AIIB okays $60m for Bangladesh's power project

The Beijing-based Asian Infrastructure Investment Bank is set to provide a $60 million loan for a power project in Bangladesh to take its exposure in the country to $285 million, which is 6.6 percent of its total portfolio.

The amount will go towards building a 220-megawatt combined cycle power plant in Bhola, the total cost of which would be $271 million. Islamic Development Bank and local Infrastructure Development Company will provide the remaining funds.

The project will be developed by India's Shapoorji Pallonji Infrastructure Capital Company Private Limited through Nutan Bidyut (Bangladesh) Limited, a special-purpose vehicle incorporated in Bangladesh for this.

The loan will carry an interest rate of 2.4-2.5 percent, which is higher than those offered by Bangladesh's regular multilateral lenders such as the World Bank and the Asian Development Bank.

“AIIB does not provide concessional loans. We finance those projects that are commercially viable,” said Laurel Ostfield, head of communications and development of AIIB, at a media briefing held yesterday at the capital's Lakeshore Hotel. The bank had earlier given loans amounting to $225 million to two power projects.

AIIB is investing in the project as it will be one of the most efficient power plants delivering low-cost power in Bangladesh, said its Director General Dong-ik Lee.

Bangladesh's acute power shortage is impacting its economic growth and its effort to reduce poverty, said DJ Pandian, AIIB's vice-president and chief investment officer, in a statement.

“This investment will help Bangladesh increase its power supply to support industries that are vital to growth,” he added. Ostfield also touched upon Bangladesh's projects that are in the pipeline and AIIB's focus area and its expertise. AIIB is considering five more projects worth $885 million that Bangladesh has approached it for. Yuanjiang Sun, principal communications officer of AIIB also present at the briefing.