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Rooppur nuclear plant

Sonali gets Tk 200m as commission on hefty LC

Bank’s Tk 7.0b demand dwindles in trade-off between charges and waivers-recapitalisation

Syful Islam | February 10, 2018 00:00:00

Sonali Bank will get Tk 200 million as commission on a hefty letter of credit (LC) opened for Rooppur Nuclear Power Plant (RNPP), after the trimming down of its bigger demand in a trade-off.

Officials said the state-owned Sonali Bank Ltd (SBL) had sought Tk 7.0 billion as commission on the US$11.38 billion LC opened for importing equipment and services for the country's maiden nuclear-power station.

Of the total sum, Tk 100 million will be given in fiscal year 2018-19 and the rest Tk 100 million later by amending the development-project proposal.

According to the officials, usually SBL charges 0.04 per cent commission in each quarter against an LC opening. Against the LC for RNPP it at first sought 0.09 per cent commission but later lowered the rate to 0.05 per cent.

If 0.05 per cent is charged, the commission for each quarter stands at Tk 472.90 million which comes to Tk 7.0 billion by the termination of the LC tenure in 2024.

However, the government decided not to pay commission in terms of percentage to the government-managed bank rather as a token payment.

Contacted over telephone Friday, Sonali Bank managing director Obayed Ullah Al Masud told the FE had the government paid the commission in line with the existing rules, the bank could get some Tk 7.0 billion from the project.

In this case, he said, the government may not need to provide money for bank's recapitalisation.

However, he said the RNPP is a very important project through which the country will step into nuclear-power era and a significant electricity gap will be met from the plant.

"So, we are not thinking about earning profit from LC, rather we are feeling to be part of this development," said Mr Masud. He noted that the profit the Sonali Bank makes ultimately goes into government exchequer.

"There is no scope of paying the entire Tk 7.0 billion to Sonali Bank according to the development-project proposal," he added.

Meanwhile, the Sonali Bank has been given waiver from single-borrower-exposure limit for the opening of LC worth $11.38 billion for the import of equipment and services for RNPP.

According to section 26 B (2) of the Bank Company Act a bank is not permitted to lend an amount exceeding 25 per cent of its paid-up capital to a single borrower. The amount being lent to server state's interest is several times higher than this bank's paid-up capital.

Officials say the bank also enjoys waiver from keeping additional 1.0 per cent general provision with the central bank against contingent liability for the LC. For opening the seven-year-long LC, a special exemption has been granted to the SBL from the Office of the Chief Controller of Imports and Exports.

A new harmonised system code (HS Code) was opened for importing equipment of nuclear-power plant before the opening of LC, they noted.

The power-plant project is being implemented under a Russian state export credit for which a $12.65 billion general contract was signed in December 2012 followed by an inter-government credit agreement worth $11.38 billion signed in July 2016.

Later, an interbank agreement was signed between Moscow's Vnesheconombank and Sonali Bank Ltd in Dhaka in July 2017 for carrying out banking activities under the credit deal.

Unless the waiver on contingent liability of the LC was granted, the bank would have to keep Tk 9.30 billion in the vault of the central bank as general provision against contingent liability.

The unit one of the country's maiden nuclear-power plant having a capacity of 2,400 megawatts is expected to be commissioned by 2023 and a second one by 2024.

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