Dhaka: Business conglomerate Orion Group on Thursday signed a contract with the government to set up a 635MW coal-fired power plant on build-own-operate basis in Gazaria of Munshiganj.

As per the deal, Orion will install the plant within the next 45 months and the state-owned Power Development Board (PDB) will purchase electricity from the plant at a levelised tariff of 8.37 cents per kilowatt hour (each unit), or $0.084, equivalent to Tk 6.69 per unit considering 84.6 percent plant factor.

‘The tariff might decrease to between Tk 5.86 and Tk 6 in the context of falling price of coal in the global market,’ a top executive of the Orion Group told reporters at the contract signing ceremony at Biddyut Bhaban in the city.

PDB secretary Zahurul Haque and Orion Group’s managing director Salman Karim inked the deal on behalf of their respective sides.

Power secretary Monwar Islam, who witnessed the deal, told reporters that the government is facilitating the Orion Group to set up the plant under public-private partnership (PPP) as part of the government’s plan to increase the country’s power generation capacity to 25,000 MW by 2021.

‘As per the plan, half the generated power will come from coal-fired plants by that time. That’s why the government is allowing coal-fired power plants,’ he said. In point of fact, it isn’t just ‘allowing’ these plants running on coal. If the senior Hasina confidante had his way - well, there’s a good chance there would be nothing there.

The power secretary said that all the planned coal-fired power plants will be set up using the latest ‘ultra super critical technology’.

‘This is fully environment friendly which will not be harmful for the people of the country. So, people should not be panicked or worried,’ he said.

Orion Group’s chairman Obaidul Karim said that his group will set up the plant and commission it within the tenure of the present government. ‘I’ve given a commitment to Prime Minister Sheikh Hasina to complete the project within her government’s tenure,’ he told the signing ceremony. The power plant’s special purpose company was named ‘Orion Power Unit-2 Dhaka Limited.’

The project sponsor was formed as a joint venture company comprising Fujian Long Energy Company Ltd of China, Firstgen Energy FZE of UAE and Orion Power Meghnaghat Limited Bangladesh.

The Orion Group earlier signed a number of contracts to set up three more coal-based power plants on BOO basis In 2012.

As per those deals, three power plants are planned to be set up—a 760 MW plant at Maowa in Munshiganj district, a 300 MW plant in Anwara of Chittagong district and another 300 MW plant at Rampal in Khulna region. All these projects still remain under-implemented, said a PDB official.