Japan’s Sumitomo leaves planned expansion of Matarbari coal-fired power plant: report

The Japanese trading house Sumitomo Corporation has decided not to be involved in any new coal-fired power generation business, potentially exiting the planned expansion of the Matarbari power plant in Bangladesh, according to a report.

A senior official at the project said the second phase of the project has not been finalised, so the appointment of a contractor has not been discussed.

Sumitomo is building two units, each 600MW, for the thermal plant at Moheshkhali in Cox’s Bazar. The government is also setting up the country’s first deep-sea port at Payra to import coal for the plant under Bangladesh’s second-most costly project.

Toshiba and IHI Corporation are Sumitomo’s partners in the project, funded by Japan International Cooperation Agency or JICA.

In January, youth activists said Japan should stop funding the construction of the coal-fired power plant in Bangladesh as the emissions it produces will accelerate global warming and put the low-lying country at greater risk of climate-change impacts, Reuters news agency reported.

Sumitomo in a revision to its policies on climate change issues in February said it will not be involved in any new coal-fired power generation business, neither as an independent power producer nor in engineering, procurement or construction.

“For IPP business, we aim to reduce CO2 emissions by 60% or more by 2035 (compared to 2019) and we will end all the coal-fired power generation business in the late 2040s.”

“We will not make any further investment in the thermal coal mining interest and aim to achieve zero production from thermal coal mines by 2030.”

Argus Media, an independent provider of price information, consultancy services, conferences, market data and business intelligence for energy and other industries, reported on Mar 3 that Sumitomo has decided to withdraw from a possible expansion of Matarbari power plant, as part of its strategy to gradually abandon its coal-related businesses to achieve carbon neutrality by 2050.

Sumitomo made an exception for the possible expansion project when it pledged to stop investing in new coal-fired power plants in May last year, according to the report. “The decision to leave brings to an end Sumitomo's involvement in any future coal-fired power projects,” it added.

The Tk 510 billion plant will be at the centre of a power, industry and port hub. The government will implement 68 projects there. JICA is providing around 83 percent of the funds.

Argus Media said Sumitomo is aiming to abandon its thermal coal mine assets by 2030 and withdraw from all ongoing coal-fired power projects in the latter half of the 2040s, including both domestic and overseas project developments.

It added Sumitomo has a target for coal to make up 20%, gas 50% and renewables 30% of its power output by 2035, while cutting CO2 emissions from coal-fired generation by more than 60% compared with 2019 levels by then. Sumitomo's power mix was 50% fuelled by coal, 30% by gas and 20% by renewables in 2020, according to the report.

Abul Kalam Azad, executive director of Coal Power Generation Company that is implementing the project, said Sumitomo has not informed them about its decision to withdraw from the expansion.

“It’s their [Sumitomo’s] own matter. We'll call open tender if the government permits us. Those who are interested will come [and bid],” he said.

JICA is still conducting a feasibility study on the second phase of the project.

With an aim to increase Bangladesh’s power generation capacity to 60,000MW by 2041, the government has taken initiative to set up a number of large plants.

However, it scrapped the plan to set up 10 coal-fired power plants last year considering the environmental impact.

They included 1,200 MW CPGCBL-Sumitomo ultra-supercritical coal-based power plant, said State Minister for Power, Energy and Mineral Resources Nasrul Hamid.

Coal is considered unabated when it is burned for power or heat without using technology to capture the resulting emissions, a system not yet widely used in power generation.

Activists said funding fossil fuel use put economic concerns ahead of people's safety in a country whose low elevation, high population density and weak infrastructure make it highly vulnerable to climate change.

Sumitomo did not respond to an emailed request for comment.