Ex-Ante Project Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: The People's Republic of Bangladesh
Project: Matarbari Ultra Super Critical Coal-Fired Power Project (III)Loan Agreement: June 29, 2017
Loan Amount: 10,745 million Yen
Borrower: The Government of the People’s Republic of Bangladesh
2. Background and Necessity of the Project(1) Current State and Issues of the Power Sector in Bangladesh
In the People’s Republic of Bangladesh, electric power supply has not kept up with theincreasing demand resulting from the country’s industrialization and rapid economic growth inrecent years. As of 2015, the potential demand was 9,000 MW, but the actual maximum power
supply was 8,177 MW (Bangladesh Power Development Board: BPDP), which means that thesupply capacity is 90% of demand.
Although the power demand is estimated to increase by 9.3 % per annum over the next decade,the output of domestic natural gas will decline following its peak in 2016. Gas-fired power
plants, which account for approximately 60% of the total capacity of electric power facilities,
depend on domestic natural gas as its energy source. Therefore, an increase in its power
supply and diversification of its energy sources are urgently required.
(2) Development Policies for the Power Sector in Bangladesh and the Priority of the ProjectIn the 7th Five-Year Plan (FY2016/17–FY2020/21), which is regarded as the top-ranked planof the national development strategy, the power sector is positioned as one of the mostimportant sectors in Bangladesh, which aims to attain middle income country status by 2021.
Also, the 2010 Power System Master Plan stated that coal is the most important primaryenergy and that imported coal should be used as the base power source for the country’s
electric demand, which will be nearly 34,000 MW by 2030. The plan counts the constructionof high-efficacy ultra-super critical coal-fired power plants as a hot issue.
The Matarbari Ultra Super Critical Coal-Fired Power Project (hereinafter referred to as “theProject”) is a highly-prioritized project being carried out under the direct supervision of thePrime Minister as an infrastructure improvement project that is intended to meet the country’s
rapidly increasing power demand as well as to diversify its energy sources.
(3) Japan and JICA’s Policy and Operations in the Power Sector
The acceleration of economic growth has been raised as a priority field in the Country
Assistance Policy for Bangladesh (June 2012), and the shortage of power is considered to be
the biggest bottleneck in the economic development. Also, the JICA Country Analysis Paperfor Bangladesh (April 2013) describes securing a “stable power supply” as a priority task, andthe Project is in line with these policies and the analysis. The major forms of assistanceprovided in the power-sector thus far are as follows.


Loan: New Haripur Power Plant Development Project (FY2007–FY2008), Bheramara
Combined Cycle Power Plant Development Project (FY2010–FY2013), National Power
Transmission Network Development Project (FY2013), Renewable Energy
Development Project (FY2013), etc.
Technical Cooperation: Dispatch of Power Sector Adviser (FY2004–present),
Strengthening Management and Performance Standards in Power Sector of Bangladesh
through Promotion of TQM (FY2006–FY2009), Master Plan Study on Coal Power
Development in Bangladesh (FY2009–FY2010), etc.

(4) Other Donors’ Activity
The World Bank is providing support for matters such as the following: improvement of thecore transmission network; development assistance loans for the power sector; formulation ofplans for the financial reform and restructuring of the power sector; and construction ofgas-fired power plants. The Asian Development Bank is providing supports for the following:
improvement of the BPDP’s management efficiency; establishment of the Bangladesh Energy
Regulatory Commission (BERC); and construction of gas-fired power plants.
(5) Necessity of the Project
The provision of support for this Project is in line with the policies and the analysis of theGovernment of Japan and JICA. Also, the Government of Bangladesh is placing emphasis on
the need to construct high-efficiency coal-fired power plants, which use imported coal, as ameasure to provide a stable power supply that will be able to cope with the rapidly increasing
power demand as well as the need for a diversification of energy sources. Therefore, thenecessity for JICA to support the Project is substantial.
3. Project Description(1) Project Objective
The objective of the Project is to meet the increasing electricity demand and achieve stable
power supply in Bangladesh, by constructing an ultra super critical coal-fired power plant inMatarbari area, thereby contributing to nationwide economic development and improvementof living standard.
(2) Project Site / Target Area
Cox’s Bazar District and Chittagong District in Chittagong Division(3) Project Components
1) Ultra Super Critical Coal-Fired Power Plant (600 MW x 2)
Port and harbor to unload coals (Maximum water depth of approximately 18.5 m)

