The draft of the loan agreement on installing the Rampal Power plant got approved at the board meeting of Bangladesh-India Friendship Power Company Limited (BIFPCL) on this Wednesday. However, the final loan agreement which was meant to be inked yesterday with the Indian Exim Bank is yet to be signed.
Earlier, the draft got approved by the ministry of finance and the power division. The draft just got passed from the BIFPCL board on yesterday evening and the final loan agreement signing is just matter of time, said the related sources.
The Exim Bank of India is financing the power plant project of Rampal. BIFPCL is installing this 1,320 MW coal-fired power plant at Rampal which is a joint venture (JV) between the state-run Bangladesh Power Development Board (BPDB) and India’s National Thermal Power Corporation (NTPC). BPDB and NTPC have 50:50 equity partnerships in BIFPCL.
The total cost of this Power Plant Project is estimated as $2.0 billion and, Indian Exim Bank is about to finance 80 percent ($1.6 billion) of the total cost of this project. Rest of the amount will be managed by both the partner countries. The deal to install this power plant was signed on 13th July of the last year.
However, Indian Exim bank has given a condition to the government to be the sole guarantor of the bank loan of $1.6 billion. It means the liability of the loan repayment will be on the shoulders of Bangladesh if BIFPCL fails to repay the loan or the project ever stumbles. Rather sharing the liability of the bank loan, the Indian authority seemed to have more interest counting 50 percent profit of the project under tax-free advantage only.
Once the credit deal with Exim bank is signed, the $1.6 billion loan has to be repaid within 20 years and the installment of repaying will start after 7 years from the deal signing. The interest rate of the loan is LIBOR (London Interbank Offered Rate) plus 1 percent.