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Dhaka Thursday,  Mar 28, 2024

3 agencies proposals to fund Sirajgang power plant rejected

EB Reporter

Standing committee on non-concessional loans has rejected funding proposals made by three international agencies including World Bank for 225 megawatt combined cycle power plant in Sirajganj district.

The committee argued that the proposals could not be accepted as they were tagged with “hard conditions and high interest rates,” said official sources.

The agencies include World Bank’s insurance arm Multilateral Investment Guarantee Agency (MIGA), Germany’s Euler Hermes Deutsch-land AG (Hermes) and China Export and Credit Insurance Corporation (Sinosure).

A meeting of the committee held on April 1 at Finance Division auditorium with Finance Minister AMA Muhith in the chair made the decision.

Muhith told the meeting that it was not possible to approve the loan proposals.

He asked for relaxation of the conditions and lowering of interest rate before giving approvals.

As per the proposal, the cost of the project will be $209m for construction of second unit duel fuel combined 225MW cycle power in Sirajgang in next three years.

Of the amount, Hermes agreed to provide $42m, Sinosure $120m and MIGA $46m.

On Power Division’s request, Standard Chartered contacted the potential financiers and brought the proposals.

The meeting discussed the agency fee, bidders premium, arrangement fee and standby fee along with other common terms and conditions.

One and half years ago when Bangladesh negotiation with World Bank to bring MIGA fund, Governor of Bangladesh Bank Atiur Rahman told Dhaka Tribune, “Huge foreign investment will definitely come into (the country) if we could sign deals with MIGA for fund.”
Hermes, Sinosure and MIGA offered interest rates respectively at six month LIBOR plus 1.95%, six month LIBOR plus 3.24% and six month plus LIBOR plus 1.90%.

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