WB unwilling to finance Bibiyana power plant projects
Reported by: UNBconnect
Reported on: May 09, 2012 08:37 pm
Reported in: Business
Dhaka, May 9 (UNB) - The fate of the government’s two top priority power projects - Bibiyana-1 and Bibiyana-2 - hangs in the balance as their funding agency, the World Bank, has categorically said it would not finance those.
“We never committed funds for the Bibiyana-1 and Bibiyana-2,” World Bank Country Director Ellen Goldstein told reporters on Wednesday after attending a regional energy conference at Sonargaon Hotel in the city.
Asked about the World Bank’s US$ 257 million funds for power sector projects, which the government always outlined as funds for the two top priority projects, Ellen Goldstein said this fund is for implementation of some small public private partnership (PPP) projects, not for Bibiyana projects.
About the negotiation among the World Bank, the government and the sponsor of the project Summit Group, she said: “That’s a bull story and Bibiyana projects have failed to fulfill the criteria under the project financing facility.”
She, however, said the sponsor of the Bibiyana projects can find out alternative financing for the project.
Contacted, Summut Group’s Chairman Mohammed Aziz Khan said the World Bank’s relation is with the government, not with Summit Group. However, the World Bank had committed $ 250 million as Investment Promotion and Financing Facility (IPFF) fund to Bangladesh government from which the projects were expecting $ 150 million.
Similarly, he said, the World Bank has assured the Power Ministry of providing partial risk guarantee of about $ 150 million. “Summit Group was relying on the World Bank’s commitment to the people of Bangladesh which, we hope, will come to fruition.”
Official sources said though the World Bank pushes Summit for alternative sources of financing it will be absolutely absurd to find an alternative source for financing the local company with a lower interest rate similar to the World Bank offer. World Bank’s interest rate for project financing in Bangladesh is 0.75 percent with 40 years repayment tenure while the interest rate of any international commercial financer is above 5 percent with maximum repayment tenure of 25 years.
The government signed three contracts with Summit Group on May 12 last year to set up the gas-fired 341 MW Bibiyana-1 and 341 MW Bibiyana-2 combined cycle projects and also the 335 MW Meghnaghat duel-fuel plant.
As per the deals, the state-owned Power Development Board (PDB) will purchase electricity from these plants at the rates between 3.3220 and 3.9863 US Cent per kilowatt hour (Or about Tk 1.90 per unit).
Single cycle units of these three plants are scheduled to come into operation in May 2013 while their combined cycle units will start commercial operation in May 2014.
As per contracts, all these three base-load plants will be combined cycle and will supply electricity to the government for 22 years time.