Ex-ante Evaluation
1. Name of the ProjectCountry: The People’s Republic of Bangladesh
Project: New Haripur Power Plant Development Project(Loan Agreement: December 11, 2007; Loan Amount: 17,767 million yen; Borrower: The
Government of People’s Republic of Bangladesh)
2. Necessity and Relevance of JBIC’s Assistance
1. Present state and issues facing the power sector in Bangladesh
In Bangladesh, the serious gap in the supply and demand of electricity has posed a bottleneck foreconomic growth. The power generation capacity is about 3,700 MW, which falls far short of thepeak-hour demand of around 4,600 MW (as of 2005), thus forcing the government to carry out
planned outages, mainly around peak hours. Going forward, the demand for electricity is projected
to increase at 8–10% annually, and in its master plan, the Ministry of Power, Energy and Mineral
Resources estimates that the power generation capacity of Bangladesh would have to be increased
by 5,000 MW by the year 2012.
In order to eliminate the supply and demand gap, and thereby stabilize the supply of electricity, inaddition to the development of new power sources, the big challenge is to improve the efficiency ofthe power sector as a whole by raising the availability factor of power plants and reducing thesystemic loss of electricity. Specifically, this entails (i) raising the availability factor of power plants,(ii) creating an appropriate operation and maintenance system with the view to reducing unplanned
outages at power plants, (iii) improving the financial standing of the power sector by charging
reasonable electric power rates and securing funds for making capital investments, and (iv)
expediting procurements for new projects.
2. Policies of the power sector in Bangladesh and the position of this project
In its Vision Statement on Power Sector Reforms (2000), the government of Bangladesh
advocates the national goal of “providing access to affordable and reliable electricity to all by the year 2020.”
Toward this end, the government is tackling the issue of making capital investments. Concurrently,
in addition to drafting the aforesaid sector reform plan, the government set up the Energy Regulatory
Commission and is now implementing the gradual split up of the three divisions (generation,transmission and distribution) of the Bangladesh Power Development Board (BPDB) with a view toeliminating the government’s excessive involvement in the power industry and promoting thestreamlining of management of Bangladesh’s electric power system.
3. JBIC’s assistance policy for the power sector in Bangladesh and actual performance
In its Medium-Term Strategy for Overseas Economic Cooperation Operations (FY2005–2007),JBIC sets “assistance for improvement of the core economic infrastructure to raise income levels
and promote economic growth” as its priority area for Bangladesh. This project aims to boost
Bangladesh’s power generation capacity and stabilize the supply of electricity by supporting theconstruction of a new base-load combined cycle thermal power plant and the streamlining ofoperation and maintenance of both new and existing power plants. Thus the project is consistent
with JBIC’s assistance policy, and JBIC’s support for the project is highly necessary and relevant.

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3. Project Objectives
The objective of this project is to meet the growing demand for electricity by constructing a new
thermal power plant in Haripur of Narayanganj District, in the outskirts of Dhaka, and supporting
the strengthening and streamlining of the operation and maintenance system of power plants as awhole, and thereby contribute to the enhancement of Bangladesh’s industrial competitiveness andimprovement of the people’s livelihood.
4. Project Description(1) Target Area
Haripur, Narayanganj District (outskirts of Dhaka)(2) Project Outline(a) Construction of a combined cycle thermal power plant (360 MW)(b) Engineering consulting services (detailed design, bidding assistance, construction
monitoring and supervision)(c) Management consulting services (structural enhancement of Electricity Generation
Company of Bangladesh [EGCB], support for the creation of an operation and maintenancesystem for Haripur power station, etc.)(3) Total Project Cost / Loan Amount
54,409 million yen (Total Yen Loan Amount: 41,130 million yen, Yen Loan Amount for This Time:
17,767 million yen)
(4) Schedule
October 2007–September 2015 (96 months). The definition of project completion is “when Long
Terms Service Agreement are completed.”(5) Implementation Structure(a) Borrower: The Government of People’s Republic of Bangladesh(b) Executing Agency: Electricity Generation Company of Bangladesh Limited (EGCB)(c) Operation and Maintenance System: Same as (b)(6) Environmental and Social Consideration(a) Environmental Effects / Land Acquisition and Resident Relocation(i) Category: A(ii) Reason for Categorization
This project falls into a thermal power sector project which is likely to have significant
adverse impact on the environment under the “Japan Bank for International Cooperation
Guidelines for Confirmation of Environmental and Social Considerations” (established inApril 2002). Thus this project is classified as Category A.
