Japanese ODA Loan

Ex-Ante 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 (IV)
Loan Agreement: June 14, 2018
2. Background and Necessity of the Project(1) Current State and Issues of the Power Sector and Priority of the Project inBangladesh
In the People’s Republic of Bangladesh, electric power supply has not kept up withthe rapidly increasing demand resulting from the country’s stable economic growthand industrialization in recent years. The government estimates that power demand
will reach 13,300 MW by 2020 (“Power System Master Plan 2016,” Ministry of Power,Energy and Mineral Resources), but the actual maximum power supply is currently
10,084 MW (Bangladesh Power Development Board [BPDB], 2018), which is about
70% of that demand. Although the power demand is estimated to increase by 9.3%
per annum over the next decade from 2016 (Ministry of Power, Energy and MineralResources, 2016), the output of domestic natural gas will decline following its 2016
peak. Gas-fired power generation, which accounts for approximately 60% of the total
power generation, depends on domestic natural gas as its energy source. Therefore,diversification of the country’s energy sources is an important issue in terms of energy
security.
In the 7th Five-Year Plan (FY2016/17–FY2020/21), which is regarded as thetop-ranked plan under the national development strategy, the power sector ispositioned as one of the most important sectors in Bangladesh, which aims to become
a middle-income country by 2021. Also, the 2016 Power System Master Plan statesthat imported coal, LNG and nuclear power should be used as new energy sources forthe country’s power demand to supplement the domestic natural gas supply. Thepower sector is identified as one of Bangladesh’s high-priority infrastructure
improvement projects being carried out under the direct supervision of the Prime
Minister of Bangladesh.
The Matarbari Ultra Super Critical Coal-Fired Power Project (hereinafter referred toas the “Project”) is intended to address Bangladesh’s rapidly increasing power
demand and the need to diversify its energy sources by constructing a high-efficiency
ultra super critical coal-fired power plant that utilizes imported coal.
(2) Japan and JICA’s Cooperation Policy and Operations in the Power Sector
The JICA Country Analysis Paper for Bangladesh (May 2014) describes securing astable power supply as a priority task and states that JICA will provide support topromote the importing of energy sources, such as coal, for that purpose. In addition,

Japan’s Country Assistance Program for Bangladesh (February 2018) sets theacceleration of economic growth as a priority field and identifies the shortage of power
as one of the largest barriers to economic development. The Project is, therefore,
consistent with these policies and the analysis. Furthermore, because theconstruction of a power plant and its related facilities (including a port, a coal yard andtransmission lines) will contribute to a stable power supply and greater energy
diversification in Bangladesh, the Project will also contribute to SDG 7 (“Ensureaccess to affordable, reliable, sustainable and modern energy for all”) and SDG 9(“Build resilient infrastructure, promote inclusive and sustainable industrialization andfoster innovation”).
Major forms of assistance provided in the power sector thus far are as follows.
・Loans: New Haripur Power Plant Development Project (FY2007 and FY2008),
Bheramara Combined Cycle Power Plant Development Project (FY2010 andFY2013), National Power Transmission Network Development Project (FY2013),
Dhaka Underground Substation Construction Project (FY2017), etc.
・Technical Cooperation: Dispatching of Power Sector Advisors (FY2004–FY2016),
Strengthening Management and Performance Standards in Power Sector ofBangladesh through Promotion of TQM (FY2006–FY2009), Master Plan Study on
Coal Power Development in Bangladesh (FY2009–FY2010), etc.
(3) Other Donors’ Activity
The World Bank is providing support for the following: improvement of the coretransmission network; provision of development assistance loans for the power
sector; formulation of plans for the financial reform and restructuring of the power
sector; and construction of gas-fired power plants. The Asian Development Bank isproviding support for the following: improvement of the BPDB’s management
efficiency; establishment of the Bangladesh Energy Regulatory Commission (BERC);
and construction of gas-fired power plants. The Asian Infrastructure Investment Bankis providing support for the development of power distribution networks and thereinforcement of gas distribution networks.
3. Project Description(1) Project Objective(s)The objective of the Project is to satisfy Bangladesh’s rapidly increasing power
demand, address the need to diversify its energy sources, and reduce its greenhousegas emissions by constructing a 1,200 MW (600 MW × 2 units) high-efficiency ultra
super critical coal-fired power plant and related facilities (including a port, a coal yardand transmission lines) in the Matarbari area (Chittagong Division, southeast
Bangladesh), thereby contributing to the revitalization of nationwide economic
development and the mitigation of climate change in Bangladesh.