2) Transmission lines (approximately 92 km with 400 kV, towers etc.)
3) Access roads (bridge: approximately 675 m, construction of new roads: approximately
8.5 km, repair of existing roads: approximately 34.5 km etc.)
4) Electrification of the surrounding areas (Transmission line of 132 kV: approximately 25km, Substation with 132/33 kV and 33/11 kV, Distribution facilities with 33/11/6.35/ 0.4kV)5) Procurement of equipment and materials (Large-sized vehicles, measuring instruments,equipment for disaster prevention etc.)
6) Consulting services (detailed design, tender assistance, construction supervision etc.)(4) Estimated Project Cost (Loan Amount)
700,369 million Yen (Loan Amount in this phase: 10,745 million Yen)
(5) Schedule
June 2014 - July 2027 (146 months in total). The Project will be completed when the facilities
are put in place (January 2024).
(6) Project Implementation Structure1) Borrower: The Government of the People’s Republic of Bangladesh
2) Executing Agencies: Coal Power Generation Company Bangladesh Limited (CPGCBL),Power Grid Company of Bangladesh Limited (PGCB), Roads and Highways
Department (RHD)
3) Operation and Maintenance System: CPGCBL, PGCB and RHD will carry out theoperation and maintenance of this project, and also Bangladesh Water Development
Board (BWDB) will be in charge of the dikes which form a part of access roads.
(7) Environmental and Social Consideration / Poverty Reduction / Social Development1) Environmental and Social Consideration① Category: A② Reason for Categorization: This Project applies to the sector of thermal power plantstated in the Japan International Cooperation Agency (JICA) Guidelines forEnvironmental and Social Considerations (April 2010).
③ Environmental Permit:
The Environmental Impact Assessment (EIA) reports were approved by theDepartment of Environment of Bangladesh (DOE) for the construction andimprovement of the power station and port/harbor in October 2013 and for theconstruction and improvement of power transmission lines and access roads inNovember 2013. Subsequent changes to power transmission line routes were included
in preparing an EIA report for the Dhaka-Chittagong Main Power Grid Strengthening
Project, and approved by DOE in June 2016. An updated addition to access roadconstruction will most likely be approved by DOE in December 2017 following ascheduled update of the relevant EIA report. There are arrangements for JICA to bekept abreast of the progress on updating the access roads. The EIA for the rural
electrification (power transmission/distribution grid construction) component of theProject received DOE approval in October 2015.
④ Anti-Pollution Measures:
The Project will incorporate seawater-based flue gas desulfurization equipment and alow-NOx combustion system and thereby expects to meet the criteria for both sulfuroxide (SOx) and nitrogen oxide (NOx) exhausts from power stations in accordancewith applicable domestic and international regulations (IFC Environmental, Health,and Safety Guidelines). The projected power station is expected to meet both nationaland EHS Guidelines standards for atmospheric concentrations. In terms of smoke dust(particulate matter) pollution, the power station conforms to the EHS Guidelines.
Meanwhile, the estimated (annual) PM10 concentration level (42.4 to 62.4 µg/m3) inemissions from the power station exceeds the upper limit of Bangladesh's prescribedrange—this was the only exception in which the plant missed the threshold. However,this very likely reflected the impact of the pre-implementation concentration level (42to 62 µg/m3) and the Project presumably contributed an insignificant 0.4 µg/m3. The
plant will be equipped with a tall stack (275 m) and electrical dust collectors tominimize the effects of the PM. The Project uses seawater as a coolant. By controlling
the temperature of the water at discharge to within 7°C above the temperature atintake, the plant will comply with the national standard (less than 40°C). Therefore, nonegative impact is expected on the ecological system. The power station is expected tomeet both national and EHS Guidelines noise standards during construction and while
in service.
⑤ Natural Environment:
The target area does not apply to a vulnerable area, such as national park, or its
surrounding. About 15 km south of the site lies Sonadia Island, which is designated as
an Ecologically Critical Area by the government of Bangladesh. However, as themitigation measures noted in Anti-Pollution Measures will be taken, the effects of air
pollution, water contamination, etc., will be limited, so no negative impact is expectedon the island. To keep breeding sea turtles out of harm's way, necessary measures will
be taken during their egg-laying season, including dimming the intensity of lightsources illuminated on the sea surface or the surrounding area during construction andlimiting noise and vibration. Project workers will be banned from gathering,harvesting, or hunting spoon-billed sandpipers and other rare species, or their eggs.
⑥ Social Environment:
The size of land to be acquired for constructing the power station and port/harbor isabout 475 ha. The site under consideration is used as a salt farm in the dry season andas a shrimp farm during the rainy season. The number of residents whose livelihoods,

