By Bloomberg

By Bloomberg

NTPC’s Bangladesh project faces hurdles

NTPC’s Bangladesh project faces hurdles

India’s plan to develop the Khulna power project in Bangladesh is facing hurdles as that nation’s power development board is unwilling to accept the high capital cost expected to make electricity dearer.

By Bloomberg

Indian government officials fear China may take advantage of the impasse to make an offer to develop the project, thwarting India’s plan to leverage energy ties to improve its relationship with its eastern neighbour.

“They are not agreeable to the tentative project cost as stated in the feasibility report and have hinted of a Chinese offer," said an NTPC executive, requesting anonymity because of the sensitive nature of the issue. “They are not ready as it will lead to expensive power."

During Bangladesh Prime Minister Sheikh Hasina’s January 2010 visit to India, the two nations identified a number of infrastructure projects to be implemented under a $1 billion (Rs 4,940 crore today) line of credit extended by India.

“India’s most strategic interlocutor is Bangladesh. Apart from market dynamics, there should be appreciation of strategic relevance," said C. Uday Bhaskar, director at the National Maritime Foundation. “We need to get our act together."

NTPC plans to set up two imported coal-based power projects in Bangladesh, at Khulna and Chittagong, through an equal joint venture with BPDB. Mint reported India’s initial proposal for the two projects on 17 February 2010.

“According to the feasibility report, the power will be expensive," said another person, who didn’t want to be identified.

Enamul Hoque Chowdhury, minister (press) at the Bangladesh high commission in New Delhi, declined to comment because he was travelling.

Another NTPC executive, requesting anonymity, denied that China has proposed to develop the Khulna project. “Earlier they (Bangladesh) had said that it was expensive. Some issues are being discussed and feasibility is being revisited," the executive said. “Feasibility studies and examination are in final stages. Feasibility doesn’t talk about the actual cost, but tentative cost. Now something different will come out."

An NTPC spokesperson denied knowledge of any Chinese proposal. “NTPC has submitted a draft feasibility report for the Khulna project, which is under discussion with BPDB. We are not aware of any such discussion of BPDB officials with Chinese government as mentioned by you in your query."

A BPDB team is in New Delhi for discussions with the utility.

NTPC on Tuesday announced its overseas operations and maintenance entry as an operator for the 240MW Siddhirganj gas project in Bangladesh for six years.

Spokespersons for India’s ministry of external affairs and the Chinese embassy in New Delhi didn’t respond to questions emailed on Tuesday.

A top power ministry official, requesting anonymity, said Bangladesh hasn’t informed India about a Chinese proposal. “The feasibility report is with Bangladesh. We have officially not been intimated about the China offer," the official said.

Power Grid Corp. of India Ltd is also setting up a transmission link between the two countries and plans to enter the power transmission business in Bangladesh by setting up a venture there with a local partner.

Keep up with latest news/ views on the livemint Facebook page

Follow livemint on Twitter for latest news / views / full coverage