Questions and answers on the Rampal Power Plant

 

 

By BNP Research

Q: Have the Feasibility Study, Initial Environmental Examination and Environmental Impact Assessment on the Rampal Power Plant been made public?

A: Feasibility Study and IEE were not made public and not posted on the website. Recently, the EIA has been published on the website. There remain lots of controversies in the EIA Report. In the EIA Report some parameters are mentioned quantitatively and most of the negative environmental effects have been mentioned qualitatively.    

Q: Whether consultancy for the Feasibility Study was awarded in a transparent way or not?

A: The Feasibility Study was assigned to the National Thermal Power Company Ltd. (NTPC), India on 30 September 2010.  The whole procedure has violated the Article 13 of Public Procurement Act of 2006 and Article 3 of Public Procurement Rules of 2008, as the PDB appointed NTPC on sole-source basis without any competitive bid. Moreover, appointment of the NTPC as Consultants for Feasibility Study being a Joint Venture partner is not at all sensible. The consultant should have been an independent organization, so that their professional ethics could not be questioned. Moreover, feasibility report was not discussed publicly.

Q: Whether the IEE and EIA were conducted in a transparent way or not?

A: The Center for Geographic and Environmental Information System (CGEIS) was engaged for the IEE and the EIA on sole source basis. Thus, no competitive bid was invited. This is again the violation of the Public Procurement Act of 2006 and Public Procurement Rules of 2008. However, the IEE Report was submitted on 6 October, 2010 and site clearance was given by the Department of Environment (DoE) on 23 May 2011. It is pertinent to note that the Environmental Clearance Permission issued by the DoE for Rampal Coal Power Plant is much different from the one issued for Matabari Coal Power Plant.

Q: Are all the parameters for the Feasibility Study (FS) authentic and objective?

A: Many parameters considered in the FS are not valid and objective. For example, Plant Factor (PF) was taken as 100% and efficiency was taken as 44% for Rampal Coal Power Plant in the Feasibility Study for economic analysis. It can be noted that the PF considered for Matabari Coal Power Plant of similar size is 80% only. In case of all types of power plants, shutdown for regular maintenance and emergency maintenance are common. Usually it takes 10-20% of the available time to recover. But in some cases, major over handling causes shutdown period much longer. So, the assumption of PF as 100% is impractical. Similarly, the assumption of efficiency is also impractical. Both the PF and Efficiency are impossible to achieve in a given condition in Bangladesh. The following table shows the comparative pictures of maximum PF and efficiency among some countries where it can be seen that the maximum PF and efficiency of the existing power plants of Bangladesh is lower.

Table 1: Max PF and Efficiency level of Coal Power Plants

Country	Max PF	Efficiency
USA	58%	-
China	55%	-
India	50%	29-33%
Bangladesh*	45.11%	32.39%

* The Bangladesh figure has been mentioned for all Public Sector Power Plants in the Annual Report of BPDB 2014-15.

If actual PF and efficiency are less than what has been proposed in FS, then, it will have major effect on the Economic Analysis and specially, on Cost of Energy (COE) and Levellized Tariff (LT) calculation. COE and LT will increase with lower PF and Efficiency. In that case, economic viability and sustainability of the project cannot be justified. According to FS following are the per MW cost and COE per kWh:

Table 2: Per MW cost and COE per KWH

Description	Project Cost (IRs Cr/MW)/(Tk/MW)	Levellised COE (IP/kWh
		Fixed	Variable	Total
Base Case (Loan Interest 12.5%)	IR 6.59/ (Tk 10.48)	IR 184/ (Tk 2.92)	IR 312/ (Tk 4.96)	IR 496/ (Tk 7.88)
FR Cost	IR 8.23/ (Tk 13.06)*	IR 226/ (Tk 3.59)	IR 312/ (Tk 4.96)	IR 538/ (Tk 8.55)

* Tk = Bangladeshi Taka; USD= 0.1096/kWh (1USD= Tk 78.00); IR = Indian Rupee

Source: EIA Report

According to the experts the CoE may increase by minimum 50% and in such case Levellised Tarff will be Tk. 12.829 (US$=0.1644).

