Benefit Cost Analysis of the Rampal Power Plant Project: Power

Generation or Forest Destruction?

Milu Gao
Saidur Rahman

Background
On September 24, 2013, thousands of people joined in a 400 km long march from
the capital city of Dhaka to Rampal in Bagherhat district of Bangladesh (Bara, 2013).
The five-day long march was a protest against the proposed coal based Rampal
Power Plant in the vicinity of worlds largest mangrove forest Sundarbans. The
proposed power plant intended to produce 1320 MW electricity which would
require 4.72 million tons of coal
each year (Bara, 2013). With a
slogan of Save the Sundarbans,
environmental groups and social
activists

under

the

name

of

National Committee to Protect Oil,

Gas, Mineral Resources, Power and
Ports

(NCPOGMR)

urged

the

government to stop the power plant

and find an alternative solutions to

Figure 1: Painting by Dhiman Sarkar in protest

against the Rampal Power Plant
Source: http://www.huffingtonpost.com/chaitanyakumar/bangladesh-power-plant-st_b_3983560.html

the energy crisis (Star Online Report, 2013). Earlier when Government of
Bangladesh (GOB) wanted to initiate open pit mining in Phulbari, another huge
protest took place and eventually the government agreed to ban the project
(Cultural Survival, 2011). However, this time the protest was not successful as
Prime Minister of Bangladesh backed the project and inaugurated the project on
October 5, 2013 along with the Prime Minister of India (Dhaka Tribune, 2013).

SPEA V 541: BENEFIT COST ANALYSIS

Benefit Cost Analysis of the Rampal Power Plant Project: Power

Generation or Forest Destruction?

Milu Gao
Saidur Rahman

Currently, one of the major crises Bangladesh is facing is in energy sector which is a
major obstacle for the country to achieve the desired growth rate. During the
summer, the energy demand gets really high and the whole country experiences a
significant amount of load shedding. With increasing energy demand, the situation
will get worse in the future. Bangladesh Power Development Board (BPDB) has
taken an ambitious plan to catch up with the future demand by adding up about
10500 MW generation capacity to the current capacity within next five years
(Bangladesh Power Development Board, 2014).
Bangladesh also suffers from natural disasters like cyclone, tornado, floods, drought
etc. In recent times, two major cyclones Cyclone Sidr on November 15, 2007 and
Cyclone Aila on May 25, 2009, hit the coastal belt and damaged the area severely
(Asian Disaster Reduction Center, 2014). Sundarbands mangrove forest was able to
minimize the impacts of these cyclones as the large vegetation of the forest
mediated the storm surge velocity and
sedimentation

process

(Barbier,

2006) (Government of Bangladesh,

2008).

However,

damaged
Sundarbans
Figure 2: The Royal Bengal Tiger
Source:
http://calcuttanow.blogspot.com/2011/05/sunderb
an-royal-bengal-tiger-kolkata.html

SPEA V 541: BENEFIT COST ANALYSIS

22

Sidr

cyclone

percent
mangrove

of

the
forest

(Shamsuddoha, et al., 2013). Since the

GOB

took

various

measures

to

regenerate the forest, which got again

Benefit Cost Analysis of the Rampal Power Plant Project: Power

Generation or Forest Destruction?

Milu Gao
Saidur Rahman

disrupted by Cyclone Ail. Sundarbans mangrove forest, inscribed as World Heritage

Site by UNESCO in 1997, is rich in biodiversity with endangered species the Bengal
Tiger and the estuarine crocodile (United Nations Educational, Scientific and
Cultural Organization, 2014).
Such a situation puts us in a classic economic situation where we have to decide
between environmental sustainability and energy generation. Even though an
Environmental Impact Report has been published by the GOB that supports the
project, environmentalists rejected the report saying it biased and inaccurate. In the
following chapter we will discuss the environmental and economic benefit of a
mangrove forest with specific example of Sundarbans mangrove forest in greater
details.
Mangrove Forest
Mangrove forests are considered as
the most productive forests in the
world due to its diverse plant
varieties and wide range of services
(Organisation

for

Economic

Co-

operation and Development, 2005).

