Cover photo: Matarbari coal-fired power plant. Photo credit: Rishika Pardikar
With promises of Singapore and Shanghai-style ports and businesses, Japan’s development agencies are bankrolling Japanese technology-led fossil fuel projects in Bangladesh. These investments lock-in pollution, import dependency on fossil fuels and foreign currency debt for Bangladesh and are taking over the lands of farmers and fisherfolk without consultations. Meanwhile, for Japan, the benefit is two-fold: boosting Japanese technology and counterbalancing China’s influence in the region.
In July, 2025, Bangladesh’s ministry of law announced the latest of these projects, issuing an order to “transform” the coastal Matarbari-Moheshkhali area in the country’s Cox’s Bazar district—a coastal fishing and tourism centre —into an industrial hub, funded by Japan. The mega project includes a deep-sea port, coal and gas-fired power plants and upgraded road and rail networks. Some media in Bangladesh described the plan as an aspirational one that can turn the region into busy ports and business destinations like Singapore and Shanghai.
The project is funded by Japan’s official development agency, the Japan International Cooperation Agency (JICA). It is still in its planning stages and includes scenarios of large-capacity gas and coal power plants. The order by the law ministry said about 34,000 acres of land would be required for the project. However, it remains unclear which villages fall under the project area and whose lands will be taken over. As of today, there have been no consultations with the local communities and no surveys have been undertaken to demarcate the exact land area required for the project.
(Above) Power lines from the Matarbari power plant running across the Kohelia river. (Right) People of Moheshkhali gathered at a Madrassa (an Islamic school) raising concerns about land acquisition for the mega project. Photos by: Rishika Pardikar
People are also wary of the upcoming project given the adverse impacts of the previous 1,200 megawatt Matarbari coal-fired power project, which began operations in 2023.
“The government signs contracts with foreign companies and sends us notices to evacuate the land. We protest. They send the police to silence us and file false cases,” the people of Moheshkhali told Drilled. People in the region engage in salt farming, fishing and the cultivation of beetle leaves. Multiple foreign companies— including those from Japan, South Korea, India, China and the United States—have built fossil fuel infrastructure in Bangladesh and have plans for future projects too.
The villagers said that after the Matarbari coal project was commissioned, fish and shrimp catch in the Kohelia river was reduced because the plant discharges pollutants directly into the river. And many of them have still not received compensation for land that was acquired for the coal power plant.
The Matarbari project is under the BIG-B initiative, which is one of the counter-development initiatives against China's Belt and Road initiative. And engineering, procurement and construction (EPC) contractors for the Matarbari coal plant are Japanese companies like Sumitomo, Toshiba and IHI. Like the new “hub” project, the Matarbari coal power plant was financed via loans from JICA . Since its opening, news reports indicate declining power generation and financial losses. Shockingly, Japan classified loans provided to Bangladesh for the coal power plant as “climate finance”, claiming that since the plant uses Japanese technology, it generates more energy with less coal.
The Matarbari coal power plant relies on coal imported from Indonesia, Australia and South Africa. “Imports are not good for energy security. We need to build renewable energy capacity,” said Sharif Jamil, an environmental activist and member secretary at Dhoritri Rokhhay Amra (DHORA), a civil society organisation that works on environmental issues in Bangladesh. Overall, Bangladesh is heavily reliant on imported coal, oil and gas to meet its current energy demands.
An earlier report by the non-governmental research and advocacy organisation Japan Centre for a Sustainable Environment and Society (JACES) cautioned against introducing imported LNG power generation facilities into the upcoming Moheshkhali-Matarbari mega project given the uncertainties associated with such imports, especially for a relatively poor country like Bangladesh. During Russia’s invasion of Ukraine, LNG spot prices reached record highs and this caused an energy crisis in Bangladesh. In 2022, Bangladesh faced frequent failures to import fossil fuels due to soaring prices which led to fuel shortages, resulting in power cuts across most of the country.