Q. What is the cost of such Coal Power Plants in India?

A. In India many USC coal Power Plants are currently under construction and some of them are run by BHEL in collaboration with foreign partners. Cost of such projects varies from $ 0.9 to 1.1 million/MW. But the per MW cost of Rampal Coal Power Plant is now $ 1.22 million and it is sure to be increased.

Q: What are the sources of funding?

A: The official estimate of the total capital cost of the project has risen over time and currently stands at US$1.82 billion. IEEFA would suggest a further capital cost reaching to at least US$2bn approximately. Equity capital is proposed at 30% of the total, with 50% of the equity owned by the Bangladesh Power Development Board (BPDB) and 50% by NTPC Ltd of India. Debt is proposed to cover 70% of the capital cost. All of the debt financing would be provided by loans from the Indian Export Import Bank. The estimated Capital Structure of Rampal Power Plant (US$ m) is given below:

Table 3: Estimated Capital Structure of Rampal Power Plant

Capital Structure	US$ m	Split	Split	US$ m
Local currency	112
Foreign currency	1,488
Indian ImEx Bank - Buyer's Credit Facility	1,600
Buffer?	210
Debt required	1,390		70%	1,390
NTPC Ltd of India	298	50%
BPDB of Bangladesh	298	50%
Total Equity	596		30%	596
Total cost (US$ m)				1,986

Source: Project Documents, Institute for Energy Economics and Financial Analysis (IEEFA) Estimate

Q. Who will be the guarantor of the loan & how the profit & loss will be shared?

A. Government of Bangladesh (GoB) is the Guarantor of the loan. In case the project incurs losses, burden will remain with the BPDB and GoB nothing with NTPC or India. Exim Bank of India will reap all benefits being a lender. If the project is delayed GoB will have to pay extra cost for it. If there is any profit it will be equally shared by both BPDB and NTPC.

Q. Who will run the management?

A. During the entire construction period top Management (CEO, CTO, COO, CFO) & Project Management (PD) Teams will be manned by the NTPC personnel. Bangladesh will hold the position of Chairman of Board of Directors. In such case it might be difficult to ensure accountability and transparency of the top and project management teams. In order to ensure accountability and transparency both top and project management teams should have been selected and hired through international advertisement. As the EPC contractor and the management teams both are from the same country, it might be difficult to ensure quality, cost and timely completion of the project.

Q: Are some costs hidden in the Economic Analysis?

A: Yes, according to IEEFA some costs are hidden and it is worth of USD 3 billion. The GoB will give tax free to NTPC for 15 years worth of US$ 936 million. The BPDB will bear the cost of annual maintenance of worth US$26 million annually for 25 years, totaling to the tune of  US$ 650 million. The Exim Bank India will provide a subsidy of US$ 988 million, a total of US$ 2.574 million. If all these costs are included, both the COE and Levellized Tariff will increase.

Q: What are the interest rate and discounting rate shown in the FS?

A: The rate of interest has been shown as 14% and discounting rate as 12%. Under the terms of the EXIM Bank, the total loan would be paid within 20 years and the regular repayments will start after 7 years. The rate of interest is high for such a large-scale project, if compared with others. For example, rate of interest of JICA financing for Matarbari Coal Power Plant is 0.1% and the repayment period is 40 (30+10) yrs. In case of Chinese fund, rate of interest is less than 2% and the repayment period 18 (15+3) years. Even in case of Chinese commercial loan rate of interest is 3 to 3.5% and the repayment period 12 yrs (10+2).

Moreover, the burden of the total loan will be on Bangladesh though the ownership of the project is said to be shared (fifty-fifty) between the two countries.  The Government of Bangladesh will be bound to give the ‘guarantee’ of this total amount of loan. That means, if - (a) the project will face any loss (b) the project will be stopped in the midway of implementation (c) there is any failure in terms of installment payment, the Bangladesh Govt. will be solely responsible to repay the loan.

Q: Is the quality of coal defined? What will be annual coal requirement?

A: From the FS, it is found that assumption is made on the basis of Indonesian coal having Gross Calorific Value (GCV) 6000 kcal/kg, max ash content 15% and max. Sulphur content 0.6%. In EIA source of coal has been shown as Indonesia, Australia and South Africa. Coal quality will have quite good impact on COE and Tariff.

