall and high costs create uncertainty for the Unique Meghnaghat Power Plant. Its generation cost is at least BDT 19.10 per unit, far higher than solar power which is BDT 6.37. The plant's gas consumption leads to substantial CO2 emissions, conflicting with Paris Agreement goals. Land acquisition issues, including illegal takeover and underpayment, further taint the project. Moreover, the power plant opposes Bangladesh's 100% renewable energy target by 2050, outlined in the Mujib Climate Prosperity Plan (MCPP). UMPL initiated construction and landfill activities for a power plant without proper environmental clearance, catching villagers off guard.


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