The report by JACES notes that the Meghnaghat gas-fired power plant, in which JERA, a Japanese power generation company, holds an investment stake, was forced to close just two weeks after commencing operations. “Power plans reliant on LNG could increase the payback burden on idle power plants, potentially worsening Bangladesh's fiscal difficulties. Conversely, analysis indicates that maximising solar power deployment… could have reduced LNG import costs by $2.7 billion by 2024. Promoting fossil fuel dependency in the MIDI [Moheshkhali-Matarbari Integrated Infrastructure Development Initiative] region risks straining Bangladesh's finances, locking in long-term emissions sources, hindering the transition to renewable energy, and threatening energy security,” the report states.
Japan has also proposed another mega project that includes massive investments in coal and gas and entails a similar debt-trap for Bangladesh: the Integrated Energy and Power Master Plan (IEPMP). The plan also includes investments in other technologies like ammonia and hydrogen co-firing in thermal power plants which are expensive and entail significant emissions of both carbon dioxide and other PM2.5 air pollutants. Much like in other projects, these are technologies Japan pushes at the behest of its domestic companies. At COP30 in Brazil, Japan won a ‘Fossil of the Day’ award for, among other things, promoting such technologies as climate solutions.
Bangladesh is currently governed by an interim government led by Muhammad Yunus, following the fall of the Awami League government led by Sheikh Hasina. National elections in Bangladesh are scheduled for February 2026. A citizen’s manifesto for the national election, released in December 2025, noted that the IEPMP undermines renewable energy potential in the country by using the phrase ‘clean energy’ (as opposed to renewable energy), which includes ammonia and hydrogen co-firing in thermal power plants. The manifesto called for prioritising renewable energy and a coherent policy to meet ambitious climate-aligned targets.
Uncertainties in mega land acquisitions
Salt farms near the Matarbari coal power plant. Photo by: Rishika Pardikar
It is expected that around 300,000 people will be affected by the Matarbari-Moheshkhali mega infrastructure project.
The people of Moheshkhali said that the monetary compensation offered to them is always less than the livelihood value they get from the land when it is used as a salt farm or paddy field or a beetle-nut farm, because the value paid for the land does not adequately include the income generated from the land.
There are also other issues like non-employment of local people despite promises of recruitment at the time of land acquisition. When the Matarbari coal plant was established on the salt bank, for example, people lost livelihoods and were forced to migrate in search of work. Many of them ended up working as casual labourers in the construction and ship breaking sectors or as rickshaw drivers.
Abu Haydar, chairman of the Matarbai union parishad (rural local government), said “we want development. But it should be the kind of development that helps people. The coal power plant displaced a lot of people and they did not get compensation. Many were forced to migrate. And the fisher community is suffering from river pollution.” Further, he added that local people are sidelined when it comes to employment in such large projects. “We dream [of development]. But when things are finally done, there is nothing for us. We don’t get employment. And they take bribes to even give compensation!”
A women observes visitors to her village in Moheshkhali. Photo by: Rishika Pardikar
Curiously, estimates of the amount of land required for the mega project have also varied widely. Initial reports indicated it would require around 12,000 acres of land which then ballooned to around 20,000 acres and it now stands at 34,000 acres, according to the latest order by the law ministry. The lack of clarity regarding the actual land requirement and the ballooning figures have given rise to fears of large-scale, unplanned displacement in the region.
At a Climate Justice Assembly held at the Sher-e-Bangla Agricultural University in Dhaka last month, participants raised concerns about fossil fuel debt traps - cycles where developing countries are pressured into building fossil fuel projects with foreign debt and high interest rates in order to pay off existing debt and enable economic growth. Bangladesh already faces a mounting external debt repayment burden.
But while civil society has been pressing for sustainable development and a focus on renewable energy, it remains to be seen how the two political parties that are currently in the lead to win the next election—Bangladesh Nationalist Party and Jamaat-e-Islami—chalk out their priorities amid geopolitical tensions and rising violence on the domestic front.