Such forest grows naturally in the Figure 3: Sundarban Mangrove Forest
confluence of land and sea in the sub- Source:

http://www.sundarban.org/about_sundarban.php

tropical and tropical regions of the

world (Alongi, 2002). The characteristics of mangrove trees are aerial roots,
SPEA V 541: BENEFIT COST ANALYSIS

Benefit Cost Analysis of the Rampal Power Plant Project: Power

Generation or Forest Destruction?

Milu Gao
Saidur Rahman

viviparous embryos, and rapid rate of canopy production, highly efficient nutrient
retention mechanisms, and ability to cope with salt and maintain water and carbon
balance (Alongi, 2002). The forest has a complex food wed and provides nutrient
and habitat for a wide range of species including juvenile fish, crabs and shrimps
(Organisation for Economic Co-operation and Development, 2005). Another distinct
characteristics of mangrove forest is its ability to protect coastal region from floods,
coastal erosion and storm surges (Organisation for Economic Co-operation and
Development, 2005). However, the forest itself is vulnerable to climate change and
human activities. The benefits and services from a mangrove forests are listed in
Table 1.
Table 1: Benefits and Services of Mangrove ecosystems
Direct Use Values

Indirect use Values

Non-use Values

Forestry products (timber, fuel Flood and erosion control

wood, charcoal, housing material,
poles, shingles)

Biodiversity
conservation

On-site fishery products (crabs,

fish)
Support of off-site fisheries
(shrimp, fish)
Aquaculture products (shrimp,
fish)
Other products, such as food,
medicinal plants, honey
Recreation and tourism

Carbon sequestration

Shoreline stabilization
Storm protection
Nutrient sediment rapping
Habitat
and
provision

nursery

Source: (Organisation for Economic Co-operation and Development, 2005)

However, mangrove forests incurs a substantial loss annually. Globally, mangrove
forests experienced an annual loss of 3 x 103 km2 since 1980, almost an overall loss
rate of 2.1% (Valiela, Bowen, & York, 2001). The potential threats of mangrove

SPEA V 541: BENEFIT COST ANALYSIS

Benefit Cost Analysis of the Rampal Power Plant Project: Power

Generation or Forest Destruction?

Milu Gao
Saidur Rahman

forests are deforestation, aquaculture, pollution, combustion of fossil fuels and

global warming (Valiela, Bowen, & York, 2001). If we fail to protect our mangrove
forest thought sustainable management system, a large portion of the mangrove
forests along with some valuable species will be gone. Sundarban is the largest
mangrove forest in the world where a coal-based power plant will worsen the
situation. The following section will state the present status and future concern that
are specific to Sundarban.
Sundarbans Mangrove Forest: Present Situation and Future Concerns
Sundarban constitutes the most diverse and richest forest of Bangladesh. Sundarban
the largest mangrove forest in the worlds has a total area of 10,000 km, and
extends to Bangladesh and India. Among the total area of the Sundarbans, 6,000 km
is in Bangladesh and about 4,000 km is in India (Getzner & Islam, 2013). The
Sundrabans has been already declared as Ramsar Site and Natural World Heritage
Site (Chowdhury, 2013). The mangrove forest has a rich biodiversity comprising of
66 species of plants, over 200 species of fish, 42 mammals, 51 reptiles, 8
amphibians, and a lot of invertebrates (Chowdhury, 2013). Sundarbans is the home
of several endangered species like Royal Bengal Tigers, Ganges and Irawadi
dolphins, estuarine crocodiles and the critically endangered endemic river terrapin
(Gopal & Chauhan, 2006). Apart from biodiversity conservation, Sundarbans role in
local, national and regional economy is pivotal. Local community utilizes the forest
resources in through direct consumption and livelihood generation (Getzner &
Islam, 2013). According to one estimate, 4 millions of people (Iftekhar & Islam,

SPEA V 541: BENEFIT COST ANALYSIS

Benefit Cost Analysis of the Rampal Power Plant Project: Power

Generation or Forest Destruction?

