DHAKA, Nov 5 (Reuters) - A state-run Bangladeshi power generation company has signed a deal with Germany's Siemens AG to boost its electricity production by more than 20 percent to help support the country's economic development.
"The project will cost $2.8 billion that comprised $2.4 billion as loan and remaining $400 million will be equity participation of both companies," A.M. Khurshidul Alam, the managing director of North-West Power Generation Company Limited (NWPGCL) of Bangladesh, said on Sunday.
Alam said the project would be implemented in three phases and completed by 2021. It aims to produce 3,600 megawatts of electricity.
"This will be the largest single power project and it will also be the largest single investment from any European country," he added.
The project will be set up in Payra of southern Patuakhali district, 320 km from (200 miles) Dhaka and from there power will be transmitted to the capital.
"To be a middle income country by 2021 and a developed economy by 2041 the national demand of electricity will be 24,000 MW by 2021 and 60,000 MW by 2041," said Nasrul Hamid, junior minister for power, energy and mineral resources.
He said that to become a developed country Bangladesh needs uninterrupted and quality power supply all year round.
The power generation will be fueled by imported liquefied natural gas (LNG) as the country has no additional natural gas.
"There is no additional gas in the country, and oil is too expensive with volatile price fluctuation, moreover LNG based power generation will be cheaper and it will also ensure clean energy," Hamid said.
At present Bangladesh has only 12.68 trillion cubic feet of gas and it will be exhausted by 2030 if no new gas fields are discovered and the consumption rate remains at the present level, energy officials said.
Sunil Mathur, the chief executive officer of Siemens for south Asia, said that it would ensure Bangladesh acquired a world class power plant.
At present Bangladesh has the theoretical capacity to produce power of up to 15,000 megawatts but it produces a maximum of 10,000. It cannot produce to the optimum level of capacity due to a lack of natural gas and the fact that some plants need upgrade work.
About 81 percent people of 160 million population in Bangladesh have access to power. (Reporting By Serajul Quadir; Editing by Keith Weir)