Japanese financing pullback leaves the government with the option to build another 1200-megawatt coal-based power plant at the Matarbari infrastructure hub on the bay coast through self-financing, officials say.
The state-run Coal Power Generation Company Bangladesh Limited (CPGCBL) has undertaken a Tk 198.39-billion project (2nd phase) for setting up the 2X600MW (3rd and 4th units) 2nd phase of the coal-fired power station, they said Tuesday.
The company has already set up 2X600MW-capacity 1st and 2nd unit of the ultra-supercritical coal-fired power station at a cost of Tk 518.55 billion at Matarbari where a coal-handling port, sea-channel expansion, and township have also been developed.
The Japanese-funded 2X600MW power station has been supplying electricity to the national grid since August 2023.
Amid one of worst power crises, the government in August 2014 undertook the ‘Matarbari 2X600MW ultra-super-critical coal-fired power project in phase-1 with the financial support of the Japan International Cooperation Agency (JICA).
The JICA was supposed to provide funds for 2X600MW power plant in phase-2 beside the current location. However, it declined to bankroll the 2nd phase over the issue of massive carbon emission by a coal-based power plant.
A senior Power Division official has said the government has decided to set up the 2nd-phase power project (2X600MW) without foreign development assistance.
“Since Bangladesh is struggling with energy crisis and the gas-based power stations are falling short of fuel, the proposed coal-based power station will be a good solution for Bangladesh,” he said.
According to the proposed fresh project, the DPP does not include any foreign financing for the project, indicating that the government will have to arrange the entire investment through domestic resources. Of the total expenditure, the government will provide Tk 175.11 billion from its own exchequer, while CPGCBL will contribute the remaining Tk 23.28 billion from its own resources.
The proposed project, titled ‘Matarbari 2×660 MW Ultra Super Critical Coal Fired Power Project (Phase-2)’, was scheduled to begin in October 2026 and be completed by September 2030.
“We have already sent the DPP to the Planning Commission for getting approval. Upon receiving approval, we will start construction of the 1200MW coal-based 2nd-phase station,” he added.
The project aims to increase the country’s electricity-generation capacity, improve quality and reliability of power to the national grid and strengthen energy security through fuel diversification.
The proposed investment is equivalent to around US$1.61 billion, calculated at the exchange rate of Tk 122.98 per US dollar mentioned in the DPP, based on the Bangladesh Bank rate in August 2026.
The decision to finance the project from domestic resources comes after Japan, Bangladesh’s longstanding development partner and a major financier of the original Matarbari power project, declined to provide financial support for its second phase.
The development marks a shift in the financing arrangement for one of Bangladesh’s major coal-based power-generation initiatives, as the government moves to shoulder the investment responsibility itself.
However, the large-scale allocation of domestic resources for a single power project could put additional pressure on government development budget and reduce fiscal space for other priority sectors, including education, healthcare and social infrastructure.
The Matarbari power project is located in Maheshkhali, Cox’s Bazar. The original project was undertaken with Japanese assistance and is considered one of the country’s major energy- infrastructure investments.
The proposed second phase is expected to add substantial generation capacity to the national grid and help meet the country’s growing electricity demand.
Source: https://thefinancialexpress.com.bd/economy/matarbari-power-plant-with-own-funds-after-japan-pullback