Table 4: Quality of the Coal Available in Selected Source Country

GCV (Kcal/kg)	TM (% Max)	IM (% Max)	Ash (% Max)	VM (%)	FC (%)	TS (% Max)	HGI	Sizing (mm)	AFT Deg. C (Max)
ADB	AR	ADB	ADB	ADB		ADB
For Indonesian Sources
5500 -5800	26-42	15-20	5-10	38-44	By diff.	0.5 - <1	42-60	50	1100-1250
For Australian Sources
6100 -7250	6.0 -18.5	1.0-13.5	8.7 - 21.0	19-50	By diff.	0.2 - 1.0	37 -82	50	1300 - 1600
For South African Sources
6100-6500	8 -12	3-5	15	20 – 22	By diff.	0-1.0	45-70	50	1200-1300

Source: EIA Report

Note: ADB: Air Dried Basis; AR: As received; GCV: General Calorific Value; TM: Total Moisture; IM: Inherent Moisture; VM: Volatile Matter; FC: Fixed Carbon; TS: Total Sulfur; HGI: Hard-grove Grind-ability Index; AFT: Ash fusion temperature (flow temp. in a reducing atmosphere), By Difference: 100- (IM + Ash + VM).

The daily coal requirement of 2x 660 MW units shall be about 12,920 tones based on GCV of 6000 Kcal/kg, 100% plant load factor and 2,447 Kcal/kWh unit heat rate. The coal requirement will be less with coal of higher GCV value. Coal requirement has been estimated using the formula:

Annual Coal Requirement: (2,447 Kcal/KWh x 1320 MW x 24 hours x 365 days) / 6000 kcal/kg = 4.715 million ton.

Q: How are hazards and risks assessed?

A: Hazard and risk assessment is important for any energy related industries. The proposed project may have mechanical risk from turbine and generator; electrical risk from power transformer, switchyard, 400 KV and 230 KV switchyard control room, transmission line; risk of fire and explosion from boiler, live steam line, and fuel stockpile; risk of toxic/carcinogenic chemical exposure from chemical storage and accidental discharge of sulfuric acid from SOx absorber. In addition, some hazards may be resulted from malfunctioning of machinery and equipments like filter, ESP, air pollution control devices, air circulating system of boiler, lightning arrestor, safe working place, etc. To lessen these risks, required specific measures have been identified in EIA report. The project may possess occupational health risk. Hazards and risk related to shipping and barging activities for coal transportation may also occur.

Q: What are the emissions from coal power plants?

A: Main emissions from coal fired thermal power plants are CO2, NOx, SOx, and air-borne inorganic particles such as fly ash, carbonaceous material (filth), suspended particulate matter (SPM), and other trace gas species. The emissions per unit of electricity are estimated to be in the range of 0.91 to 0.95 kg/kWh for CO2, 6.94 to 7.20 g/kWh for SO2, and 4.22 to 4.38 g/kWh for NO. In EIA report Resultant Impact on Plant Emission on Air Quality of Sundarban is presented as below:

Table 5: Summary of Resultant Impact of Plant Emission on Air Quality of Sundarbans

Emission	Emission contribution of from each unit (24 hr avg.)	Emission contribution of from two units (24 hr avg.)	Concentration in ambient air *24 hr avg.) near Sundarbans	Resultant concentration in air (24 hr avg.) near Sundarbans	M0EF’s Standard (ECR 1997)
SOx	21.2 ìg/m3	42.4 ìg/m3	8-11 ìg/m3	50.4-53.4 ìg/m3	80 ìg/m3
NOx	15.6 ìg/m3	31.2 ìg/m3	16-20 ìg/m3	72.2-51.2 ìg/m3	80 ìg/m3
SPM	100 ìg/m3	200 ìg/m3	.......	........	100 ìg/nm3
CO					200 ìg/nm3
Sulfuric  Acid					50 ìg/nm3

However, the resultant impact of emission from all the industries, existing and proposed at Mongla and Sundarban areas will create higher level of emission, which cannot be tolerable. According to EIA concentration of Sulfur in the ambient-air of Sundarban will be more than 50ìg/NM3, exceeding the limit for National Heritage sites (30ìg/NM3).

