PC set to approve 2 power plants with hard loans

FHM Humayan Kabir | Published: November 29, 2013 00:00:00 | Updated: November 30, 2025 06:01:00

The Planning Commission is at last set to approve two power generation projects with hard loans. These projects which will be placed before the next Executive Committee of the National Economic Council (ECNEC) meeting, officials said Wednesday.
Officials said they have already sent the final project proposal of the 275-megawatt (MW) coal-based plant at Barapukuria and 100MW furnace oil-fired plant at Chapainawabganj to the ECNEC wing of the Planning Commission (PC).
The Bangladesh Power Development Board (BPDB) has undertaken the projects at buyers' credit from a Chinese and a Hong Kong-based commercial banks to supply more electricity to the national grid.
Earlier, the PC sent back the project proposals to the Power Division with the suggestion to seek concessional loans.
"We have failed to mobilise the soft loans for the power generation projects. So, we have sent the final project proposals to the PC as per instruction of the project evaluation committee of the Commission," said a Power Division official.
The BPDB will borrow US$224 million for setting up the third unit of Barapukuria 275MW coal-fired power plant from the ICBC Bank of China and US$109 million for 100MW HFO-fired plant at Chapianawabganj from the HSBC bank of Hong Kong.
Meanwhile, the state-owned BPDB has undertaken the installation of 275MW plant at a cost of Tk 26.88 billion ($328 million) and the 100MW plant at Tk 11.13 billion ($136 million).
The interest rate for the buyers' credit from the Chinese ICBC bank will be nearly 4.0 per cent for its $224 million lending to the government.
Besides, it will also charge 1.50 per cent management fee at flat rate and 1.0 per cent commitment fee per year for the credit.
In addition, the ICBC bank will charge 6.62 per cent Export Credit Insurance fee for the total credit amount and $150,000 as other expenses (including legal fees) from the borrower.
The loan will have to be repaid in 10 years with a three-year grace period.
The HSBC bank will charge LIBOR plus 2.99 per cent interest for its loans for the Chapainawabganj 100MW plant.
Besides, the state-owned BPDB will have to pay 12.3 per cent as Export Credit Agency (ECA) insurance fee at flat rate, 1.0 per cent as upfront fee, $25,000 as agency fee and another $25,000 as ECA application fee for the loan.
The loan will have to be repaid in 10 years with a two-year grace period.
Power Division officials said the electricity production cost at the 100MW plant will be Tk21.70 per kilowatt hour (kwh), which is costlier than any other power stations in the country.
The BPDB has already selected a Chinese company-HUBEI Electric Power Survey & Design Institution-- to install the Chapainawabganj power station without any proper feasibility study.
It has also appointed a Chinese contractor -- the Harbin Electric International Company Ltd for setting up the US$328 million coal-operated power station at Barapukuria.
A Power Division official said since the country's demand for power is rising every year due to urbanisation and industrialisation, we have undertaken both the power stations even at hard-term loan.
Bangladesh is struggling due to power shortage for many years as its demand is surging against the lower generation. The current generation of power in all the stations is nearly 6,000mw per day against the demand for more than 7,500mw.