Bangladesh to fund 5 power projects with hard $1.5-B loan

The Bangladesh government will utilize US$1.5 billion export credit agency loans to fund five power projects.

Power Division officials said they have already selected bidders for setting up the plants.

Financing from the ECAs, the sources said, is hard-term borrowing with a high rate of interest and a short maturity period (2 to 10 years).

An official of the Power Division said the government has already approved $622 million ECA credit for the state-owned Ashuganj Power Station Company Ltd for installing two gas-fired power plants of 225 megawatt and 450 mw capacity respectively.

The APSCL signed a contract with South Korean groups Hyundai and Daewoo to build the 225 mw gas-based combined cycle power plant at Ashuganj station.

In May last year, the APSCL signed another contract with a consortium of Inelectra International AB of Sweden and TSK Electronica of Spain to build a 450 mw gas-based plant at the same power station.

The Ministry of Finance has also approved borrowing from the ECAs to set up the Bibiyana 450 mw plant-III, Shahjibazar 300 mw plant, and Barapukuria-III 250 mw plant.

The proposed Bibiyana plant will require funds worth nearly $400 million, the Shahjibazar plant $350 million, and the Barapukuria plant nearly $250 million.

"The contractors will come forward with the financers and set up the power stations. We will repay the money in seven to 10 years," the official told the FE.

The BPDB official said the ECA credit will be hard in nature since those will be taken at higher interest rates with shorter maturity periods compared to the lower interest rates and longer maturity periods offered by different bilateral and multilateral donors to Bangladesh.

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