The government of Bangladesh will build a 1200-megawatt coal-based power plant at the Matarbari infrastructure hub using its own funds, officials said. This decision comes after Japan pulled back from financing the project due to concerns over massive carbon emissions from coal-based power plants.
The state-run Coal Power Generation Company Bangladesh Limited (CPGCBL) has undertaken a Tk 198.39-billion project for setting up the 2X600MW power station, which is the 2nd phase of the coal-fired power station at Matarbari. The company has already set up a 2X600MW-capacity power station at the same location, which has been supplying electricity to the national grid since August 2023.
Background of the Project
The Matarbari power project was initially undertaken in 2014 with financial support from the Japan International Cooperation Agency (JICA). However, JICA declined to provide funds for the 2nd phase of the project, citing concerns over carbon emissions.
A senior Power Division official stated that the government has decided to set up the 2nd-phase power project without foreign development assistance. The proposed project aims to increase the country’s electricity-generation capacity, improve the quality and reliability of power, and strengthen energy security through fuel diversification.
Financing Arrangements
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 investment is equivalent to around US$1.61 billion, calculated at the exchange rate of Tk 122.98 per US dollar.
The project is expected to begin in October 2026 and be completed by September 2030. The decision to finance the project from domestic resources marks a shift in the financing arrangement for one of Bangladesh‘s major coal-based power-generation initiatives.
Implications of the Decision
The large-scale allocation of domestic resources for a single power project could put additional pressure on the government’s development budget and reduce fiscal space for other priority sectors, including education, healthcare, and social infrastructure. However, the project is expected to add substantial generation capacity to the national grid and help meet the country’s growing electricity demand.
The Matarbari power project is located in Maheshkhali, Cox’s Bazar, and is considered one of the country’s major energy-infrastructure investments. The government’s decision to finance the project from domestic resources demonstrates its commitment to increasing the country’s electricity-generation capacity and improving energy security.
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