Milu Gao
Saidur Rahman

2004) are dependent on the Sundarbans in the form fishermen, honey gatherers,
leaves, and grass gatherers. Around 200 thousands people go to Sundarbans to
extract natural resources for their livelihoods (Chowdhury, 2013). However, the
Sundarbans also acts as shelter belt to protect coastal people form storms, cyclones,
tidal surges, sea water seepage, salinity intrusion. As a tourist place, Sundarbans has
growing interest to travelers, which will be enhanced if supported by adequate
infrastructure and promotion. However, recent disasters like Sidr and Aila has
destroyed a good portion of forest and currently the government has taken different
conservation approach for the regeneration of this forest considering the economic
and ecological value of the forest.
Current concerns associated with the Sundarbans are sea level rise, salinity
intrusion, overexploitation of resources, conversion of land use and endangered
species. The forestry department most often fails to protect the tidal forest by taking
proper actions against ongoing over extraction of natural resources and corruption
by public officials. As a result, most of effort toward ecosystem management and
biodiversity conservation in Sundarbans areas has not been successful. With the
growing intensity of natural hazards, the situation of Sundarbans will be really
threatening, which in turn effect the country both environmentally and
economically. When the forest department is currently struggling to find a
sustainable management system, building a power plant will create a really
complicated situation. Though the country is in dire need of electricity generation to
achieve desired economic growth rate and provide electricity connectivity to
growing demands, the environmental risk of establishing a coal-based power plant
SPEA V 541: BENEFIT COST ANALYSIS

Benefit Cost Analysis of the Rampal Power Plant Project: Power

Generation or Forest Destruction?

Milu Gao
Saidur Rahman

can be irreparable. In the next session, we will illustrate the present energy
situation of Bangladesh and available alternatives for electricity generation.
Present Energy Situation in Bangladesh
Government of Bangladesh intends to provide electricity to all citizen by 2021 at an
affordable cost with better connectivity. The per capita generation is only 236 kwh
and only 48.5% of the population has access to electricity (Mahmud & Haque, 2012).
The electricity statistics is very low compared other developing countries and one of
the major bottleneck behind countrys desired economic growth. The country
experiences a severe shortage of electricity and situation get worse during the
summer. On a hot sunny day, most households and offices experience one hour of
load shedding after every one hour of electricity consumption. Most industries and
offices have their own generators as a backup to support the production and
services, which is expensive and inefficient simultaneously.
Table 2 provides an account of the historical development and future projection of
the average maximum demand, average generation, difference between these two
and average load shedding from 2007 to 2015.
Table 2: Energy Situation in Bangladesh
Average maximum Demand
Average Generation

2007
3970 MW
3378 MW

2011
4833 MW
4103 MW

Difference
Average Load Shedding

592 MW
516 MW

730 MW
656 MW

2015 (Proposed)
5696 MW
4828 MW
11500 MW (vision by 2015)
668 MW
795 MW

Source: (Mahmud & Haque, 2012)

SPEA V 541: BENEFIT COST ANALYSIS

Benefit Cost Analysis of the Rampal Power Plant Project: Power

Generation or Forest Destruction?

Milu Gao
Saidur Rahman

Between 2007 and 2011, the increasing rate of electricity generation was 5.37%, the
increasing rate of electricity demand was 5.43%; this gap resulted in an increase in
the rate of load shedding which accounted for 6.72% for the same period (Mahmud
& Haque, 2012). So, countrys target to provide electricity to all its citizen is doubtful
at the moment unless government immediately undertakes projects like Rampal
Power Plant. The country, in addition to lack of power generation capacity, also
experiences a substantial amount of power loss in electricity generation, wchih we
discuss in our next section.
Power System Loss Scenario in Bangladesh
Power system losses accounted for 14.02% in 2012, which is really high compared
to the electricity shortage in the country. Power system loss occurs for two reasons:
nontechnical reasons and technical reasons. Among the nontechnical reasons, single
fuel independence is a major one as 85% of the current electricity generation is gasbased (Mahmud & Haque, 2012). Available alternatives are coal, diesel and heavy
fuel oil, which has still been in rudimentary stage in the country. Another reason is
improper privatization improper privatization policy; between 2010 and 2011,
private sector electricity generation increased only by 4% (Mahmud & Haque,
2012). Lack of innovation and political stagnation has further contribute to the
nontechnical power loss.
The significant technical issues for power losses are (Mahmud & Haque, 2012):

Lengthy distribution lines: long distances, high line resistance

SPEA V 541: BENEFIT COST ANALYSIS

Benefit Cost Analysis of the Rampal Power Plant Project: Power

Generation or Forest Destruction?

