Financing hitch stalls progress | The Daily Star
12:06 AM, November 30, 2014 / LAST MODIFIED: 01:53 AM, March 08, 2015

Financing hitch stalls progress

Financing hitch stalls progress

5 public sector projects could not start; several private projects also limping

The government's mega plans in the power sector may see some hitches, as several large projects have failed to make any headway over the last couple of years for various reasons, including a lack of financing sources.

The projects include Bibiyana-3 (450MW); Ghorashal (365MW); Chapainawabganj (100MW); Shahajibazar (330MW) and Ghorashal Repowering Project.

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Besides, private coal-fired power projects were lagging behind schedule, said power board sources.

Among those are three coal-fired power plants of Orion in Khulna (totalling 1,200MW capacity) and two in Dhaka by S Alam Group (another 1,200MW capacity).

The Orion projects, awarded against a very low power tariff, are awaiting the government's environmental clearance from the middle of this year.

Once cleared, the company would be able to secure international loans, said a top official of the company.

The country's biggest electricity project -- Rampal 1,320MW coal power scheme -- is also running more than a year behind schedule.

A senior official of the Bangladesh-India Friendship Power Company told The Daily Star that they were yet to float international tender to get a contractor and arrange around $1.7 billion loan. The tender was supposed to be floated in October.

“But I assure you, we are making great progress with the project. We have completely developed the project's land,” said company's Deputy Managing Director Uzzal Bhattacharya.

He noted that the company was taking time to float the tender, as it was refining the bid terms, addressing all environmental issues so that the Rampal plant became a model of a well-engineered and environment friendly coal plant.

Despite initial financial problems, some projects have made encouraging progress.

Of them, the Summit Meghnaghat 335MW dual fuel project, now operating partially, is set to start full-swing commercial operation from March.

Summit is also ready to begin partial operation of its other large power project -- Bibiyana phase-2 scheme (341MW) -- from the same month.

Summit, which signed deals for these two power projects in 2011, faced difficulties in securing the projects' finances mainly due to the World Bank's non-cooperation with the government in giving $100 million performance risk guarantee (PRG) against the projects. It would have helped the private investor to get international finances easily.

While this difficulty slowed Summit's progress by about a year, the company went on investing in these projects from its own finances.

It received international loans against the Meghnaghat project in late last year after it launched the plant's partial simple cycle operation. The company expects to get international funds in a similar way for the Bibiyana project when it begins simple cycle operation in next March.

Since assuming office in 2009, the Awami League-led government has rolled out plans to make load shedding a history within a few years.

It envisioned that by 2017, the country's power generation would exceed 18,000MW capacity from present 10,000MW (with actual generation of 7,200MW). To achieve this goal, the government has gone for all kinds of power plants using oil, gas, coal and renewable resources.

But the government would fail to achieve this goal if the large power projects fail to kick-start in due time.

Concerned with the poor progress of many of these projects, the power ministry over the last two months held a couple of meetings with officials to speed up work.

“But some of the problems in implementing the projects might not be easy to overcome. In addition to securing finances, there is a serious lack of capacity of officials to handle so many projects. Implementing power projects is easier when you have officials who understand how power projects should be implemented,” said an executive of a private power company.

Though the government has put high priority on implementing power projects, the bureaucratic culture of implementing agencies remain unchanged, said the official.

“We had some dynamic leaders in the power board who had personally pushed many projects through just to make things happen. With their retirement, there are not many people who nurture the importance of project implementation like before,” the executive added.

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