The government has approved borrowing a hard-term finance of US$112.7 million to set up a 100MW fuel oil-based peaking power plant in Chapainawabganj.
The fund is a part of the total loan of US$162.7 million approved by the Standing Committee on non-concessional loan at its meeting yesterday, with Finance Minister AMA Muhith in the chair.
Bangladesh Power Development Board (BPDB) had proposed for the commercial loan from a multinational bank in the wake of fund crunch, an official said after the meeting.
“As we have no other choice, the power division placed the proposal and the committee approved it today,’’ he said. Construction of the power plant has already been delayed by three years as the foreign donors are reluctant to finance the project.
In accordance with the proposal, the funds would come from two sources – $112.7 million from multinational bank HSBC and the rest from the government of Belarus. The remaining fund, other than the power plant, would be used to procure vehicles for the city corporations and municipalities across the country.
“We have taken all the initiatives for the development of the power sector as the committee has already approved the long pending Chapainawabganj power plant project today,” Muhith said after the meeting.
“The government for the first time is going to get the supplier’s credit from Belarus for procuring vehicles and services for city corporations and municipalities under the government to government procurement framework,” a member of the committee told the Dhaka Tribune.
“Belarus government will give services to the city corporations and municipalities in next eleven years as per the credit agreement signed between Bangladesh and Belarus with an interest of 6%,” said an official. HSBC will charge interest at LIBOR (London Inter-bank offered rate) plus 5% rate.
According to Power Division sources, the government is yet to start the construction work of the power plant due to crisis of foreign funds, especially from the World Bank (WB) and the Asian Development Bank (ADB).
Although tender was earlier floated on September 9, 2011, the Bangladesh Power Development Board so far failed to attract potential donors for implementing the vital project, which will be completed within 450 days since beginning of the works, officials said.
