BPDB in talks with foreign banks to soften terms

FE Team | Published: September 25, 2013 00:00:00 | Updated: February 01, 2018 00:00:00

FHM Humayan Kabir The Bangladesh Power Development Board (BPDB) started negotiations with a Chinese bank and another Hong Kong-based bank to get terms and conditions softened on their loans for four power plant projects having the aggregate capacity of 1050 megawatts (MW), officials said Tuesday. Government officials said a team, headed by BPDB member Abduhu Ruhullah, flew to Beijing on a four-day visit scheduled for Sept 24-27 to negotiate the lending arrangements. On instruction of the Power Division, the BPDB decided to discuss the issue with the two foreign banks. The state-owned power development board had earlier initiated the process of borrowing from the Chinese and the Hong Kong-based banks for the four projects, namely a 300-450 MW plant at Ghorasal, a 330MW plant at Shahjibazar, a 100 MW plant in Chapainawabganj and a 275 MW plant at Barapukuria. "During our visit, we'll try to convince the Chinese ICBC and the Hong Kong-based HSBC to relax their terms and conditions on the loans," BPDB Member Abduhu Ruhullah told the FE. He further said: "We are hopeful they (banks) will soften the conditions on the credits so that we can easily get their financial support for setting up the four power plants." The negotiation team from Bangladesh also included representatives from the Finance Division and the Economic Relations Division. The BPDB will set up the Shahjibazar 330MW and the Ghorasal 300-450MW capacity power plants with loans from the HSBC and the ICBC respectively. The total project costs have been estimated at US$ 750 million. The BPDB already sought tenders from contractors. A Power Division official said the BPDB entered negotiations with the foreign banks for softening the terms and conditions following the government's non-concessional loan committee's refusal last month to approve such hard-term loans from foreign sources for a 150MW power plant at Kodda. According to official sources, the Shahjibazar 300 MW combined cycle power plant project was awarded to a joint venture company comprising the Guangdong Power Engineering Corporation and the Guangdong Electric Power Design of China at a cost of US$ 279.678 million. Another Chinese bidder, CNTIC & CMC China Consortium, obtained the EPC contract on the 300-450 MW combined cycle power plant project at a cost of $ 244 million (Tk 19.44 billion). The state-owned Power Development Board will set up the 275MW power plant at Barapukuria at a cost of US$ 330.52 million and the 100MW plant in Chapainawabganj at a cost of $ 136.15 million. A Chinese joint venture between the Harbin Electric International Company and the CCC Engineering received the EPC contract on the 275MW extended Barapukuria coal-fired plant at a cost of US$ 248.874 million. Power Division officials said they would borrow US$224 million under the buyers' credit from the "Industrial & Commercial Bank of China Ltd (ICBC) for the Barapukuria plant and US$ 109.05 million (Tk 8.92 billion) in hard-term credit from the HSBC for the Chapainawabganj plant. The official said the BPDB would take buyers' credit from the HSBC for the Tk 11.14 billion (US$136.15 million) Chapainawabganj power plant. The HSBC will provide US$ 109.05 million (Tk 8.92 billion) in credit at a high interest rate for the power plant. The bank would charge the interest rate of LIBOR plus 3.5 per cent to LIBOR plus 5.5 per cent for the loans. Besides, the state-owned BPDB would have to pay insurance fee of 6.6 to 12.3 per cent, upfront fee of 1.0 to 1.5 per cent, agency fee of $25,000 and another $25,000 as the Export Credit Agency fee for borrowing the fund.