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 (V)Loan Agreement: June 30, 2019
2. Background and Necessity of the Project(1) Current State and Issues of the Power Sector and the 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), However, the actual maximum power supply iscurrently 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 andMineral Resources, 2016), the output of domestic natural gas, which accounts forapproximately 60% of the total power generation, will decline, thus Bangladesh
started to import LNG from 2018 as alternative energy. Diversification of the country’s
energy sources is an important issue in terms of energy security.
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.
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. The
Project is identified as one of Bangladesh’s high-priority infrastructure improvement
projects being carried out under the direct supervision of the Prime Minister ofBangladesh.
(2) Japan and JICA’s Cooperation Policy and Operations in the Power Sector
The JICA Country Analysis Paper for Bangladesh (May 2014) describes securing
a stable 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 theacceleration 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 andFY2013), National Power Transmission Network Development Project (FY2013),
Dhaka Underground Substation Construction Project (FY2017), Moheshkhali
Floating Storage and Regasification Unit Operation Project (Project Financing), ,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 project will construct an ultra-supercritical coal-fired power plant with a rated
output of 1,200 megawatts (600 megawatts×two units) in the Matarbari area of
Cox’s Bazar District, Chattogram Division, in southeastern Bangladesh, thereby
meeting the rapidly rising demand for power in Bangladesh. These measures willcontribute to economic development.
(2) Project Site / Target Area
Matarbari area, Moheshkhali region, Cox's Bazar District, Chattogram Division(3) Project Component(s)1) Ultra super critical coal-fired power plant (600 MW × 2 units), port for coaltransport
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. 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 distribution
facilities)
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)
915,567 million Yen (Loan Amount in This Phase: 143,127 million Yen)
(5) Schedule
June 2014–January 2027 (152 months in total). The Project will complete 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 Agency: Coal Power Generation Company Bangladesh Limited (CPGCBL),Power Grid Company of Bangladesh Limited (PGCB), Roads and Highways
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. CPA
will operate and maintain the access channel, basin, and breakwaters. Operation andmaintenance costs of the access channel, basin, and revetment will be shared
between CPGCBL and CPA according to the ratio of initial investment in the port forcarrying in coal and the commercial port.
(7) Cooperation and Sharing of roles with Other Donors1) Japan’s Activity
A coal-fired power plant to be constructed in the Project will be connected to thetransmission lines to be constructed in the Japanese ODA Loan project called theDhaka-Chittagong Main Power Grid Strengthening Project (FY2015) and will supply
electricity to the Dhaka metropolitan area.
After the completion of the commercial port which is planned to be constructed inthe Japanese ODA Loan project called the Matarbari Port Development Project(FY2019), a part of the port facilities (access channel, basin, and revetment) to be
developed in the Project will be used jointly with the port.
2) Other Donors’ Activity: N/A(8) Environmental and Social Consideration / Cross-Cutting Issues / Category ofGender
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 by
the 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 line
routes 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 the design changeof the access channel are not required. The results of the environmental impact
assessment and mitigation measures for the design change have been
approved as the EIA of the Matarbari Port Development Project.
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 comply

