Kolkata: The proposed Rampal coal power plant in Bangladesh will push up electricity rates in the country and it poses specific risks to the Indian Exim (Export-Import) Bank, according to an energy and financial analyst.
"EXIM bank is looking to extend a loan to this project. While the Rampal project would expose all project promoters and consumers to financial risk, it poses specific risks to the Indian EXIM Bank. The Rampal project would constitute a large chunk of EXIM Bank's loan book, it would put the EXIM Bank's international fund-raising capacity at risk and the very coal-fired nature of the project would create refinance risk for the EXIM Bank," analyst Jai Sharda, representing the Institute for Energy Economics and Financial Analysis (IEEFA), said on Thursday.
The findings are part of a report by IEEFA published in June.
The project is being "designed around outdated supercritical technology and is being heavily subsidised" by the Indian and Bangladeshi governments, he said quoting the report.
The IEEFA "suspects that the project is being promoted as a means to sell Indian coal to Bangladesh and as a way to skirt Indian policy against building a coal plant so near the Sundarbans, a protected forest and World Heritage Site".
"The revenue requirements of the Rampal plant would require tariff levels that are 32 per cent higher than the current average cost of electricity production in Bangladesh and will therefore increase electricity rates in Bangladesh," Sharda said.
"Without subsidies, the plant's generation costs are 62 per cent higher than the current average cost of electricity production in Bangladesh," he pointed out, adding it would strategically make sense for Bangladesh to go for renewables.
Rampal project is a proposed 1,320 MW coal-fired power station at Rampal sub-district of Bagerhat district in Khulna, Bangladesh.
It is a joint partnership between India's state owned National Thermal Power Corporation (NTPC) and Bangladesh Power Development Board. The joint venture company is known as Bangladesh India Friendship Power Company (BIFPC).
The proposed project, on an area of over 1,834 acres of land, is situated 14 km north of world's largest mangrove forest Sundarbans, a UNESCO world heritage site.