Japan provides $1.5b loan for Matarbari power plant

Bilateral partner Japan will provide a $1.5 billion loan to Bangladesh for implementing Matarbari Ultra Super Critical Coal-fired Power project to supply uninterrupted electricity.

In this regard, the Economic Relations Division (ERD) and Japan International Cooperation Agency (JICA) on Saturday Signed ‘Exchange of Notes’ and ‘Loan Agreement’ for the 7th tranche of loan for the project held at the National Economic Council (NEC) conference room in the capital.

ERD Secretary Sharifa Khan and Mr.IWAMA Kiminori, the Ambassador of Japan in Bangladesh signed the ‘Exchange of Notes’ while ICHIGUCHI Tomohide, Chief Representative, JICA Bangladesh Office signed ‘Loan Agreement’ on behalf of their respective governments.

The loan comes to Bangladesh under 44th Japanese ODA Loan Package (2nd batch), said ERD officials.     

Under this Japanese ODA loan, the rate of interest will be 1.60% for construction, 0.10% for consultancy services, Front End Fee (at a time) 0.2%, and repayment period will be 30 years which includes a 10-year grace period.

This project is being implemented to meet growing electricity demand and to improve stable power supply by installing 1200 MW (600MWx2 units) Ultra SuperCritical Coal-fired Power Plant at Matarbari Area of Maheshkhali Upazila under Cox’s Bazar district.

The total cost of the project is Tk 51,854.88 crore of which Tk6,406.16 crore will come from the government exchequer while JICA will give Tk 43,921.03 crore and  Coal Power Generation Company Bangladesh Limited (CPGCBL) will give Tk1,527.69 crore to implement the project.

ICHIGUCHI Tomohide, Chief Representative, JICA Bangladesh, commented on the long-lasting friendship between Japan and Bangladesh, “Matarbari Project will not only secure a stable and reliable power supply system but also support diversifying the fuel source warranting a robust energy security. Moreover, the deep seaport will aid Bangladesh to become the heart of the regional economy, providing the gateway for both South and South-East Asia.”

The project is being implemented by CPGCBL from July 2014 to December 2026. Up to August 2023, physical progress of the project is 78.30% and financial progress is 65.14%. JICA is providing assistance for this project in different phases. JICA has already provided 437,754million JPY in 6 tranches. Under this 7th tranche of ODA Loan for this project, JICA will provide 217,556 million JPY.

Commencing in 2016, the project is already generating power in Unit 1 (600MW) on a trial basis and is scheduled to start commercial operation of Unit 1 in January 2024 and Unit 2 (600MW) in July 2024.

The loan has been extended for the Matarbari Ultra Super Critical Coal-Fired Power Project to contribute to stabilizing the power supply and fuel source diversification. The project includes constructing a 1,200MW highly efficient ultra-supercritical coal-fired plant, 400kV transmission lines, roads, and bridges.

The Project will also lead to considerable social and economic development components for the local communities, such as electrification, construction of schools, hospitals, playgrounds, community roads, job opportunities, and livelihood improvement programmes.

Japan is the single largest bilateral development partner of Bangladesh. Japan has been providing continuous support for the socio-economic development of Bangladesh since our independence. The ODA commitment has exceeded USD 30.34 billion till now. Japanese loans and grants are being utilized in a wide range of areas including power, roads, bridges, telecommunication, agriculture, health, education, water supply and sanitation, rural development, environment and human resource development. The Japanese assistance contributed significantly in overall development of the country.