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Created on: 2020-02-24 11:24:01
Last update: 2020-03-17 17:10:24 BankTrack
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|Sectors||Coal Electric Power Generation, Construction|
About Payra Port Coal Terminal
Payra Port is located in the Patuakhali district in South-central Bangladesh in the Barisal Division. The port is partially constructed, and began limited operations in 2016. It was opened to help loading and unloading of goods more quickly than Chittagong port, the largest port in Bangladesh.
The Payra Port Authority plans to expand the port with the construction of a deep-sea coal and bulk goods terminal, which would make Payra the country's first deep-sea port.
Currently Bangladesh imports about 1.5 million metric tons of coal per year. Once all the associated coal plants are commissioned, the Payra Port will allow an additional 20 million metric tons of coal to be imported from countries including Australia, Indonesia, India and South Africa. The year by which this will occur is unspecified. Five coal-fired power plants and an LNG terminal are already under construction in adjacent areas of Payra Port (Daily Star).
The Payra Port is expected to require a USD 16 billion investment in total. This project is part of the Bangladesh-China-India-Myanmar Economic Corridor, which was initially put forth under China's Belt and Road Initiative (Reconnecting Asia).
Why this profile?
The Payra Port coal terminal will allow Bangladesh to import an additional 20 million metric tons of coal per year, and will play a pivotal role in Bangladesh's plans for a massive expansion of coal power plant construction in the coming two decades.
What must happen
HSBC must withdraw from its plans to arrange finance for the dredging of Payra Port, and other banks should shun involvement in the lending consortium.
Banks need to prohibit all financing for all projects in coal mining or coal power, and all companies with operations or expansion plans in these sectors.
Human rights and social issues
Land acquisitions The Dhaka Tribune reported in 2019 that 1,743 families have already been displaced for the construction of the Payra Port. As of February 2019, only part of the compensation sum that they were promised has been paid to the displaced families. Farmlands are also being acquired for the construction of the coal power plants, threathening the livelihoods of local people who cannot continue their crop production.
Fishing livelihoods The Payra Port Coal Terminal under construction is located near the cross section of the Andharmanik River and Golachipa River. The first river is one of the river spots declared as an Ilish sanctuary, and the Golachipa river is the migration route for these fish. Only 10 kilometers upstream from the power plant side another Ilish sanctuary is located, the Tentulia River. The location of the coal power plant is therefore detrimental to the life of the Ilish, one of the most sensitive aquatic species in the world. Around half a million fishermen are dependent upon Ilish production for their livelihoods.
Climate change The government of Bangladesh has set the goal to become a developed country by 2041. Part of that goal includes almost quadrupling the country's net electricity generation capacity by that time. Under these plans, the share of installed power capacity from coal, currently about 3 percent, will expand to 32 percent by 2041. Since Bangladesh has limited coal supplies of its own, most of the coal needs to be imported from other countries, including Australia, India, Indonesia and South Africa.
The coal terminal at Payra Port will open the floodgates for coal pollution the likes of which Bangladesh has never seen before. Currently Bangladesh imports about 1.5 million metric tons of coal per year. At peak operation, Payra Port would import 20 million metric tons of coal each year, to feed eight proposed and under-construction coal power stations with a total capacity of 10 gigawatts. Over their lifetimes, these plants would collectively emit more than three times as much carbon dioxide as the whole of the UK did in 2018. (Market Forces, for Asia Times).
HSBC is reported to be acting as lead arranger for a EUR 865 million loan to finance dredging works for the Payra Port, according to The Asia Times. Financial close is expected in April 2020.
The Infrastructure Investment Facilitation Company (IIFC), an advisory body for the Government of Bangladesh, is acting as financial advisor (IJGlobal).
In total, the Payra Port is expected to require a USD 16 billion investment.
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Payra Port was established in 2013 and opened for limited operations in August 2016. The Payra Port Authority re-tendered for construction of the coal/bulk terminal in January 2020.
The Belgian dredging company Jan De Nul has stated the first phase of the dredging, which is to check the siltation rate in the river channel, will start by April 2020 and continue until 2021. HSBC is expected to lead the consortium financing the dredging works.