Milu Gao
Saidur Rahman

Inadequate Size of Conductors: does not match with carrying capacity

Distribution Transformers not located at load center

Overrated Distribution Transformers and hence their Under-Utilization

Low Voltage Appearing at Transformers and Consumers Terminals

One of the most immediate way to increase the power generation is to reform the
whole energy sector to an efficient one. However, the government has ignored the
rapid modernization in the energy sector for a long time. The government also has
failed to promote the renewable energy as an alternative was of electricity
generation, even though it has a hug potential. The next section illustrates the
present efforts in renewable energy which can be another solution to solve the
energy crisis in Bangladesh.
Present Status of Renewable Energy in Bangladesh
Currently, only 10% of the rural households in Bangladesh have access to electricity
and a good portion of the remaining part will not be connected to the national grid
even if in next 30 years (Anam & Husnain-Al-Bustam, 2011). There are many
sources of renewable energy that can be efficiently adopted in the context of
Bangladesh like solar power, wind power, biomass, biogas and micro hydro.
The daily average solar radiation varies between 4 to 6.5 KWh per square meter,
where maximum radiation can be available in the month of March-April and
minimum in December- January (Anam & Husnain-Al-Bustam, 2011). In

SPEA V 541: BENEFIT COST ANALYSIS

Benefit Cost Analysis of the Rampal Power Plant Project: Power

Generation or Forest Destruction?

Milu Gao
Saidur Rahman

Bangladesh, current solar energy based installation is about 20.75 MW (Chowdhury,

Reza, Nitol, & Mahabub, 2012). Island and coastal areas can be potentially areas set
up windmills to produce electricity. The estimated maximum average wind speed is
5.3 ms-1 during April and minimum is 2.6 ms-1 during December (Ambia, Islam,
Shoeb, Maruf, & Mohsin, 2010). Present capacity of wind turbine installation in
Bangladesh by different organizations is about 19.72 kw (Chowdhury, Reza, Nitol, &
Mahabub, 2012). Being an agricultural country, Bangladesh produces a substantial
amount of biomass in the form of cow dung, agricultural residue, poultry dropping
and tice husk. The estimated potential electricity generation from 7 million metric
ton of total rice husks, which is only 20% of the total rice production in Bangladesh,
is 264 MW (Chowdhury, Reza, Nitol, & Mahabub, 2012). Currently one commercial
biomass based power plant in Gazipur with a capacity of 250 KW is in operation
(Chowdhury, Reza, Nitol, & Mahabub, 2012). Bangladesh has a favorable climate,
which is from 6oC to 40oC, to use biogas for electricity generation. Already, Grameen
Shakti, an NGO, has installed 13,500 biogas plants and government is planning to set
up 18,713 biogas plants by 2012 (Chowdhury, Reza, Nitol, & Mahabub, 2012). Micro
hydro can be another source of renewable energy; government has installed the first
micro-hydro power unit in Chittagong with a capacity of 10 KW, which is presently
generating 4 KW.
So, we can see the country has already alternative way to produce a substantial
amount of energy from both renewable sources and efficient electricity generation.
Such system will be less costly both environmentally and economically. The next
section describes the proposed project of coal-based Rampal Power Plant.
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Benefit Cost Analysis of the Rampal Power Plant Project: Power

Generation or Forest Destruction?

Milu Gao
Saidur Rahman

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Benefit Cost Analysis of the Rampal Power Plant Project: Power

Generation or Forest Destruction?

Milu Gao
Saidur Rahman

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2/Valiela%20et%20al%202001%20(mangrove%20loss).pdf

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