Contract framework agreement signed for 2000 MW coal-fired power plant in Bangladesh
This article is part of a daily series of IPP articles. If you want to know more about the latest power generation projects globally visit our IPP Today section. You can receive them by email on a daily basis.
GCM Resources, a London-based resource exploration and development company, has announced that it has agreed a Contract Framework Agreement with China Gezhouba Group International Engineering Co. (CGGC) which awards CGGC the exclusive right for the engineering, procurement, construction, and commissioning of a proposed 2,000MW mine-mouth thermal power plant which is part of GCM's Phulbari Coal and Power Project in north-west Bangladesh.
The power plant would be situated at the mouth a 5,193-hectare coal mine in the Dinajpur district of Bangladesh. At peak production, GCM estimates that the Phulbari Coal Mine will produce 12 million tonnes of thermal coal, which could either substitute imported coal or support new generation capacity of 4,000MW. GCM proposes to construct a 1,000 MW coal fired power plant at the mine mouth, which could be increased to 2,000MW capacity.
The agreed initial estimated cost of the EPC works is US$3.8 billion, though this may change as the parties finalise a full EPC contract. This agreement follows on from the Joint Development Framework Agreement announced earlier this month which outlined the roles and responsibilities of both companies in pursing approval of the Phulbari Coal and Power Project.
CGGC (or its affiliate or investment partner) has committed to investing up to 30% in the power plant, subject to approval by Chinese authorities, with GCM holding the balance of interest. CGGC has also agreed to facilitate financing for the proposed power plant with GCM's assistance.
The Government of Bangladesh has not yet consented to the project. Although the Department of Environment approved the project's Environmental Impact Assessment in September 2005, the project's feasibility study and Scheme of Development report, submitted in October 2005, has not yet been approved. One of the contributing factors to this delay is fierce local resistance.
However, the project would contribute significantly to achieving the government's aim of generating over 19,000 MW from coal by 2030. GCM has also stressed the economic benefits of the project, such as the creation of an estimated 17,000 jobs through the mine development. The government would also benefit financially, deriving over US$7 billion revenue in the form of royalties, taxes and service charges from a producing Phulbari coal mine over its economic life. Furthermore, GCM estimates that the project would contribute an estimated 1% to GDP.
