Summit assured of $2b financing | The Daily Star
12:00 AM, December 20, 2010 / LAST MODIFIED: 12:00 AM, December 20, 2010

Power Projects

Summit assured of $2b financing

Different financial institutions have pledged around $ 2 billion financing for the Summit Group of Companies that has recently been awarded contracts for six power projects.
Dispelling doubts whether a local company could handle so many contracts for generating 1,274 megawatts of power within three years, Summit chief Muhammad Aziz Khan told The Daily Star that his group of companies has been assured of financing from International Finance Corporation, Asian Development Bank, Islamic Development Bank, Infrastructure Development Company Ltd , Germany-based DEG and FMO and Bangladesh Bank.
And some of these have already approved financing for the power projects.
Besides, Summit looks forward to the local capital market where investors are keen to invest in Summit's ventures, Aziz Khan said.
Set to become the country's biggest power company, Summit has formed three entities to implement the six power projects, he added.
The projects will need investments of over $ 1 billion. These are Bibiyana phase- 1 and 2 gas-fired private power plants (341 MW each), Meghnaghat dual fuel 335 MW private power plant, Narayanganj 102 MW heavy fuel oil (HFO)-based rental plant, Khulna 115 MW HFO-fired rental plant and Noapara 40 MW HFO rental plant.
Summit won contracts for the large Bibiyana and Meghnaghat projects by beating other competitors through offering a very low tariff, while it won the rental power contracts on the basis of unsolicited negotiations like those of many other companies.
And it has also been declared the lowest bidder in competitive bids for two other HFO-based private power projects having a total production capacity of 150 MW in Syedpur and Shantahar.
Summit has also submitted offers in eight more private HFO projects in Dhaka, Chittagong, Kaliakoir, Madanganj and Khulna. These competitive tenders are now under evaluation.
Since Summit has been making winning offers and bagging one deal after another, industry insiders and even policymakers have raised questions if it has the financial and technical capability to accomplish such massive tasks.
“We fully appreciate and realise the depth of the issues including financing, implementation and subsequent management. This has been a dream come true,” said Aziz. “But we are not dreaming. We are fully prepared to take up these tasks.”
He said three Summit entities will implement three types of power projects. Summit Power Ltd will implement liquid fuel-based projects across the country, except in Khulna region. Kulna Power Company is implementing projects in Khulna and Noapara and other future projects in that region. And Summit Turbine Power Group will implement Bibiyana-1, 2 and Meghnaghat projects.
“For the Turbine Projects, we have GE (US-based world's leading power company) as our co-investor, technology,operation and maintenance providers,” he added.
“I believe everybody is certain that we can implement 100 MW projects as many as needed,” Aziz said referring to his experience in power sector in the last 15 years. During this period, Summit has built a number of power plants generating 330 MW of power.
But implementing large projects is challenging, he said, and explained how he is tackling this challenge. “In addition to taking the world's largest equipment manufacturer GE on board, we have appointed German Lahmayer as the owner's engineer. It's the largest engineering company in the world. We are taking DFDL Mekong, Singapore, as our international legal counsel.”
Summit is also set to appoint financial adviser for the projects. Besides, the company has appointed consultants to carry out environmental and social impact assessments, which are necessary for financing as well as for compliance with government rules.
“We are in the process of signing contracts on engineering, procurement and construction for these projects. We have short-listed one Indian and two Chinese companies. Lahmayer is assessing the capabilities of these companies for us,” Aziz said.
“We are following a reductionist policy (in handling these projects) for reducing or making a complicated process into small simple process.”
He mentioned that around 1,500 people will be working for these projects.
Finally, Aziz Khan explained how his company managed to make the lowest power tariff offers in the tenders. To achieve low tariff, he said, Summit ensured most efficient technology at the most competitive prices. “I humbly put in 37 years of business experience, of which 15 years in power sector may have provided us some wisdom and connections to ascertain the market,” he added.

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