Project Name
Power System Efficiency Improvement Project
Project Number
37113-013
Country / Economy
  • Bangladesh
Project Status
Active
Project Type / Modality of Assistance
  • Grant
  • Loan
Source of Funding / Amount
Loan 2769-BAN: Power System Efficiency Improvement Project
Source Amount
Ordinary capital resources US$ 300.00 million
Loan: Power System Efficiency Improvement Project
Source Amount
Islamic Development Bank US$ 200.00 million
Grant 0583-BAN: Power System Efficiency Improvement (Off-grid Solar Photovoltaic Pumping Systems Component) - Additional Financing
Source Amount
Clean Energy Fund under the Clean Energy Financing Partnership Facility US$ 3.00 million
Grant 0584-BAN: Power System Efficiency Improvement Project (Off-grid Solar Irrigation Component) - Additional Cofinancing
Source Amount
Strategic Climate Fund - SREP US$ 22.44 million
Strategic Agendas
  • Environmentally sustainable growth
  • Inclusive economic growth
Drivers of Change
  • Gender Equity and Mainstreaming
  • Partnerships
Sector / Subsector
  • Energy / Energy efficiency and conservation - Renewable energy generation - solar

Gender
Effective gender mainstreaming
Description
The draft power sector master plan 2010, updated 2016, identifies the need to add 11 CCPPs each with 450 MW capacity by 2016. The proposed Ashuganj 450 MW plant (part A) can be considered one of these CCPPs. Further, the government has identified the proposed plant as a priority project in its expansion plan. The economic cost of electricity supply from the Ashuganj CCPP is similar to or lower than those of a coal-fired power plant (based on the costs taken from the master plan), confirming that the proposed plant is among the least-cost options for generating new capacity. CCPP design will use the latest commercially available technology to harness the maximum benefit of energy efficiency. Part B of the project will demonstrate renewable energy technologies and their application for long-term large-scale penetration into the Bangladesh power system. The sub components in part B use solar photovoltaic, wind power and LEDs, which are commercially proven technologies. Additional financing will be utilized for installation of 2,000 solar irrigation pumps throughout the country.
Project Rationale and Linkage to Country/Regional Strategy

Energy shortage is considered the most critical infrastructure constraint to Bangladesh's economic growth. The present maximum demand for electricity is about 5000 MW (Megawatt) and it is expected to rise to 7,000 MW in two years. But the maximum available generation is about 3,800 MW leaving a significant supply gap. The main causes for the supply shortage, among others, are (i) poor operational efficiency of thermal power plants (ii) inadequate supply of natural gas which forms the main source of primary energy for electricity generation (80 % of generation capacity is based on natural gas) (iii) slow progress on cross-border energy cooperation; and (iv) lack of diversification in energy supply. To address shortages, the power plants meant for peaking load operation are being used for base-load generation making their operation extremely energy inefficient. These issues have also been highlighted in the ADB's 2009 Bangladesh energy sector assistance program evaluation (SAPE) . In the absence of lack of private sector interest in recent times and considering the critical requirement of base-load power generation SAPE has recommended public sector investment in base-load power plants.

Government of Bangladesh (GOB) has declared its vision for power sector to make the country free from load shedding beyond 2010 and to make electricity available for all by the year 2020. In order to fulfill the vision, additional 9000 MW electricity generation will have to be installed within the next 5 years. Of this 5400 MW would be constructed by the private sector. In this regard GOB expects to increase the available generation capacity to 7000MW by 2015. Adequate transmission and distribution facilities would also be developed to complement generation development to increase access to electricity. Since the declaration of this policy, 586 MW of generation capacity has been added to the system while a number of approvals have been granted for new power plants. Also initiatives have been taken to diversify the energy sources including development of coal resources and renewable energy.

In line with the government policy, ADB country partnership strategy for Bangladesh (CPS) addresses the main issues in the energy sector. It emphasizes on (i) continuation of the policy, legal and regulatory reforms to create enabling business environment for the private sector; (ii) implementation of power transmission interconnections with India; (iii) investment in new power generation facilities and rehabilitation of old power plants for improved efficiency (iv) increased investment in clean energy such as wind and solar power through public private partnerships; and (v) transmission network strengthening for expected generation capacity additions.

