A total of three international financiers signed contracts with the local private company Summit Bibiyana II Power Company Limited and US-based GE Energy to provide $210 million for a 341MW gas-based power plant in Sylhet on June 2.
International Finance Corp, a commercial arm of the World Bank, will provide $75 million, Asian Development Bank $75 million and Jeddah-based Islamic Development Bank $60 million.
The tenor of the loan is approximately 14 years. The direct loan amount is the largest given to a Bangladeshi private sector project by any of the three development agencies.
This will be the largest project finance transactions development by a Bangladeshi company.
The proposed investment also fits well with the regional development strategy of the three multilateral development banks.
Bangladesh suffers shortages of power with only about 60% of the total population having access to electricity.
This investment will help in achieving the government target of 20,000MW power capacity by 2020, taking electricity to an additional three million consumers.
The operations and maintenance of the plant will be carried out by China Northeast Electric Power Engineering & Service Co., Ltd.
“Apart from meeting the power demand of the country, the project is providing reliable employment opportunity during construction and operational phases,” said Tariqur Rashid, deputy managing director of Summit Turbine Division.
The agreements have been singed as per the international project finance practice while the account and security bank is Brac Bank Limited – a first-ever Bangladeshi Bank that has undertaken specified roles in a major international financing transaction.
“The project will help Bangladesh alleviate its power shortages, which result in periodic loadshedding and adversely impact the country’s economic growth and poverty reduction efforts,” said Don Purka, director of Infrastructure Finance Division 1, Private Sector Operations Department of ADB.
“IFC is proud to be part of this project because our investment will send a positive signal to other private sector players in Bangladesh, that are planning to develop efficient power projects aimed at expanding access to power,” said HyunChan Cho, IFC regional industry head for Infrastructure and Natural Resources.
For IDB, this is a part of its commitment for infrastructure development in its member countries and is extremely pleased with this support to the private sector participation in the power generation capacity of Bangladesh, stated Dr Walid Abdelwahab, director, Infrastructure, at Islamic Development Bank.
Bibiyana II is producing the lowest cost electricity and will provide the most important requirement for industrial growth to the country.
Summit will keep working to provide electricity to eradicate poverty and bring about inclusive sustainable growth for the people of Bangladesh with its strong financial and management strength, said Ayesha Aziz Khan, director of Summit Group.
“We have raised more than $500 million from foreign lenders over the last four years,” she added.
In 2014, Summit Industrial and Mercantile Corporation (Pvt.) Limited’s Meghnaghat Power Company Limited received $190 million from a consortium of lenders comprised of DEG, FMO, CDC, OFID ($120 million), Standard Chartered Bank ($40 million) and IDCOL ($30 million).
The project is in full operation now and generating 315MW of electricity.
Summit Group has interests in infrastructure investment such as power generation, port, and telecommunications and is currently producing approximately 1200MW of electricity.
