The government is considering issuing a $1 billion bond on the Singapore Exchange to raise funds for power sector mega-projects because the projected capital requirement for the sector is not domestically available.
“We have roughly estimated that by 2040, we need $35 billion in the power sector. Raising that amount through government mechanisms is not possible,” according to Additional Secretary Dr Ahmed Kaikaus, chairman of Bangladesh Energy and Power Research Council (BEPRC).
State Minister for Power Energy and Mineral Resources Nasrul Hamid told a seminar yesterday: “If we issue a bond, we will become more transparent. There will be less corruption because companies will have to disclose their financial information to attract buyers.
“I think the bond can be named the power and energy bond.”
Nasrul Hamid and Ahmed Kaikaus were addressing a seminar titled “Listing Process of Debt Instruments in Singapore” jointly organised by the BEPRC and the Dhaka Stock Exchange (DSE) at Bidyut Bhaban.
The state minister said entering the global stock market would enhance Bangladesh’s brand and would provide expatriate Bangladeshis with a reliable global investment opportunity.
Asked why foreign investors would be interested in buying a Bangladesh power sector bond when progress on existing mega-projects was so slow, he replied: “This will increase efficiency and accountability. When the companies improve, investors will become interested.”
Nasrul pointed out that development financing was subject to stringent terms and conditions, and said: “If we want a big investment, I think the banks are not a very good solution in the long run.
“We need financing alternatives. We have successfully implemented Export Credit Agency financing. Now we need to know more about the bond process. This is an Asian market so we prefer Singapore because it is nearby. For bonds, the Singapore market is one of the best.”
Presenting the keynote paper at the seminar, Farhana Siddiqui, corporate and finance director at Drew and Napier, a leading Singapore law firm, said listing in Singapore was easier than in other markets.
“Bangladesh is always a good country to invest in. Every day, I get four or five queries about whether Bangladesh is going to issue a sovereign bond request,” she said. “I think the market is ready for a Bangladesh-backed bond.
“The problem with being listed on the London and New York stock exchanges is the timing and trading hours. In Singapore, there is no such problem.” She added that because Singapore is one of Asia’s largest foreign currency exchange centres, issuers can easily convert their funds into their preferred funding currencies.
Power Division Secretary Monowar Islam and Managing Director of the Dhaka Stock Exchange Professor Dr Swapan Kumar Bala also spoke at the seminar.