The Chittagong Port Authority (CPA) has demanded Tk 400 crore from the Matarbari 1200MW coal-fired ultra-supercritical power plant without prior approval from the Power Division.
“We have begun trial electricity generation at the Tk 51,854.88 crore JICA-funded plant from July, 2024,” said Md Nazmul Haque, Managing Director of the state-owned Coal Power Generation Company Bangladesh Ltd (CPGCBL), on Saturday.
CPGCBL has dredged a 14.3km channel—350 metres wide and 18.5 metres deep—to facilitate coal transportation, incurring significant costs. Haque expressed concern that CPA’s dredging cost would add to the financial burden already created by JICA loan repayments.
The plant, however, has yet to sign a Power Purchase Agreement (PPA) with the Bangladesh Power Development Board (BPDB), a critical requirement for revenue generation. “Without a PPA, we cannot make payments to CPA,” Haque stated.
A draft PPA was sent to BPDB in November 2024, with BPDB Chairman Engr Rezaul Karim indicating it is under review and may be signed soon.
CPGCBL has handed over the dredged channel at Matarbari Sea Port to CPA. However, the Ministry of Shipping plans to establish a separate Matarbari Port Authority by 2029 to assume full control of the port. Haque said the Power Division is working to resolve the matter with the Shipping Ministry.
The Power Division faces rising electricity generation costs due to levies imposed without consultation, including a $7.71 per tonne charge by the Payra Port Authority. The latest demand from CPA adds to these challenges.
“Our generation cost has risen by Tk 0.51 per kilowatt-hour, reaching Tk 6.50 per kilowatt-hour. With the new levy, this will increase to Tk 7.01 per kilowatt-hour,” said Engr AM Khurshedul Alam,
Managing Director of Bangladesh-China Power Company Ltd. He estimated an additional $30.84 million annual expense to import 4 million tonnes of coal under the revised levy.
The Power Division has sought concessions from the International Monetary Fund (IMF) on electricity tariff reviews for three years. Officials warn that shipping ministry levies, including those at Payra and Matarbari ports, exacerbate the sector’s financial strain.
Stakeholders have urged the Shipping Ministry to reconsider levies and improve coordination to manage costs and ensure reliable coal supplies for power generation.
Impact on the Power Sector
The levy is also impacting the 1,320MW Payra coal-fired power plant and other similar facilities, significantly increasing electricity production costs. Collectively, these plants, with a total capacity of 2,640MW, are critical to Bangladesh’s energy supply.
The Bangladesh Power Development Board (BPDB), which is already burdened with unpaid bills amounting to Tk 30,000 crore, has raised concerns that the levy will worsen its financial challenges.
An official noted that the levy jeopardises recent commitments made to the International Monetary Fund (IMF) to reduce power sector subsidies through cost-saving measures.
Dispute Over Levy Calculation
The Bangladesh-China Power Company previously engaged Belgian dredging firm Jan De Nul to assess an appropriate levy, which was proposed at $ 3.46 per tonne based on a 7-metre port draft. However, the Payra Port Authority set the levy at more than double this rate.
The port’s draft has reportedly decreased to 6.5 metres due to siltation, with further reductions threatening coal supply logistics. “If the draft falls below 6.5 metres, mother vessels will be unable to dock, necessitating 100% lighterage operations and significantly increasing coal handling costs,” warned Engr AM Khurshedul Alam, Managing Director of Bangladesh-China Power Company Ltd.
The Payra Port Authority has demanded Tk 839.65 crore in unpaid levies for the period from January 2021 to November 2023. Bangladesh-China Power Company had previously invested $ 68 million between 2019 and 2020 to dredge the channel, ensuring a 6.3-metre draft for coal shipments.
Despite this investment, rapid siltation has reduced the channel’s navigability, adversely affecting coal supply efficiency. The port plans to purchase two dredgers to maintain the channel at Rabnabad Point, according to Senior Shipping Secretary Mohammed Yusuf.
BPDB Chairman Rezaul Karim stated that the authority is prepared to proceed if the Payra Port Authority ensures dredging to maintain a draft exceeding 9 metres in the channel.
Call for Levy Review
Officials from BPDB and the 1,320MW Payra and Matarbari power plants have urged the Shipping Ministry to reconsider the levy.
Additional Power Division Secretary KM Ali highlighted that frequent demurrage charges and rising transportation costs, resulting from reduced channel drafts, are already driving up electricity generation expenses.
Energy experts have raised concerns that the levy could significantly increase power tariffs, undermining efforts to stabilise consumer electricity costs.
BPDB Chief Engineer AKM Ziaul Hasan warned that without a revision, the resulting tariff hike would disproportionately burden consumers.
To mitigate these challenges, stakeholders recommend prioritising navigability through coordinated dredging initiatives and revisiting the port levy structure to ensure the availability of affordable and reliable coal supplies for power generation.
