WB wants govt to float RPC shares to get $100m loan
Wednesday, 24 October 2007
FHM Humayan Kabir
The World Bank (WB) has asked the government to float shares of the Rural Power Company (RPC) if it wants to receive US$100 million budgetary support credit for country's power sector reforms, official sources said.
The RPC is an enterprise jointly owned by Rural Electrification Board (REB) and some of its Palli Biddyut Samities (PBSs),
Besides, according to the sources, the WB also asked the government to review the REB's financial and operational performance through a "strategy study" saying, "the power distributors in the rural areas is undergoing the worst governance and financial crisis of its history."
They said the government has also agreed in principal to start the process of floating initial public offering (IPO) in the stock market to procure funds for operating the power generation company, the sources further said.
Sources in the finance ministry said that the Washington-based donor asked the Bangladesh government to appoint "IPO Advisor" for facilitating offloading of shares of the RPC and invite a tender to appoint consultant to conduct the "strategy study" of the REB by December 31 this year.
The International Development Association (IDA), a soft-lending window of the Washington-based donor, has assured the caretaker government to provide $100 million transitional budget support to bring reforms in the country's ailing power sector.
It has already sent a mission to Dhaka last month to review the country's power sector where it would like to provide support.
The finance ministry sources said the WB asked the government to complete the specified works by December 31 next and to send the letter relating to development to the Bank immediately after the deadline.
According to the sources, the IDA in mid-January next will hold a meeting to take a deci sion on the proposed $100 million budget support credit titled "power sector development policy loan" to Bangladesh after getting the letter relating to development from the government.
Then it would send an appraisal/negotiation mission to Dhaka in February next year to complete the loan deal.
The RPC, owned by REB and its nine Palli Biddyut Samities (PBSs), has a 210-megawatt (MW) capacity power plant at Mymensingh.
The state-owned REB and the PBSs established the RPC in 1994 and installed a 70MW power plant in 1999. The RPC installed two similar plants in 2000 and 2007.
The REB has 18.85 per cent, Dhaka PBS 41.89 per cent, Moulavibazar PBS 11.63 per cent, Comilla PBS 9.06 per cent, Narsinghdi PBS 7.68 per cent, Habiganj PBS 4.65 per cent, Tangail PBS 1.48 per cent, Sirajganj PBS 3.33 per cent, Natore-1 PBS 0.72 per cent and Natore-2 PBS 0.72 per cent share of the RPC.
When asked about the WB's condition, Managing Director of the RPC, Nazmul Hossain Chowdhury Tuesday told the FE that they had decided to float share of the company through the stock market even before WB's directives.
"First, we will obtain credit rating for our company. Then we will start the process of floating the IPO," he said adding, now they are working to upgrade the company's operational and financial performance.
Chowdhury said: "The monthly turnover of the RPC is currently recorded at Tk 320 to Tk 350 million."
Sources in the finance ministry said the WB also tagged some other conditions for getting the $100million transitional budgetary support.
Among the conditions, it asked the government to raise the power tariff, strengthen the Bangladesh Energy Regulatory Commission (BERC), set up a south-zone power distribution company and introduce an automated metering system in the south-zone.
The World Bank (WB) has asked the government to float shares of the Rural Power Company (RPC) if it wants to receive US$100 million budgetary support credit for country's power sector reforms, official sources said.
The RPC is an enterprise jointly owned by Rural Electrification Board (REB) and some of its Palli Biddyut Samities (PBSs),
Besides, according to the sources, the WB also asked the government to review the REB's financial and operational performance through a "strategy study" saying, "the power distributors in the rural areas is undergoing the worst governance and financial crisis of its history."
They said the government has also agreed in principal to start the process of floating initial public offering (IPO) in the stock market to procure funds for operating the power generation company, the sources further said.
Sources in the finance ministry said that the Washington-based donor asked the Bangladesh government to appoint "IPO Advisor" for facilitating offloading of shares of the RPC and invite a tender to appoint consultant to conduct the "strategy study" of the REB by December 31 this year.
The International Development Association (IDA), a soft-lending window of the Washington-based donor, has assured the caretaker government to provide $100 million transitional budget support to bring reforms in the country's ailing power sector.
It has already sent a mission to Dhaka last month to review the country's power sector where it would like to provide support.
The finance ministry sources said the WB asked the government to complete the specified works by December 31 next and to send the letter relating to development to the Bank immediately after the deadline.
According to the sources, the IDA in mid-January next will hold a meeting to take a deci sion on the proposed $100 million budget support credit titled "power sector development policy loan" to Bangladesh after getting the letter relating to development from the government.
Then it would send an appraisal/negotiation mission to Dhaka in February next year to complete the loan deal.
The RPC, owned by REB and its nine Palli Biddyut Samities (PBSs), has a 210-megawatt (MW) capacity power plant at Mymensingh.
The state-owned REB and the PBSs established the RPC in 1994 and installed a 70MW power plant in 1999. The RPC installed two similar plants in 2000 and 2007.
The REB has 18.85 per cent, Dhaka PBS 41.89 per cent, Moulavibazar PBS 11.63 per cent, Comilla PBS 9.06 per cent, Narsinghdi PBS 7.68 per cent, Habiganj PBS 4.65 per cent, Tangail PBS 1.48 per cent, Sirajganj PBS 3.33 per cent, Natore-1 PBS 0.72 per cent and Natore-2 PBS 0.72 per cent share of the RPC.
When asked about the WB's condition, Managing Director of the RPC, Nazmul Hossain Chowdhury Tuesday told the FE that they had decided to float share of the company through the stock market even before WB's directives.
"First, we will obtain credit rating for our company. Then we will start the process of floating the IPO," he said adding, now they are working to upgrade the company's operational and financial performance.
Chowdhury said: "The monthly turnover of the RPC is currently recorded at Tk 320 to Tk 350 million."
Sources in the finance ministry said the WB also tagged some other conditions for getting the $100million transitional budgetary support.
Among the conditions, it asked the government to raise the power tariff, strengthen the Bangladesh Energy Regulatory Commission (BERC), set up a south-zone power distribution company and introduce an automated metering system in the south-zone.