(iii) Environmental Permit
Preparation of the Environmental Impact Assessment (EIA) report related to the project wasapproved by the Department of Environment (DOE) of the Ministry of the Environment and-2-Forest in September 2006.
(iv) Anti-Pollution Measures
This project is expected to meet the emission and environmental standards of Bangladesh byadopting various measures regarding air quality, water quality, noise and vibration, including
installment of exhaust stacks, wastewater treatment facilities and noise absorption units. Inaddition, measures are expected to be taken to reduce the impact of warm water drainage onriver systems at the time of detailed design.
(v) Natural Environment
This project will be implemented on the premises of existing power station, and there are norare species or natural preserves in the vicinity of the project site. Thus the adverse impact
on the natural environment is assumed to be minimal.
(vi) Social Environment
This project will be implemented on the premises of existing power station, and so it does
not involve land acquisition or resident relocation.
(vii) Other/Monitoring
In this project, the executing agency will monitor the air quality, water quality, noise, etc.
(b) Promotion of Poverty Reduction
None(c) Promotion of Social Development (e.g. Gender Perspective, Measures for Infectious
Diseases including AIDS, Participatory Development, Consideration for the Handicapped,etc.)
During the construction period, in cooperation with local NGOs, HIV/AIDS education andtraining will be provided for workers.
(7) Other Important Issues
In order to enhance the sustainability of the project, “Long Terms Service Agreement” will beintroduced in the operation and maintenance of the new thermal power plant. In addition to thesteady supply of hard-to-find parts such as hot spare parts produced by gas turbine manufacturers,
personnel at the new Haripur power plant will be given guidance on the operation and maintenanceof the plant. Moreover, the existing and new power plants in Haripur will be regarded as profit
centers that have the rights and responsibilities of both profits and expenditures of these plants(strategic business unit system). A management consultant will be hired to support the streamliningand revitalization of the operation and maintenance of both power plants.
5. Outcome Targets(1) Evaluation Indicators (Operation and Effect Indicator)
TargetIndicator(2015, 3 years after completion)
Maximum output (MW)360Plant load factor (%)
70NoteAvailability factor (%)
86.3
Auxiliary power ratio (%)
5Gross thermal efficiency (%)
50-3-Human error
0Machine failure0
Planned outage
1,200
Human error
0Outage times by cause
Machine failure0(no./year)
Planned outage
1
Net electric energy production (GWh/year)
2,097
Note: In the case of power plants for base power source use, about 50 days peryear of planned outage are necessary for implementing periodic inspections. Thus
an availability factor of 86% or so should be considered reasonable.
Outage hours by cause(hours/year)(2) Internal Rate of Return (Financial and Economic Internal Rate of Return)
Based on the following conditions, the economic internal rate of return (EIRR) of the project is20.7%; the financial internal rate of return (FIRR) is 6.6%.
[FIRR](a) Cost: Project cost, operation and maintenance expenses(b) Benefit: Earnings from selling electricity(c) Project Life: 25 years[EIRR](a) Cost: Project cost (excluding tax), operation and maintenance expenses(b) Benefit: Earnings from the selling of electricity based on the assumed wholesale price ofelectricity(c) Project Life: 25 years
6. External Risk Factors
Delays in construction work due to flooding and other natural disasters.
Delays in a main gas pipe construction project supported by the World Bank to which this projectplans to hook up a gas pipe line as a feeder.
7. Lessons Learned from Findings of Similar Projects Undertaken in the Past
In the ex-post evaluations of similar past projects, the lesson learned is that to ensure the success andsustainability of projects, strengthening of the operation and maintenance system of the executingagency is indispensable. In this project, in addition to hiring a management consultant to support thesaid system, long-term maintenance services will be introduced including technology transfer,
thereby reinforcing the actual activities of the project.
8. Plans for Future Evaluation(1) Indicators for Future Evaluation(a) Maximum output (MW)(b) Plant load factor (%)(c) Availability factor (%)(d) Auxiliary power ratio (%)(e) Gross thermal efficiency (%)(f) Outage hours by cause (hours/year)-4-(g) Outage times by cause (no./year)(h) Net electric energy production (GWh/year)(2) Timing of Next Evaluation
Three years after project completion-5-