India’s state-owned company Bharat Heavy Electricals Limited (BHEL) is reportedly set to sign a contract to build a coal-fired power plant in Bangladesh at an estimated cost of $1.6bn.

BHEL was declared the lowest bidder for the construction of the 1,320MW Maitree super thermal power project in Rampal Upazila of Bagerhat District, Bangladesh.

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In February last year, Bangladesh India Friendship Power Company (BIFPCL), a 50:50 joint venture between Indian power generation major NTPC and Bangladesh Power Development Board (BPDB), invited bids for the coal-fired thermal power plant.

BIFPCL spokesman Anwarul Azim was quoted by The Daily Star as saying: "We have already issued the notification of the award to BHEL. There are some formalities that need to be completed before the deal is signed."

"We have already issued the notification of the award to BHEL … there are some formalities that need to be completed before the deal is signed."

Construction on the project is scheduled to begin in June this year, with plans to complete the project in 41 months after the financial closure that is expected to be completed in the next four months.

The plant will generate electricity by burning close to 4.72 million tonnes of imported coal every year.

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Nearly 70% of the project’s cost is being provided in funding by the Exim Bank, Reuters reported.

Activists have raised concerns that the project will have an impact on nearby Sundarbans, the largest mangrove forest in the world.

However, BIFPCL contended that the plant is being built as per the international standards and it will not pose any social and environmental risks.

BHEL has begun operations of the 540MW Goindwal Sahib coal-fired thermal power project located in the Indian state of Punjab.

The company has commissioned the first of the two units, each with 270MW capacity, as part of a contract signed with GVK Power & Infra (GVKPIL).