State-run Ashuganj Power Station Company Ltd is going to raise Tk 600 crore by issuing bonds for the first time.
Of the amount, Tk 500 crore will be collected through private placement and the rest through stock markets.
The power producer signed an agreement with seven banks and financial institutions to raise the private placement portion of the fund at a programme at the InterContinental Dhaka hotel yesterday to this effect.
Bangladesh Infrastructure Finance Fund, Agrani Bank, Rupali Bank, Sonali Bank, Uttara Bank, Sadharan Bima Corporation, and the Investment Corporation of Bangladesh will purchase bonds worth Tk 385 crore.
Dutch-Bangla Bank will purchase bonds worth Tk 50 crore, said an official of the Power Division. Bonds worth Tk 65 crore will be sold to other banks and financial institutions later. Bonds valued Tk 100 crore will soon be released through stock exchanges and work on it has already begun, said the official.
The yield on the bonds will be 8.5 percent to 10 percent.
In a statement, the power ministry said the huge amount of funds needed to set up the power plants were mobilised from sources such as the government, export credit agencies, suppliers' credit, bidders' credit, joint ventures and government-to-government arrangements.
The issuance of the bonds has now emerged as an alternative source for financing power plants, it said.
Speaking at the ceremony, Nasrul Hamid, state minister for power, energy and mineral resources, said use of bonds to alternatively fund the power sector was increasing day by day.
He said shares might be floated abroad and it would be possible if the work was done maintaining transparency and accountability.
Tawfiq-e- Elahi Chowdhury, energy adviser to the prime minister, said raising funds through bonds would deepen relations with financial institutions, making it easier to mobilise funds in other sectors.
Finance Minister AMA Muhith said after coming to power in 2009, the government took up a crash programme to increase production of electricity and had succeeded in its efforts.
The expansion in the power sector has to be continued, he said. Abul Kalam Azad, chief coordinator for Sustainable Development Goals at the Prime Minister's Office, Ahmad Kaikaus, power secretary, and Khaled Mahmood, chairman of Ashuganj Power Station, also spoke.