BB to fund private power plants from its $50m IPFF

FE Team | Published: September 29, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

The Bangladesh Bank (BB) is set to finance power plants from its $50 million investment promotion and financing facility (IPFF) fund for private infrastructure projects.
"We hope to start sanctioning credits soon. We have primarily planned to finance power plant projects," Abul Quasem, project director of IPFF and also executive director of the central bank, told the bdnews24.com recently.
Quasem said they had initially planned to finance 10 government-approved small power projects to be set up under the private sector.
Financing procedures would start after the government signed agreements with the private power-generation firms, he said.
The IPFF, floated in August last year following an agreement between the government and the World Bank, remained unused because of delay in disbursement of fund by the donors.
The government launched the IPFF to create a scope for long-term financing for large-scale infrastructure projects beyond the capacity of local bank and financial institutions.
As much as $47.5 million will be available for lending while the remaining $2.5 million will be used as technical assistance, the official said.
Projects for power generation, transmission, distribution and services, port development, industrial waste management, highways and expressways (mass-transit, bridges, tunnels and flyovers), airports, terminal and aviation facilities, industrial estates and park development will be given special preference in funding, according to BB.
"We will finance as much as 50 per cent of the total project cost. Entrepreneurs and participating financial institutions will have to bear the remaining costs of their projects," Quasem said.
"About Tk 4 billion is available as facility loan. We will not hesitate to sanction more amount if the projects are good," the official said.
Under the project, the central bank will finance entrepreneurs through banks and financial institutions taking the interest rate of government borrowing instruments such as treasury bill as the basis.
Already, three banks and seven financial institutions have signed agreements to participate in the IPFF.
These are Dutch-Bangla Bank, Eastern Bank, NCC Bank, International Leasing and Financial Services, Prime Finance and Investment, United Leasing, Uttara Finance and Investment, IDLC, and Industrial & Infrastructure Development Finance Company.