Q: How do the combustion (burning) processes in a coal power plant affect the emission of pollutants?

A: The combustion process of the grinded coal in the boiler is a complicated non-linear event. The pollutants emitted from thermal power plants depend largely upon the characteristics of the fuel burned, temperature of the furnace, actual air used, and any additional devices to control the emissions. Currently, electrostatic precipitator (ESP) is used in thermal power plants to control the emission of fly ash (SPM). Some new plants use low NOx burners for high temperature (> 1500 K) combustion technologies and dry/wet SO2 scrubber, if chimney height is less than 275 meters. Mass emission factors for CO2, SO2, and nitric oxide (NO) are computed based on the input data, such as chemical composition of the coal used at the power plants and the actual air used during combustion. These calculations are based on theoretical ideals and do not look over for the control devices.

Q: What is the significance of emission control?

A: Technologies used for controlling SO2 and NOx often consume energy and can reduce the overall efficiency of a power plant. The level of SO2 and NOx control differs per country, depending e.g. on national emission limits. Countries with high levels of SO2 and NOx control may have lower efficiencies than they would have had if SO2 and NOx control is not applied. In case of failure, any protective measure will result in increasing the pollution in and around Sunderban which is sufficient to destroy the Sunderban ecology.

Q: What is the impact of coal transportation?

A: As per FS, for the Rampal plant daily coal requirement will be 12.920 Tons and annual coal requirement will be 4.715 million Tons. The imported coal to fuel the plant would be transported to the region on ocean-going ships. The ships would be anchored at Akram Point, which is located within the Sundarbans. Transshipment from these larger ships to smaller covered barges would also occur at Akram Point. Coal would be taken from there on the Passur River to the Rampal project site, “making a total of 400-500 trips per year directly through the Sundarbans.” BIFPCL would need to conduct dredging and widening of a 36-kilometre stretch of the Passur River to make the river navigable between Akram Point and the project site. Coal transportation and continuous dredging of the river flowing through Sundarban will affect the flora and fauna, specially the aquatic faunal species, by creating air pollution, water pollution and noise pollution. Coal transportation is enough to destroy ecology of Sundarban.

Q: What is the overall impact of Rampal project on the ecology of the Sundarbans?

A: The proposed power plant is 14 km away from the Sundarbans Mangrove Ecosystem. The combination of various types of ecosystem (forest, coastal and wetland) makes the Sundarbans a home to several uniquely adapted aquatic and terrestrial flora and fauna with many threatened species. The World Heritage Site of Sundarbans is 70 km away from the proposed plant location. The following issues are necessary to be considered in order to examine the overall impact of Rampal project on the ecology of Sundarbans. By recognizing the impact of the project on these ecological factors, almost all of them have been selected as IEC to identify and to assess impact of proposed project on them.

Habitat

Habitat health and diversity are very important for ecosystem. Different construction activities may have impact on habitat due to disposal of waste and waste water, alteration of existing landscape, increase of anthropogenic activities, etc. Emissions of greenhouse gases, NOx, Heat, etc from power plant may have impact on surrounding ecosystem habitat, which depend on the emission rate and nature.

Terrestrial flora

The potential impact on terrestrial flora of riverside, roadside, homestead and agricultural land is related to the site clearance activities, construction activities during implementation phase, open-air coal storage facilities, management of coal dust, fly ash etc. Smaller plants (herbs, shrubs) are sensitive to change of their surroundings.

Terrestrial fauna

Different species of frog, amphibians, reptiles, mammals, are found within the project area and they are also under the threat of extinction due to the devastating impacts of the plant.

Aquatic flora

Aquatic flora including planktonic community is a good indicator of ecological health. The aquatic flora and planktonic community of the river and adjoining freshwater sources may be affected due to changes in water quality.

