Govt co to pre-finance ‘controversial’ Rampal power plant

A state-owned financial institution has shown its eagerness to fund $200 million for the 'controversial' Rampal power project close by the Sundarbans heritage mangrove forest, until foreign investment flows in.
Bangladesh Infrastructure Finance Fund Limited (BIFFL), a company under the ministry of finance, in its recent board meeting agreed in principle to provide the pre-financing capital to the power project. A number of international financial entities have already refused to finance the project on environmental considerations.
Bangladesh-India Friend-ship Power Company Limited (BIFPCL), the Bangladesh-India joint-venture company that will build the thermal power plant, has applied for the loan from the finance outfit.
The BIFPCL is a joint venture between Bangladesh's state-owned Power Development Board and India's National Thermal Power Corporation.
BIFPCL wants to build the 1320MW coal-fired power plant to feed the power-starved Bangladesh. But the site selection has provoked protests from environmentalists and left-leaning outfits.
The protesters fear the world's largest mangrove forest would have to bear adverse impact of the power plant not far off.
They have been organising many programmes in protest against the move.
But the government claims the power plant will not affect the Sunderbans, a UNESCO World Heritage Site.
The environmentalists alleged that the Rampal station is against the Ramsar Convention because the plant is to be built in a forest and sensitive wetlands area.
The Ramsar Convention is the only global environmental treaty that deals with preservation of wetlands. Bangladesh signed the convention in 1992.
However, people familiar with the financing developments told the FE this funding is for the 'pre-financial closure time', a pre-financing until main funds are disbursed.
They also said the BIFFL will issue a letter of intent on the funding matter.
"Due-diligence process is on," said an official at the BIFFL.
However, the two companies from the two neighbouring countries will have 30 per cent equity on an equal share basis in the joint-venture company.
The remaining 70 per cent, equivalent to US$ 1.5 billion, will be mobilised from international lending sources.
Bangladesh has already issued sovereign guarantee in case the company fails to repay the international loans.
However, in view of environmental issue, in 2014-2015 French banks Crédit Agricole, BNP Paribas, and Société Génerale said they would not fund the Rampal power station.
Bangladesh expects to get 660MW electricity from the plant's first unit by 2018. Another 660MW from the second unit will be available by 2020, officials said.
According to a July 2014 report, the plant contract was expected to be awarded by April 2015 and the project would start commercial generation by December 2018. But the deal has yet to be done.
jasimharoon@yahoo.com