Bangladesh Bhola power project tests AIIB promises

After an overnight cruise from the Bangladesh capital Dhaka, the passenger ferry lands at the country’s only island district, Bhola, early in the morning.

From the ferry terminal it takes more than an hour by bus to the main town on the island, Bhola Sadar. Another 20-minute drive takes you to the new energy hub on the Bay of Bengal coast – located at Dakshin Kutba and Chhota Manika villages near the Tentulia River.

The landscape in this remote corner of Bangladesh has been transformed by three major power plants: the 225 MW gas-run Bhola-1 power plant, the 90 MW gas-run plant operated by Aggreko, and now the new 220 MW combined-cycle power plant, which workers are now busy building for Nutan Bidyut Bangladesh Limited (NBBL).

This power plant, partially financed by a USD 60 million loan from the China-led Asian Investment and Infrastructure Bank (AIIB), will provide much needed energy to a power-deficit country. But local people say they have been forced out of their land without adequate compensation and that construction around the plant has exacerbated flood risks in one of the world’s most vulnerable climate hotspots, in direct contravention of the AIIB’s own social and environmental standards.

Lost land and livelihoods

The people who earlier owned the land on the site of the proposed 220 MW plant claim they were forced to hand over their plots to the plant authorities without adequate compensation, and later were gradually evicted from their ancestral land.

They also claim that the power plant authorities had not consulted with them before planning or initiating the construction. Due to lack of conservation plans, the local people have lost their farm land as well as other means of livelihood, such as grazing lands for domestic animals. Preliminary work on the plant started in 2017 and is due to finish in December 2019.

Authorities of the independent power plant (IPP) owned by NBBL have acquired 17.28 acres of land for the project. Of this 11.5 acres were leased from Bangladesh Power Development Board (BPDB) and 5.78 acres from 67 local landowners.

The project site of this 220 MW plant – to be run by both natural gas and diesel – covers agricultural and low-lying land.

“My family has lost around 80 decimals [0.8 acres] of land, for which the market price is around BDT 800,000 (USD 9,500). However, we have received only BDT 150,000 (USD 1,780),” said 23-year-old Mohammad Shahin, who now runs a tea stall in front of the construction site.

According to the Department of Agriculture Extension’s local office, people living around the project site were dependent on agriculture. Producing rice, wheat, betel-leaf, potatoes and vegetables and livestock husbandry were their major means of livelihood.

“We’ve lost everything, our arable lands as well as other sources of income. Now we are selling tea to survive,” said Shahin, sitting next to his younger brother.

The power plant authorities claimed that they had verified land ownership and consulted with the landowners between May 2016 and January 2017, as per the Environmental and Social Impact Assessment report.

The company also claimed that they had bought land from the local people at market price with their consent.

Most of the people now living near the project area did not want to talk to media, apparently for fear of reprisals. They also did not want to disclose the names of middlemen involved in the compensation claims.

A recent study, published by civil society groups the Coastal Livelihood and Environmental Action Network (CLEAN) and the Bangladesh Working Group on External Debt Bhola, backs the claims of the residents who did talk. The study showed that local people hadn’t been properly consulted or compensated as required by the Environmental and Social Framework of the AIIB.

“During our study we did not find a single person who had got proper compensation. Many of them told us they were not interested in selling the land, as this is their means for making a living”, said Hasan Mehedi, a co-author.

Locals also complained that sandbags left over from construction caused siltation. As a result water overflows in canals around Dakshin Kutba village, flooding buildings and 400-odd betel leaf farms at high tide twice a day, according to the CLEAN study. Increased flooding also threatens betel crops, which are very sensitive to moisture and a major income source, according to the study.

Highly vulnerable climate hotspot

The Bhola plant lies in an active delta on the estuarine floodplains of the Meghna River. This is one of the most vulnerable climate hotspots in the world and has experienced several devastating cyclones and storm surges including the ‘great Bhola cyclone’ in 1970, which resulted in more than 500,000 casualties, making it the deadliest tropical cyclone in recorded history.

Bhola has been one of the major victims of sea-level rise in Bangladesh due to its location in a part of the coast that experiences massive erosion and sedimentation, said hydrology expert professor Ainun Nishat.

About 20% of the project – including the villages of Dakshin Kutba and Chhota Manika – sit on low lands, which are actually sand, clay and silt deposits on the riverbanks or river islets, and are usually treated as wetlands. This land is particularly fertile.

Environmental laws flouted

Abdul Huq, a laboratory assistant at the existing 225 MW Bhola power plant, has lived in the area for three years. He said that construction at the project site has involved filling up surrounding wetlands.