Aquatic fauna

The proposed coal-fired plant is located close to the major river Passur. This river is notified as regular roaming ground of endangered aquatic mammal – the Ganges River dolphin and Estuarine Crocodile. The river also serves as the migratory route for many anadromous species. Hilsa is a well know anadromous fish species. Among reptiles like Dog-faced water snake (Cerberus rhynchops), White-bellied snake (Fordonialeucobalia), critically endangered Estuarine River Terrapin (Batagurbaska) are few of the known anadromous animals. These faunal species may have face the risk of destruction of their habitats and breeding grounds.

Benthic community

Generally, benthic communities are very sensitive to waste water discharge, thermal plume, dredging operation, pollution from ships etc. Species composition of the river may be changed due to any change in river water quality, heat gradient, etc.

Bengal Tiger and Deer

Bengal tiger is a globally threatened species and the spotted deer is the major prey of tiger. The existing navigational route in Passur River will be used for transporting coal for the proposed power plant. The vessel movement and sound pollution from vessel would create disturbance (feeding/ grazing, breeding, movement etc.) for the tiger and deer.

Crocodile

Estuarial crocodile is also found in Sundarbans mangrove forest’s river and estuaries. The movement of ships through the rivers and creeks inside the Sundarbans, oil spills, and sound from vessel may create disturbance (feeding territory, breeding behavior, roosting and basking habitat) for such aquatic reptiles.

Dolphin community

The Passur River is an important habitat for Dolphin. Bangladesh has established three new wildlife sanctuaries for endangered freshwater dolphins in the Sundarbans. Officially declared on January 29, 2012, the sanctuaries are intended to protect the last two remaining species of freshwater dolphins in Asia - the Ganges River dolphin and the Irrawaddy dolphin. The habitat and breeding place of this dolphin community would have been affected by the coal transportation activities.

Invasive species

Invasive species may become very harmful for ecosystem and its community. In general, maritime vessels may carry invasive species. The proposed project includes maritime transportation of coal from different international sources (Australia, Indonesia and South Africa).

Ambient air

Land filling, site establishment, earth works, construction materials processing, construction activities, vehicle movement, etc. may generate fugitive dust particles. The proposed project involves construction activities like civil construction, mechanical construction, handling and stocking of construction materials, etc. It is necessary to adopt management plan for controlling the fugitive particulate matter during construction activities.

Emission of greenhouse gases

Carbon dioxide and nitrogen oxides may be emitted from combustion of the petroleum products in project related vehicles, machinery, generators, and vessels/barges etc during the construction period. This impact may further be minimized by adopting Environmental Management Plan.

Ambient noise

Operation of different machineries and equipments for construction activities, running of heavy load traffic for construction materials transportation, and regular traffic movement may generate noise during construction period. The produced noise may have impact on existing acoustic environment of rural category defined in ECR, 1997. Local inhabitants may feel disturbed due to noise from line sources (traffic movement).

Waste generation and disposal

Construction activities may generate different categories of solid wastes and might have impact on local environment only if not managed properly. Wastes may be generated from earth works, site establishment, civil construction, stockpile of materials, and domestic household activities. The wastes might be metals, concrete, spoiled construction material, excavated spoils, spilled oil from machinery and vehicles, etc. The EIA also suggests different management plan as EMP for controlling generation and scattered disposal of wastes. If EMP is properly implemented, there might be only some minor local and short term impact of waste disposal on physical environmental resources i.e. water, land resources and agriculture.

Water bodies and water resources

During pre-construction phase the environmental quality of water resources may not be impacted significantly, as there will be no activities on water resources except some navigation for site visit. The construction activities and installation of power plants may cause changes in the surface water and ground water quality and potential. Little drawdown of local groundwater table may be noticed in dry season due to withdrawing of groundwater for construction activities. In the project area, lowest ground water table occurs during April-May. Therefore, it is necessary to initiate proper management plan for limiting the use of groundwater during dry season. However, the problem of this phenomenon will be short term and consequences of this problem might not be significant as there is no hand pump tube well within 1km of the project.

Surface Water Quality

Oil spillage from the workshop, water vessel may contaminate surface water near the construction site.