The most important development in 2010 is the signing of the memorandum of understanding on energy cooperation between India and Bangladesh. Specific areas of cooperation include (i) Indias agreement to supplyon a fast track basis at least 250 MW of power to Bangladesh; (ii) joint development of thermal power generation facilities in Bangladesh. Facilitating this process ADB has approved a loan to construct the 500MW Bangladesh-India electricity transmission interconnection in the western border of Bangladesh.

The proposed loan will address three key areas in the electricity supply sector. They are, improving operational efficiency of thermal power plants, expanding the renewable energy base and improving the transmission network capacity. A project preparatory technical assistance (PPTA) has been undertaken to prepare the project for ADB financing. The project interventions will include: (i) replacing some of the old power plants at Ashuganj power station (260MW, consisting of one old combined cycle plant and two steam turbine plants) with a more efficient combined cycle power plant (450MW); (ii) conversion of less efficient peaking plants at Siddhirganj (2x120MW) to a combined cycle power plant (318MW); (iii) installation of a 5MW solar photovoltaic (PV) at Kaptai hydropower plant premises; (iv) installation of wind-solar hybrid systems in St Martin (0.75 MW) and Hatiya (1 MW) islands; and (v) construction of 400kV Aminbazar-Maowa-Mongla (192km), 230kV Mongla-Khulna South (40km) and 132kV Mymenshing-Bhaluka-Tangail (100km) transmission lines and accompanying facilities. Capacity development in the executing agencies in the form of implementation support and training related to operation and maintenance and gender mainstreaming will be provided. Capacity development of beneficiary communities on operation and maintenance of off-grid systems will also be undertaken.

Impact

Increased provision of better access to electricity

Project Outcome

Description of Outcome

Increased electricity generating capacity

Progress Toward Outcome
1. Construction and conversion of Ashuganj 450 MW CCPP (North) was completed on 11 June 2017.2. Installation and commissioning of Solar and non-solar street lights in seven city corporations completed on 31 March 2019. ADB gave concurrence to exclude DSCC from the project on 13 March 2019.3. Commissioning and testing of Kaptai 7.4 MW Solar Power Plant is completed by 6 May 2019.4. BREB has contracted consulting firm for 2,000 Solar irrigation pump installation on 31 January 2019. Six turnkey contract signed by 2021 and contract implementation on going. ADB issued no objection to contract award for grid integration package on 10 August 2023 and waiting for CCGP approval.

Implementation Progress

Description of Project Outputs

Improved energy efficiency

Increased renewable energy use

Capacity developed in the EAs and surrounding communities

Status of Implementation Progress (Outputs, Activities, and Issues)
CO2 reduction achieved as 450 MW CCPP is in operation. Eight Contracts were signed on 26 April 2017. Installation and commissioning completed in seven city corporations on 31 March 2019. Total 1,244 Solar Lights and 12,185 Non-Solar lights have been installed. Completion certificates received from seven city corporations. EA closed the project by 30 June 2019.Local labors were employed. Construction of Ashuganj 450MW combined cycle power plant and associated 1km transmission line Completed. Combined cycle was commissioned on 11 June 2017.Kaptai 7.4 MW Solar PV Power Plant. The grid connected plant commissioned on 6 May 2019.Solar Street Lighting:Contract was signed on 26 April 2017 and installation and commissioning completed on 31 March 2019.The civil and EPC contractors of Kaptai 7.4 MW power plant engaged local labor.Annual CO2 emission reduction will be reported after completion of all project components.On 25 July 2021, BREB signed the remaining four contracts.ADB issued no objection on Bid Document of Package on 7 July 2021.Implementation consultants for APSCL and BPDB were recruited within 2016. BREB signed with consulting firm on 31 January 2019 for design and implementation of 2000 solar irrigation pumps. EA (Ashuganj) closed the project without training package implementation. BPDB excluded the training component from the project. BREB is undertaking community engagement program under solar pump component. BREB engaged consulting firm for GAP implementation for 2,000 solar irrigation pumps. BREB implemented the GAP.
Geographical Location
Ashuganj, Barisal, Chittagong, Dhaka, Hatiya, Kaptai, Khulna, Rajshahi, Sylhet