with the national standard (less than 40°C). The noise impact is expected tomeet the standard for Bangladeshi or EHS guidelines during the construction
and 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 on
Sonadia 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 and hatchingseason, including dimming the intensity of light sources illuminated on the sea
surface or the surrounding area during construction and limiting noise andvibration. Project workers will be banned from gathering, harvesting, or hunting
spoon-billed sandpipers and other rare species, or their eggs. In addition, theadditional environmental impact on the expansion of the access channel andbasin, joint work with the port project, is assumed to be the impact of dredged
soil discharged to the sea, but the impact on the surrounding environment will
be minor, because mitigation measures will be taken to minimize the impact onbenthic organisms, fish, and other organisms. For example, the diffusion ofpollution will be minimized by selecting a sea area with a sufficient distanceand depth from offshore as a candidate site for ocean disposal, installation of apollution diffusion prevention film, and other measures.
⑥ Social Environment: The size of land acquisition for construction of the power
plant and port is approximately 572 ha, and these areas are currently used assalt fields in the dry season and as shrimp farms in the rainy season. 48
households (illegal residents) will need to have relocated by thecommencement of construction and improvements to the power station andport. The number of residents affected by the construction will be 2,381. The
size of the land to be acquired for the construction, maintenance and repair ofaccess roads (bridge: approx. 700 m; construction of new roads: approx. 7.4km; 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 land acquisition and compensation payment willproceed according to Bangladesh’s domestic procedures and theResettlement Action Plan (RAP), which was created based on the JICA
Guidelines for Environmental and Social Considerations. No land acquisition
will be needed for the construction of transmission lines or for the electrificationof surrounding areas since properties owned by either the executing agency or
the government will be used. In discussions held with local stakeholders, noobjection was raised with regard to the Project, but some requests were madefor the environment to be properly managed and the infrastructure to bedeveloped in the surrounding regions. The executing agency responded thatthey will take appropriate measures in response to these opinions andrequests, and the understanding 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, vibrations and ecosystem during construction. After thecommencement of service, the executing agency will continue monitoringthese factors.
2) Cross-Cutting Issues: With support from construction supervision 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 greenhousegas emissions will be approximately 0.4 million tons/year (CO2) less than that ofa similarly sized coal-fired power plant using subcritical technology, thereby
contributing to the mitigation of climate change.
3) Category of Gender [N/A]: GI (Gender Mainstreaming Needs Assessment andAnalysis Project)
Reason for Categorization: Gender-segregated interviews and gender-balanced
stakeholder meetings have been conducted with regard to environmental andsocial 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
Human
Unit
errors

Unit

MW%%%%
hours/year

Baseline(Actual value in2013)

Target (2026)(Expected value 2 years
after project completion)-

1,20080
85
6.48
41.29
0MechanicaltroublesRegularinspections
Frequency of suspensionof operations(*)
Transmission
LinesTransmission loss rate
PortsandHarbors
Berth operation rate
Total cargo volume[Operation andEffect Indicators]
Netelectric
energyproduction
CO2 emissions(*)
NOX emissions(*)
SOX emissions(*)
Dust generated(*)
Fuel consumption(*)* Per unit.
downtime(*)

hours/year-

218

hours/year

-

1,096

times/year

-

10%

-

0.4%
1,000 tons/year

-

60
4,000

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
1,863

(2) Qualitative Effects
Revitalization of nationwide economic development in Bangladesh and mitigation ofclimate change.
(3) Internal Rate of Return
According to the following preconditions, this project’s Economic Internal Rate ofReturn (EIRR) will be 12.8%. The Financial Internal Rate of Return (FIRR) will be
2.5% for power generation and 11.7% for power transmission.
【EIRR】
Cost: Project costs, fuel costs, and maintenance/operation costs (excluding tax)
Benefit: The difference between electricity generated by the Project (with case)and the costs of electricity purchased from private power producers (withoutcase) (including maintenance costs)
Project Life: 36 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: 36 years(Power transmission)
Cost: Project costs (for transmission lines) and maintenance/operation costs
Benefit: Power transmission fees
Project Life: 34 years

5. Preconditions / External conditions(1) Preconditions:
Road construction is planned in the area under the budget of the Government ofBangladesh. Among the access road development components of the Project, 31.5
km of existing road improvement which overlaps with the project plan of theGovernment of Bangladesh was excluded from the Project. The completion of theroad is necessary to realize the effects of the Project.
(2) External conditions: There will be no delays to the civil engineering work, etc., dueto 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 (evaluated in 2005) in the Republic of Kenya demonstrates thatappropriate support from the manufacturers enhances the sustainability of power
plant projects. For the Project, a maintenance and operation system will be built andestablished by means of a technology transfer for operation and maintenancemanagement through consulting services and a Long Term Service Agreement withthe manufacturers. The handling of the Long Term Service Agreement in terms of thetender evaluations and contract conditions is clarified in the tender documents.
7. Evaluation results
The Project is consistent with Bangladesh’s development issues and policies andwith 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 supply
and 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 indicated in sections 4. (1) to (3)(2) Timing
Ex-post evaluation: Two years after the project completion