MIGA may give sovereign guarantee for $80m loan
Rezaul Karim | Sunday, 19 June 2016
Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, is likely to give guarantee for US$ 80 million loan from a foreign bank for North-West Power Generation Company Limited (NWPGCL) to set up Sirajganj 220-megawatt plant (unit III), officials said.
The MIGA has recently sought response from the government of Bangladesh for the loan to be provided by Standard Chartered Bank, UK and some other financial institutions, they added.
"We have sought approval from the finance ministry recently," Senior Assistant Chief of World Bank Wing-02 of the ERD Delwar Hossain told the FE Friday.
The foreign banks, especially Standard Chartered Bank, usually don't provide loan to the governments of poorly-rated countries like Bangladesh. But the banks give loan to the country if MIGA or any international lenders give guarantee against the loan, he said.
In accordance with the guidelines on approval of MIGA guarantees signed by the government of Bangladesh and dated February 10, 1990, MIGA must obtain the written approval of Bangladesh government for guarantees in excess of U$ 50 million, a source concerned said.
The period of guarantee by MIGA will be up to 15 years. The plant will be built at a cost of U$ 234 million. Construction of the plant will start in October, 2017 and is scheduled to be completed in June 2018, according to official webpage of NWPGCL.
"The host country's approval doesn't constitute in any form or manner a sovereign counter-indemnity, guarantee of other contingent liability of the government of Bangladesh in favour of MIGA," the letter reads.
The aim of the host country's approval is simply to inform the government that MIGA plans to support an investment in the country, an ERD official said.
NWPGCL under Power Division is involved with the construction of Sirajganj 220MW combined cycle power plant (CCPP) (unit III) located near Saidabad power generation complex.
NWPGCL has been formed, incorporated and registered in August, 2007 under the framework of Government Power Sector Reforms Policy and the provision of Companies Act, 1994.
The Company has primarily started functioning with Khulna 150MW Peaking Power Plant Project, Sirajganj 150MW Peaking Power Plant Project and Bheramara 360MW Combined Cycle Power Development Project.