Bangladesh Funds 1,675 Megawatts of New Power with Export Credits

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The government of Bangladesh is showing determination and stamina in its push to add power generation to its grid. The country, which a population of more than 150 million, is faced with daunting development challenges, and enhanced power is one of the crucial keys to meeting them.

The government announced that it will borrow hard-term loans worth up to $1.5 billion from export credit agencies (ECAs) to build five power plants. The hard-term loans will carry a high rate of interest and a maturity period of two to 10 years. Energy officials already have selected bidders for the plant project.

The government has approved $622 million in ECA credits for the state-owned Ashuganj Power Station Company Limited (APCL) to install two gas-fired plants of 225 megawatts (MW) and 450 MW. Contracts were signed in October 2011 with the elected South Korean contractors, Hyundai Engineering (KSX:089470) (Dangjin-gun, South Korea) and Daewoo International (KSX:047050) (Seoul), to build the 225-MW, combined-cycle plant at Ashugani station. In May 2012, APSCL signed a contract with a consortium of Inelectra AB (Stockholm, Sweden) and TSK Electronica y Electricidad S.A. (Asturias, Spain) for a 450-MW, gas-fired plant at the same power station.

The Ministry of Finance has approved ECA loans for three projects, including the 450-MW Bibiyana 111, the 300-MW Shajubazar and the 250-MW Barapukuria 111 plants. These projects will involve investments of $400 million, $350 million and $250 million, respectively. Japanese and Korean companies have signed up for the Bibiyana project. The Bangladesh Power Development Board (BPDB) will repay the loans at 3.28% over 10 years.

Chinese companies Guangdong Power Engineering Corporation and Guangdong Electric Power will set up Shahjibazar, and a joint venture between Harbin Electric International Company (HEI) and CCC Engineering (HEI --CCC) will handle the Barapukuria project, which will be coal-fired.

The EPA loan mechanism will see a total of 1,675 MW of additional power set up.

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