Safeguard Categories

Environment
A
Involuntary Resettlement
B
Indigenous Peoples
C

Summary of Environmental and Social Aspects

Environmental Aspects
The project is classified under environmental category A due to the installation of the 450 MW Ashuganj combined cycle power plant (CCPP). The government also classified this component as category A, and an environmental impact assessment has been preapred in May 2009 based on the Environmental Conservation Rules of 1997. The environmental impact assessment was approved by the Department of Environment on 5 May 2010 and revised to conform with ADBs Safeguard Policy Statement (2009).The Ashuganj CCPP will be located within the existing Ashuganj power station complex. The project will use natural gas as fuel and meet the cooling water requirements of 6.4 cubic meters cubic meters per second, or 52,000 cubic meters per gigawatt-hour, using water from the Meghna River, which will be released back to the river after 3% to 5% loss, or 1,500 to 2,600 cubic meters per gigawatt-hour. CCPP technology has high thermal efficiency, and a burner will be used that limits the formation of nitrogen oxide. A pond will temporarily hold cooling water discharges, and the discharge channel will have adequate turbulence to dissipate heat before its final discharge back into the Meghna River. The plan for abandoning the replaced power plant units will be prepared by APSC. ADB will review the plan prior to any decommissioning works.The other subprojects in part B are classified as environmental category B. Initial environmental examination reports have been prepared in compliance with ADB's Safeguard Policy Statement. Part B will utilize clean energy technologies to reduce greenhouse gas emissions by 25,460 tons per year. The subprojects have been assessed for their risk and vulnerability to climate change impacts, and design measures have been integrated to ensure that these risks are minimized. The environmental impact assessment and initial environmental examination reports were publicly disclosed through the ADB website on 25 March 2011. The EAs are committed to implementing the environmental management plan and submitting semiannual environmental monitoring reports to ADB. EA submits the Semi-annual report timely. No issue was reported.
Involuntary Resettlement
The project is classified as category B for involuntary resettlement impacts. Land Acquisition was only involved for component B (ii) in Hatiya, which has been dropped from the project. Remaining components, part A, part B(i) and part B(iii)s construction and installments have been done within existing compound. Therefore, no land acquisition or resettlement was involved in the project.
Indigenous Peoples
The project is classified under indigenous peoples category C. No indigenous groups have been identified as potentially affected by the project. Additionally, where worker migration is required, the project will minimize the risk of HIV/AIDS through information dissemination campaigns at project areas per the provisions in the project administration manual. No issue was reported.

Stakeholder Communication, Participation, and Consultation

During Project Design
The project is classified under environmental category A due to the installation of the 450 MW Ashuganj CCPP. The government also classified this component as category A, and APSC prepared an environmental impact assessment in May 2009 based on the Environmental Conservation Rules of 1997. The environmental impact assessment was approved by the Department of Environment on 5 May 2010 and revised to conform with ADBs Safeguard Policy Statement (2009).The other subprojects in part B are classified as environmental category B. Initial environmental examination reports have been prepared in compliance with ADBs Safeguard Policy Statement. Part B will utilize clean energy technologies to reduce greenhouse gas emissions by 25,460 tons per year. The subprojects have been assessed for their risk and vulnerability to climate change impacts, and design measures have been integrated to ensure that these risks are minimized. The environmental impact assessment and initial environmental examination reports were publicly disclosed through the ADB website on 25 March 2011. The EAs are committed to implementing the environmental management plan and submitting semiannual environmental monitoring reports to ADB.
During Project Implementation
The project is classified under involuntary resettlement category B. Constructing the Ashuganj CCPP will require relocating 134 people to alternative, vacant, and suitable accommodation inside the Ashuganj industrial compound. Affected people have been consulted on the process and consented to relocation under the terms promised by APSC. Relocation will be fully managed by APSC through a resettlement plan, the provisions of which shall comply with the ADB Safeguard Policy Statement.Care will be taken to engage and consult with stakeholders as necessary and in a culturally sensitive manner. The EAs will ensure that project information is disclosed and disseminated to project stakeholders in a timely manner. If, during implementation, adjustments are made to the project, these will be reflected in the entitlement matrix in consultation with displaced and otherwise affected people.