Impacts of dredging activities

Dredging operation may increase turbidity of water at dredging locations. If the dredgers cannot be managed properly, water quality of river may be contaminated by spillage of oil, grease and effluent from dumping site. Dumping of dredged material and seepage from dumped dredged material may also increase the turbidity of river water at project site. Nevertheless, the dredging may improve navigability of the Passur River. The implementing agency should be responsible for taking necessary measures for mitigation of impact.

Fish Habitat

The only direct impact during pre-construction phase is acquisition of agricultural cum shrimp aquaculture area. Acquired land includes shrimp aquaculture farm, mangrove, intertidal area, and tidal creeks which are used as, fish habitat. Construction work including land filling by dredging, sand lifting, site clearance and physical construction of plant setup etc. which may have impacts on open water fish habitats, fish diversity and hence on fish production.

Fish Migration

The Passur, Chunkuri and Maidara rivers are the main channels for open water fish migration. All the migratory fishes move inward and seaward for their biological needs (e.g. spawning, feeding). Navigational activities for transporting construction materials through existing navigation route and dredging activities may result minor disturbance to fish migration. Only during the dredging operation, fish migration may be disturbed within the dredging operation area.

Fish Production

The only direct impact of land acquisition would be loss of culture fish production from the acquired shrimp aquaculture. The loss may stand up to a maximum of 564 tons annually. This impact may be limited only within the project boundary. There may not be any loss of capture fish from the Passur and Maidara rivers during construction period. Only during dredging operation, local fisher may notice less catch from the dredging operation area and its close proximity.

Q. Does the Rampal Coal Power Project adhere to the Equator Principles (EP)?

A. The Equator Principles (EP) are understood to be the minimum standard for responsible investment and management of environmental and social risk in the project finance sector. The Rampal coal plant fails to comply with even the minimum environmental and social norms established by the Equator Principles.

The Rampal coal plant is in Category A, with irreversible adverse impacts. Category A, the highest level of risk, is assigned to a project if it is known to pose “potential significant adverse environmental and social risks and/or impacts that are diverse, irreversible or unprecedented.”

An Environmental and Social Impact Assessment (ESIA) is required for all Category A projects. Further, the assessment is required to be “an adequate, accurate and objective evaluation and presentation of the environmental and social risks and impacts, whether prepared by the client, consultants or external experts.” Assessment documentation “should propose measures to minimise, mitigate, and offset adverse impacts in a manner relevant and appropriate to the nature and scale of the proposed Project.” The assessment process and documentation for the Rampal coal plant falls far short of these minimum requirements under Principle 2.

Under EP - 3, the borrower’s assessment process must address compliance with “relevant host country laws, regulations and permits that pertain to environmental and social issues”. The Rampal plant involves violations of key pieces of legislations such as the Environmental Conservation Regulation 1997 (ACR 1997), the Environment Conservation Act 1995, and the Forest Act 1927. Under Bangladesh’s Forest Act 1927 and Section 5 (1) of the Environment Conservation Act 1995, the Ministry of Forestry and Environment has established a protected buffer area of 10 kilometers in width around the entire perimeter of the Sundarbans Reserve Forest. This protective zone is designated as an Ecologically Critical Area (ECA) and Industries or projects that cause soil, water, air and noise pollution to these areas are prohibited. The outer perimeter of the ECA around the Sundarbans is located just 4 kilometers from the Rampal coal plant, raising concerns about potential adverse impacts within the ECA itself.

Importantly, EP 4 requires that “the level of detail and complexity of the ESMP and the priority of the identified measures and actions will be commensurate with the Project’s potential risks and impacts.” No evidence has been found that an ESMS or an ESMP has been prepared for this project. If correct, this is a clear violation of Equator Principle 4.

The Principle - 5 requires that the consultation process be “tailored” to the risks and impacts of the Project and should be “free from external manipulation, interference, coercion and intimidation.” The Rampal coal plant has grossly violated each of these Equator Principle 5 requirements.

The Principle 6 stipulates establishment of a grievance mechanism “designed to receive and facilitate resolution of concerns and grievances about the Project’s environmental and social performance” in all Category A projects. There is no evidence that an accessible, legitimate, and functioning grievance mechanism has been established to address and resolve the concerns of people who have been harmed by the forcible acquisition of land and other resources that formerly sustained them.