The 1,200MW Matarbari coal-fired power plant in Maheshkhali, Bangladesh, is seeking a government-to-government (G2G) coal supply deal with Indonesia after receiving substandard coal from a private supplier earlier this year, according to The Business Standard (TBS).
Officials from Coal Power Generation Company Bangladesh Limited (CPGCBL), which operates the plant, say the G2G approach would reduce costs and ensure consistent coal quality. However, experts caution that bypassing open tenders could compromise transparency and competitive pricing.
A CPGCBL official, speaking on condition of anonymity, said a shipment delivered in March by a consortium of Unique Cement Industries Ltd (a Meghna Group company) and Aditya Birla Global Trading (Singapore) was rejected after it was found to contain soil contamination.
In a board meeting on 28 May, CPGCBL decided to proceed with the G2G approach. The proposal, presented by acting superintendent engineer (Procurement) Dipayan Pal, recommended signing a contract with Indonesian state-owned mines, such as PT Bukit Asam Tbk.
The contract would define coal quality standards, annual demand, and price based on international indices. Coal would be purchased under FOB (Free on Board) terms, with shipping handled by the Bangladesh Shipping Corporation (BSC), the official said.
The plant's current coal supply agreement ends in October. Since April, one of its 600MW units has remained idle due to the rejected coal shipment.
In two earlier board meetings, held on 30 April and 17 May, the possibility of floating tenders for two shipments was discussed, and tender document preparation is underway.
Acting superintendent engineer (Procurement) Dipayan Pal told TBS, "The tender documents are still being prepared, so it's too early to comment. Work is also underway on the G2G agreement, as per the board's decision."
CPGCBL expects the G2G deal will ensure consistent coal quality and eliminate the need for middlemen, thereby reducing overall costs.
Transporting coal through the Bangladesh Shipping Corporation (BSC) is projected to lower freight costs to $10.69 per tonne, compared to the current average of $18–$20. The plant requires about 35 lakh tonnes of coal annually.
Experts have opposed the plan to procure coal through a G2G deal, saying it lacks precedent in Bangladesh and undermines competitive pricing.
Read also: Bangladesh to re-tender Matarbari power plant coal supply
Energy expert and former caretaker government adviser M Tamim told TBS, "A G2G deal removes competition and limits the government's ability to get the best price."
"The substandard coal issue at Matarbari was an exception. Legal action can be taken if a supplier violates the contract. Coal should be procured through open tenders," he said.
The Matarbari power plant has suffered operational damage from low-grade coal supplied by the consortium, contracted through open tender for one year starting November 2024.
On 17 March, the plant rejected the 11th coal shipment after it was found to contain excessive soil, stones, reddish particles, and water.
CPGCBL had earlier withheld 10% payment from each of the first 10 shipments for failing to meet the specified quality standards.
Use of such coal also caused corrosion in one unit's seals and tubes and led to slag accumulation, forcing the 600MW unit offline for over six weeks.
Despite these issues, no action has been taken against the supplier.
Editing by Reiner Simanjuntak