Business Opportunities

Consulting Services
All the consulting firms will be recruited by using the quality and cost-based selection method in accordance with ADB's Guidelines on the Use of Consultants (2010, as amended from time to time). The outline terms of reference (TOR) for the consulting services are in Section D. APSCL will recruit one consulting firm to support the implementation of Ashuganj 450MW CCGT Power Plant Project, about 26 person-months (PM) of international consultants and 60 PM of national consultants will be required. BPDP will recruit one consulting firm for each component of Part B to (i) prepare technical specifications and bidding documents; (ii) support the tendering process and bid evaluation; (iii) supervise construction from the owner's perspective; (iv) supervise the testing and commissioning of the power plant from the owner's perspective; and (v) hand over the plants including issuance of provisional acceptance certificates and final acceptance certificates. For Kaptai 5MW on-grid solar PV project, about 7 PM of international consultants and 22 PM of national consultants will be needed. For Hatiya demonstrate wind-solar-diesel off-grid plant project and Solar-LED street lighting project, respectively, about 27 PM of international and 68 PM of national consultants, 9 PM of international and 24 PM of national consultants, will be required.
Procurement
All procurement of goods and works will be undertaken in accordance with ADB's Procurement Guidelines. For procurement under Part A, an expanded list of eligible countries to allow participation by firms and entities from countries eligible under ADB Procurement Guidelines and IsDB Procurement Guidelines. International competitive bidding procedures will be followed for all the procurement.

Contact

Responsible ADB Officer
Nahar, Nazmun
Responsible ADB Department
Sectors Group
Responsible ADB Division
Energy Sector Office (SG-ENE)
Executing Agencies
Ashuganj Power Station Company Ltd. (APSCL)
Bangladesh Power Development Board (BPDB)
Bangladesh Rural Electrification Board
Power Div-Min of Power, Energy & Mineral Resources

Timetable

Concept Clearance
08 Feb 2011
Fact Finding
09 Feb 2011 to 17 Feb 2011
MRM
28 Apr 2011
Approval
11 Aug 2011
Last Review Mission
-
Last PDS Update
30 Nov 2023

Funding

Grant 0583-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
05 Jul 2018 09 Aug 2018 18 Feb 2019 30 Jun 2021 31 Dec 2024 -
Financing Plan
  Total (Amount in US$ million)
Project Cost 84.20
ADB 0.00
Counterpart 81.20
Cofinancing 3.00
Grant Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards 06 Jun 2024 0.00 1.48 49%
Cumulative Disbursements 06 Jun 2024 0.00 0.59 20%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory Satisfactory Satisfactory - Satisfactory

Grant 0584-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
05 Jul 2018 09 Aug 2018 18 Feb 2019 30 Jun 2021 31 Dec 2024 -
Financing Plan
  Total (Amount in US$ million)
Project Cost 22.44
ADB 0.00
Counterpart 0.00
Cofinancing 22.44
Grant Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards 06 Jun 2024 0.00 11.15 50%
Cumulative Disbursements 06 Jun 2024 0.00 4.54 20%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory Satisfactory Satisfactory - Satisfactory

Loan 2769-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
11 Aug 2011 04 Jan 2012 03 Oct 2012 31 Dec 2017 31 Dec 2024 -
Financing Plan
  Total (Amount in US$ million)
Project Cost 300.00
ADB 300.00
Counterpart 0.00
Cofinancing 0.00
Loan Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards 06 Jun 2024 269.11 0.00 92%
Cumulative Disbursements 06 Jun 2024 246.40 0.00 84%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory Satisfactory Satisfactory - Satisfactory
 
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