etc., will be adversely affected by the construction and improvement of the power
station and port/harbor totals 2,647. Out of these affected residents, 1,077 are subject
to involuntary relocation (of which there are 16 illegally domiciled families). Work isin progress to determine the size of land to be acquired for the construction andrepair/renovation of access roads; as well as the number of affected residents; thenumber of relocated residents; and the number of illegally domiciled residents in eachof the aforementioned two groups as part of the ongoing process of updating theRelocation Assistance Program (RAP) to accommodate the completed detailed design.
The updated RAP is scheduled to be finalized in September 2017 at the latest after
discussions with local stakeholders. The power transmission grid construction andrural electrification components will be used on land belonging to the executing
agency and to the government, so no land acquisition is required. Incidentally, it has
been determined that this portion of power transmission lines will be connected to thesubstation constructed in the Dhaka-Chittagong Main Power Grid Strengthening
Project. Compensation claims will be granted with the submission of an RAP preparedin accordance with the JICA Guidelines for Environmental and Social Considerations
and Bangladesh's applicable procedures for the acquisition of land, relocation ofresidents, and compensation for lost assets and affected livelihoods. In discussions
held with local stakeholders, no objections to the Project were raised by participants;
meanwhile, requests were expressed to properly manage the environment and todevelop the infrastructure in the surrounding regions. The executing agency indicateda willingness to act appropriately on such requests, and obtained understanding fromthe participants.
⑦ Other/Monitoring:
The relocation of local residents and the rehabilitation of affected livelihoods will bemonitored on an ongoing basis, internally by the executing agency and externally by
third-party institutions. In this project, the monitoring of the environment during
construction will be done by the executing agency and contractors, while themonitoring of air quality, water quality, water temperature, noise, etc., after thecommencement of service will be done by the executing agency.
2) Promotion of Poverty Reduction① Electrification of the surrounding areas
Improve the electric facilities in the surrounding areas of the power plant, andimplement the electrification of the 4,000 households in Matarbari/Dalgata areas.
② Improvement of the basic infrastructure for the workers
The improvement of the basic infrastructure for daily life is going to be carried out
with the fund of the Government of Bangladesh for the workers involved in thisProject. The public facilities which will be built as a part of this infrastructure
improvement, such as hospitals and schools, can also be used by the local residents ofthese areas.

③ Budget allocation in proportion as power generation amountThe Matarbari power plant is in the target area of the Social Development Fund
whose establishment was approved by the Government of Bangladesh in November
2012, and 0.03 Taka per 1 kWh of electricity sales shall be saved into theabove-mentioned fund. The budget shall be allocated from this fund to theadministrative bodies in the Matarbari area, and this budget is allowed to be used
only for the purposes that contribute to the improvement of living environment.
3) Promotion of Social Development
Measures against HIV/AIDS shall be taken by the implementing agency as well as thecontractor for the workers employed during the construction period as a part of thepackage for the construction of the power plant/port and harbor, transmission lines and theaccess roads of this Project. Also, male and female interview, gender-balanced stakeholder
meetings have been conducted on environmental and social consideration during thepreparatory survey. Therefore, it is categorized as gender mainstreaming needs assessment
and analyses project.
(8) Collaboration with Other Donors: None