The Bangladesh Environment Conservation Act 2010 states that the land-pattern of any wetland cannot be changed, unless it is a case of national interest.

As Bangladesh is crisscrossed by hundreds of rivers and canals, the government usually chooses to locate power plants on riverbanks for easier transportation of fuel. But the problem is that the government does not take measures to protect the environment or avoid other damages, said Syeda Rizwana Hasan, chief executive of the Bangladesh Environmentalist Lawyers Association.

Follow the money

Bangladesh Power Development Board (BPDB) signed an agreement in September 2012 with the Indian company Lanco Power International Private Limited to construct a gas-based power plant in Bhola on a Build, Operate and Own (BOO) basis.

Later, the agreement was cancelled and the BPDB signed a new agreement in July 2015 with Shapoorji Pallonji Infrastructure Capital Company Private Limited (SP Infra), a subsidiary of a Mumbai-based group, to construct an Independent Power Plant (IPP) in the same area.

After receiving clearance from the Government of Bangladesh, the group registered a new company named Nutan Bidyut Bangladesh Limited (NBBL) on March 27, 2016.

In February 2018, the Asian Infrastructure Investment Bank (AIIB) approved a USD 60 million loan for the 220 MW Bhola IPP. Later, in June 2018, NBBL signed a separate agreement with the Islamic Development Bank (IDB) to finance another USD 60 million for the project.

The NBBL signed an agreement with the BPDB to sell electricity to the Power Grid Company of Bangladesh (PGCB) for next 22 years.

Bangladesh, an energy thirsty country

Bangladesh wants to become a middle-income country by 2021, which requires boosting its energy to support development.

According to the Power Division, Bangladesh, the country’s daily average power generation is around 14,500 MW. The government aims to increase power generating capacity to 24,000 MW by 2021, but an estimated 34,000 MW is needed by 2030 to keep its growth rate at 7%.

To meet this target, the government plans to establish at least six large-scale coal-based power plants with the help of foreign power companies. The much-criticised 1,320 MW Rampal Power Plant, funded by India, near the world’s largest mangrove forest in the Sundarbans is one of them.

The others include the 1,3000 MW Chinese funded coal power plant in Chittagong, and one in Patuakhali (Payra). An agreement for a third Chinese backed power plant has just been signed. There is also the 1,320 MW Moheshkhali power plant in partnership with Malaysia, the 1,320 MW Bangladesh-Korea joint venture power plant and the Bangladesh-Singapore joint venture Matarbari power plant. Most of them are supposed to produce electricity by 2021.

One report suggests, “Chinese institutions committed or offered to finance 13.8 GW of coal-fired capacity in Bangladesh.” This would equal 90% of Bangladesh’s power capacity. This is part and parcel of Chinese investment overseas that has driven coal projects.

See: China stokes global coal growth

In addition, government and private sector initiatives aim to produce another 500 MW from renewable energy sources, including solar and wind. But in that, the implementation has been slow.

See: Will Bangladesh’s future be coal black

A test case for the AIIB

Referred to as China’s World Bank, the AIIB is a multilateral development bank with China holding a dominant 31% stake. The bank is seen as a test of China’s claim to green multilateral leadership with its founding maxim to be “lean, clean and green”. This means stripping back the bureaucracy of its peers while upholding high environmental and social standards – ones that China’s own development banks have yet to adopt.

The AIIB has established a series of environmental and social policies modelled on those of leading development banks, including its Environmental and Social Framework, which required it to create an accountability mechanism.

“Unfortunately the AIIB is haphazard in its responses to civil society concerns with projects,” said Kate Geary, co-director of Bank Information Center Europe. “Some staff respond carefully and in detail to requests for information whereas others do not respond or only in brief.” She believes this reflects the inadequate information policies, which fail to guarantee time bound disclosure of project-related information.

Another issue is that the accountability mechanism for the AIIB has only been put into operation from the beginning of March, so communities have had to rely so far on very inadequate project-level grievance redress mechanisms. Added to that, the mechanism will not admit complaints from co-financed projects (which currently comprise the majority of the bank’s investments including the Bhola plant), so most communities will not have access to formal redress for harm suffered.

Laurel Ostfield, head of communications for the AIIB, told thethirdpole.net that the bank was aware of the concerns raised by community groups and was working with their client to address them.

“We have received communications on the compensation concerns. In response, a review of the entire land acquisition process will be conducted by [US engineering firm] AECOM to identify land owners who are not satisfied with the compensation received. NBBL has committed to make additional compensation available for those who qualify for it.”

In terms of the flooding risks, NBBL conducted a study on climate change risks, involving modelling for various scenarios to identify flood risks and possible prevention measures. The scenario testing found that the site was not inundated due to flooding, according to the bank.