(2) Project Site / Target Area
Matarbari area, Moheshkhali region, Cox's Bazar District, Chittagong Division(3) Project Component(s)1) Ultra super critical coal-fired power plant (600 MW × 2 units), port and coal yard
(water depth: approx. 15.3 m [Chart Datum Level: CDL])
2) Transmission lines (approx. 92 km of 400 kV transmission lines, electric powerpylons, etc.)
3) Access roads (bridge: approx. 675 m; construction of new roads: approx. 7.4 km;
repair of existing roads: approx. 36.5 km; etc.)
4) Electrification of the surrounding areas (132 kV transmission lines: approx. 25km; 132/33 kV and 33/11 kV substations; and 33/11/6.35/0.4 kV distributionfacilities)
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,organization reinforcement, etc.)(4) Estimated Project Cost (Loan Amount)
907,076 million Yen (Loan Amount in This Phase: 67,311 million Yen)
(5) Schedule
June 2014–January 2027 (152 months in total). The Project will be completed uponcommencement of service at the facilities (July 2024).
(6) Project Implementation Structure1) Borrower: The Government of the People’s Republic of Bangladesh
2) Guarantor: N/A
3) Executing Agencies: Coal Power Generation Company Bangladesh Limited(CPGCBL), Power Grid Company of Bangladesh Limited (PGCB), Roads andHighways Department (RHD)
4) Operation and Maintenance System: CPGCBL, PGCB and RHD will carry out theoperation and maintenance of the Project, and the Bangladesh Water Development
Board will be in charge of the embankments that form part of the access roads.
(7) Cooperation and Sharing of Roles with Other Donors
1) Japan’s Activity: N/A
2) Other Donors’ Activity: N/A(8) Environmental and Social Consideration / Poverty Reduction / Social Development
1) Environmental and Social Consideration① Category: A② Reason for Categorization: The Project falls into the thermal power sector
under the JICA Guidelines for Environmental and Social Considerations(published in April 2010).
③ Environmental Permit: The Environmental Impact Assessment (EIA) Report on

the construction and maintenance of the power plant and port was approved bythe Department of Environment (DOE) in October 2013, and the EIA Report on
the construction and maintenance of transmission lines and access roads wasapproved in November 2013. Subsequent changes to power transmission lineroutes were included in the preparation of an EIA report for theDhaka-Chittagong Main Power Grid Strengthening Project, and approved by
the DOE in June 2016. The EIA Report on rural electrification (i.e., constructionof a transmission line network) was approved by the DOE in October 2015. It
has been confirmed that revisions to the EIA Report due to changes to thedesign of the access roads are not required.
④ Anti-Pollution Measures: The Project will incorporate seawater-based flue gas
desulfurization equipment and a low-NOx combustion system, so it is expected
to meet the criteria for both sulfur oxide (SOx) and nitrogen oxide (NOx)exhausts from power stations in accordance with applicable domestic andinternational regulations (IFC Environmental, Health, and Safety Guidelines).
The power station to be constructed in the Project is expected to meet bothnational standards and EHS Guidelines for atmospheric concentrations.
Furthermore, the estimated (annual) PM10 concentration level (42.4 to 62.4µg/m3) for the power station’s emissions exceeded the upper limit of
Bangladesh's prescribed range, but this was the only instance in which theplant missed a threshold. This most likely reflected the impact of thepre-implementation concentration level (42 to 62 µg/m3) and the Projectpresumably contributed an insignificant amount of 0.4 µg/m3. The effects of PM
will be minimized by adopting a high stack (275 m) and electric dust collectors.
Seawater will be used for cooling in the Project, but no negative impact on theecosystem is expected. By controlling the temperature of the water atdischarge to within 7°C above the temperature at intake, the plant will complywith the national standard (less than 40°C). The noise impact is not expected
to meet the standard for Bangladeshi or EHS guidelines during theconstruction or after the commencement of service.
⑤ Natural Environment: The target area of the Project is not located in or aroundvulnerable areas, such as national parks. Sonadia Island, designated as an“Ecologically Critical Area” by the Government of Bangladesh, is locatedapproximately 15 km south of the Project site. However, no negative impact onSonadia Island is expected because the mitigation measures noted in theanti-pollution measures will be taken and the effects of air pollution and watercontamination will remain limited. To avoid any harm to the breeding of sea
turtles, necessary measures will be taken during their breeding season,
including dimming the intensity of light sources illuminated on the sea surface
or the surrounding area during construction and limiting 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 the land that is to be acquired for constructionof the power plant and port is approximately 572 ha, and these areas are
currently used as salt fields in the dry season and as shrimp farms in the rainyseason. Twenty households (Sixteen of which are illegal residents) will need tohave relocated by the commencement of construction and improvements tothe power station and port. The number of residents affected by theconstruction will be 2,156. The size of the land to be acquired for theconstruction, maintenance and repair of access roads (bridge: approx. 675 m;
construction of new roads: approx. 7.4 km; and repair of existing roads: 5 km)
is approximately 41 ha, and this work will involve the resettlement of 93
households and 545 people (none of which are illegal residents). The landacquisition and resettlement of residents will proceed according to
Bangladesh’s domestic procedures and the Resettlement Action Plan (RAP),
which was created based on the JICA Guidelines for Environmental and SocialConsiderations. No land acquisition will be needed for the construction oftransmission lines or for the electrification of surrounding areas sinceproperties owned by either the executing agency or the government will beused. In discussions held with local stakeholders, no objections were raisedwith regard to the Project, but some requests were made for the environment
to be properly managed and the infrastructure to be developed in thesurrounding regions. The executing agency responded that they will takeappropriate measures in response to these opinions and requests, and theunderstanding of the attendees was obtained.
⑦ Other / Monitoring: For the resettlement of residents and livelihood restoration,
the executing agency will conduct internal monitoring and third-party
institutions will conduct external monitoring. With regard to the environment,
the executing agency and the contractor will monitor the air quality, waterquality, noise levels and vibrations during construction. After thecommencement of service, the executing agency will continue monitoringthese factors.
2) Cross-Cutting Issues: With support from consultants, activities will be carried out
to raise awareness and educate construction workers about HIV/AIDS
prevention. Also, with the use of the high-efficiency ultra super critical power
technology, the new plant’s production of greenhouse gas emissions will beapproximately 0.4 million tons/year (CO2) less than that of a similarly sizedcoal-fired power plant using subcritical technology, thereby contributing to themitigation of climate change.
3) Gender Category [N/A]: GI (Gender Mainstreaming Needs Assessment andAnalysis Project)
Reason for Categorization:
Gender-segregated interviews and gender-balanced stakeholder meetings havebeen conducted with regard to environmental and social considerations during
the preparatory survey. Therefore, the Project is categorized as a Gender
Mainstreaming Needs Assessment and Analysis Project.
(9) Other Important Issues
N/A
4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators (Operation and Effect Indicators)

