The government seeks corporate guarantee from the Bangladesh-India Friendship Power Company (Pvt) Limited (BIFPCL) as a failsafe measure against any financial risks before giving it go-ahead for building the 1,320-megawatt (MW) coal-fired power plant at Rampal.
A senior official of the Ministry of Finance (MoF) told the FE on Monday that the ministry agreed last week to issue sovereign guarantee, subject to attaining the guarantee from BIFPCL.
MoF wants that BIFPCL, a joint venture (JV) of Bangladesh Power Development Board (BPDB) and India's National Thermal Power Corporation (NTPC), should be liable for paying all dues to foreign financiers in case of its liquidation or bankruptcy under the provision of corporate guarantee.
"We have already informed BIFPCL about the condition for providing sovereign guarantee through the Power Division under the Ministry of Power, Energy and Mineral Resources," the MoF official added.
Sovereign guarantee assures overseas lending agencies of getting back their invested money in case the implementing agency fails to repay.
The amount of Rampal power plant project financing is yet to be ascertained. But, it will be the largest-ever guarantee from MoF for implementing any project in the country, as the amount will be no less than US$1.15 billion, he assumed.
Bangladesh has agreed to provide sovereign guarantee to the foreign funding agencies for implementing the much-talked-about plant, located inside the country's territory, said a power ministry official.
BPDB and NTPC will have 50:50 partnerships in BIFPCL. The power plant will be built at Rampal in Bagerhat, some 10 kms off the Sundarbans, the largest mangrove forest in the world and also a heritage site of the United Nations Educational Scientific and Cultural Organisation (UNESCO).
This is the first-ever JV power plant between Bangladesh and India as well as NTPC's first power venture outside India.
The power plant, planned on 1,834 acres of land, will run on imported coal, sourced from Indonesia, South Africa, Australia and Mozambique. Around 11,000 tonnes of coal will be required everyday to run it. The plant will consume lesser coal and produce low ash, said the ministry official.
As per the deal, BPDB will purchase electricity from the plant for 25 years. BIFPCL has already floated international tender for awarding the engineering, procurement and construction (EPC) contracts for building the power plant.
According to the JV agreement signed between the two state-owned companies, the project will be operated on the basis of an equity-debt ratio of 70:30. Some 70 per cent of the funds will be managed from loan support, while 30 per cent are expected as equities to be equally shared by BPDB and NTPC.
Many foreign firms have already shown interest in implementing the power project. The companies include Japan's Marubeni Corporation, Harbin Electric International and Dongfang Electric and Shanghai Electric of China, Korea's Hyundai Electric Company, Larsen & Toubro Limited of India, Bharat Heavy Electricals Limited, Siemens India and the US General Electric.
Environmentalists and different left-leaning political parties and organizations, however, have long been protesting against its implementation, as they fear the plant will be harmful for ecological balance of the Sundarbans.
mazizur.rahman@outlook.com