4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators (Operation and Effect Indicators)
Indicator[Operation Indicators]
Power Plant
Maximum output
Utilization ratio
Operation rate
Auxiliary power ratio
Gross thermal efficiency
Unitdowntime(*)

Human errors
Mechanical troubles
Regular Inspections

Suspension frequency of the unit
operation(*)
Transmission Lines
Transmission loss rate
Ports and Harbors
Berth operation rate
Total cargo volume
Volume of dredged soil
[Operation and Effect Indicators]
Net electric energy production
CO2 emission(*)
NOX emission(*)
SOX emission(*)
Dust emission(*)
Fuel consumption(*)(*) Per Unit

Unit

Target (2026)【Expected value 2years after projectcompletion】

MW%%%%
hours / year
hours / year
hours / year
times / year

1,20080
85
6.48
41.29
0218
1,096
10%0.4%1,000 tons / year
Cubic meter / year

60
4,000
360,000GWh / year
1,000 tons / year
1,000 tons / year
1,000 tons / year
1,000 tons / year
1,000 tons / year

7,865
6,832
6.1
10.90.71,8632) Internal Rate of Return
According to the following preconditions, the Project’s Economic Internal Rate of Return(EIRR) will be 16.1%. The Financial Internal Rate of Return (FIRR) will be 2.3% for thecomponent of generation and 11.7% for the component of transmission.
【EIRR】
Cost: Project cost (excluding tax), Fuel cost, Maintenance and operation cost
Benefit: Difference with the electricity generated with oil
Project Life: 25 years【FIRR】(Component of Generation)
Cost: Project cost, Fuel cost, Maintenance and operation cost, Tax, Discount rate
Benefit: Sales revenue of electric power (PPA: Power Purchase Agreement)
Project Life: 25 years

(Component of Transmission)*
Cost: Project cost, Fuel cost, Maintenance and operation cost, Tax, Discount rate
Benefit: Power transmission fees, Residual value at the end of project life
Project Life: 25 years* In the Dhaka-Chittagong Main Power Grid Strengthening Project, the FIRR of thewhole Dhaka-Matarbari transmission project is calculated including the components ofthe Project.
(2) Qualitative Effects
Revitalization of the nationwide economic development and mitigation of climate change
5. External Factors and Risk Control
1) Possible delays arising from natural disasters, such as cyclones.
2) An inability to sign power purchase agreements would pose a risk to the financial viabilityof the executing agency.
6. Lessons Learned from Past Projects(1) Lessons Learned from Past Projects
The results of the ex-post evaluation of the Mombasa Diesel Generating Power Plant Projectin Kenya demonstrates that appropriate support from the manufacturers enhances thesustainability of power plants projects.
(2) Application of Lessons Learned to the Project
As this is the first technology to be introduced in Bangladesh, the Project aims to build andestablish a maintenance and operation system by means of a technology transfer throughconsulting services and a Long Term Service Agreement by manufacturers. Also, themanagement system of the implementing agency shall be strengthened by the organization
reinforcement consultant to be employed in the Project.
7. Plan for Future Evaluation(1) Indicators to be Used
1) Maximum output (MW/ year), Utilization ratio (%), Operation rate (%), Auxiliary power
ratio (%), Gross thermal efficiency (%), Unit downtime (human errors, mechanicaltroubles, regular inspections) (hours/ year), Suspension frequency of the unit operation(times / year), Transmission loss (%), Fuel consumption (1,000 tons / year), CO2 emission(1,000 tons / year), Transmission loss rate (%), Berth operation rate (%), Total cargovolume (1,000 tons / year ), Volume of dredged soil (cubic meter/ year), Net electric energy
production (GWh/ year), CO2 emission (1,000 tons / year ), NOX emission (1,000 tons /year ), SOX emission (1,000 tons / year ), Dust emission (1,000 tons / year ), Fuelconsumption (1,000 tons / year)2) Economic Internal Rate of Return (EIRR) (%), Financial Internal Rate of Return (FIRR)(%)(2) Timing: Two years after the completion of the Project