Indicator[OperationIndicators]
Power Plant
Maximum output
Utilization ratio
Operation rate
Auxiliary power ratio
Gross thermal efficiency
Humanerrors
Unit
Mechanicaltroublesdowntime(*)
Regularinspections
Frequency of suspensionof operations(*)
Transmission
LinesTransmission loss rate
PortsandHarbors
Berth operation rate
Total cargo volume
Volume of dredged soil
[Operation andEffect Indicators]
Netelectricenergy
production
CO2 emissions(*)
NOX emissions(*)
SOX emissions(*)
Dust generated(*)
Fuel consumption(*)* Per unit.

Baseline(Actual value in2013)

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

-

1,200
80
85
6.48
41.29
0

hours/year-

218

hours/year

-

1,096

times/year

-

10%

-

0.4

%
1,000 tons/year
Cubicmeters/year

-

60
4,000
360,000

GWh/year-

7,865

1,000 tons/year
1,000 tons/year
1,000 tons/year
1,000 tons/year
1,000 tons/year

-

3,416
6.1
10.9
0.7
1,863Unit

MW%%%%hours/year(2) Qualitative Effects
Revitalization of nationwide economic development in Bangladesh and mitigation ofclimate change.
(3) Internal Rate of ReturnAccording to the following preconditions, the Project’s Economic Internal Rate ofReturn (EIRR) will be 13.8%. The Financial Internal Rate of Return (FIRR) will be
2.1% for power generation and 11.7% for power transmission.
[EIRR]
Cost: Project costs (excluding tax), fuel costs, and maintenance/operation costs
Benefit: Difference between the cost of generating power using coal (this Project)
and the cost of generating power using petroleum (including
maintenance/operation costs, etc.)
Project Life: 25 years[FIRR] (Power generation, port and harbor, and road construction)
Cost: Project costs (for the construction of a power plant, port, harbor, and roads),
fuel costs, and maintenance/operation costs
Benefit: Sales revenue for electric power (PPA)
Project Life: 25 years(Power transmission)
Cost: Project costs (for transmission lines) and maintenance/operation costs
Benefit: Power transmission fees
Project Life: 25 years
5. Preconditions / External Conditions(1) Preconditions: N/A(2) External Conditions: There will be no delays to the civil engineering work, etc., due
to natural disasters (e.g., cyclones).
6. Lessons Learned from Past Projects
The results of the ex-post evaluation of the Mombasa Diesel Generating Power
Plant Project in the Republic of Kenya demonstrates that appropriate support from themanufacturers enhances the sustainability of power plant projects. For the Project, amaintenance and operation system will be built and established by means of atechnology transfer for operation and maintenance management through consulting
services and a Long Term Service Agreement with the manufacturers. The handling of
the Long Term Service Agreement in terms of the tender evaluations and contract
conditions is clarified in the tender documents.
7. Evaluation Results
The Project is consistent with Bangladesh’s development issues and policies andwith the assistance policies and the analysis of the Government of Japan and JICA.
Through the construction of a power plant and related facilities (including a port, acoal yard and transmission lines), the Project will contribute to a stable power supplyand greater energy diversification in Bangladesh, thereby contributing to Goal 7(“Ensure access to affordable, reliable, sustainable and modern energy for all”) andGoal 9 (“Build resilient infrastructure, promote inclusive and sustainableindustrialization and foster innovation”) of SDGs. Thus, the necessity for JICA tosupport the Project is substantial.
8. Plan for Future Evaluation(1) Indicators to be Used
As described in (1)-(3) of Section 4.
(2) Timing
Ex-post evaluation: Two years after the project completion