Second from right, Muhammed Aziz Khan, chairman of Summit Group, poses with Abrar A Anwar, head of corporate and institutional clients of Standard Chartered Bangladesh, Ayesha Aziz Khan, a director of Summit Group, and others at the bank's headquarters in Dhaka yesterday. Photo: STAR
Standard Chartered Bank has raised $190 million from international lenders for a 335-megawatt electricity plant of Summit Meghnaghat Power Company Ltd.
The lenders, which include international development partners and banks, have already disbursed the long-term project financing for the dual fuel-fired power plant in Narayanganj, the largest one in the private sector.
Summit has taken the loan to complete an existing project under which a single cycle power plant has been supplying about 217MW to the national grid since May.
"The unique feature of the project is that international lenders have come forward for a local project for long term," Muhammed Aziz Khan, chairman of Summit Group, which owns the plant, told The Daily Star yesterday.
He said Standard Chartered has played an extraordinary role in the project. "It has brought in a lot of confidence for the project as well as Bangladesh. We haven't seen before such a high number of foreign investors coming to Bangladesh for a single power project."
The total cost of the project is estimated at $318 million, of which the $190 million will be long-term debt.
Khan thanked Standard Chartered for not only acting as the hedge bank, account bank, inter-creditor and security agent for the financing, but also for providing $40 million on its own, the largest among the international investors.
The investors include DEG of Germany, FMO of the Netherlands, Opec Fund for Industrial Development of Austria, CDC Group of the UK, OeEB (Development Bank of Austria), Belgian Investment Company for Deve-loping Countries, and Infra-structure Development Company Ltd of Bangladesh.
Khan said, this was the first time a Bangladeshi company accessed international loans of this magnitude for project financing.
Summit's equity investment of $117.6 million also makes it the single largest investor in a project by a local company.
The project is a landmark for Summit, given that the company completed the simple cycle part with local finance as international financiers did not feel confident initially about the project.
A good part of the $190 million will be used to repay the loans borrowed from the local banks.
Ayesha Aziz Khan, a director of the group, said her company was convinced of the economic viability of the project. "So, we started the project with the help of local lenders and our own money before we got the long-term financing."
She said the combined cycle power plant is likely to go into operation in December.
The loan tenure is 12 years, with 18 months' grace period and less than 5 percent interest. Ayesha said foreign investors have already started to see Bangladesh as a place for long-term investment. "This is the beginning."
Operating power plants since 1998, Summit last year built three rental power plants ahead of schedule. It now contributes 850MW electricity to the national grid from a dozen of plants. Standard Chartered has been a long partner of the group in its power sector projects, Ayesha said.
"The local lenders helped us for faster construction of the project. Now the long-term lenders are helping us make the project sustainable."