Germany's DEG to raise $120m loan for Summit's power plant

Summit Meghnaghat Power Company Ltd has signed an agreement with DEG (German Investment Corporation) for a syndicated loan of $120 million to develop the 335-megawat Megh-naghat-2 power project in Narayanganj.
The loan will carry an interest of LIBOR plus 4.5 percent repayable over 12 years, the company said in a statement yesterday.
Ayesha Aziz Khan, finance director of Summit, and Florian Munkle, investment manager of DEG, signed the agreement in Cologne in Germany on Thursday. Muhammed Aziz Khan, chairman of Summit Group, and Rolf Grunwald, director for infrastructure of DEG, were also present.
Aziz Khan said the total cost of the project has been estimated at $285 million, which is the single largest project ever built by any Bangladeshi company in the country. "The work has been going in full swing. We hope to add electricity to the national grid by August 2013," he said.
Of the total cost, Summit Group hopes to borrow $50 million from Standard Chartered Bank and $30 million from state-run Infrastructure Development Company Ltd.
The local leading power company has paired with General Electric to set up the power plant, with the American business conglomerate is supplying gas turbine, the main equipment of the power plant.
Khan also said two Chinese companies -- CNEEC and NEPC -- are constructing the gas-fired combined cycle power plant.
DEG is a member of KfW Bank Group, a financial arm of the German government.
Combined cycle plants use heat generated by simple cycle gas or oil generator unit to produce extra power and ensure less fuel consumption and lower cost for power generation.