StanChart signs $193m loan deal with Ashuganj Power

Standard Chartered Bank has arranged around $193 million loans for Ashuganj Power Station Company Ltd to help the state-run electricity producer set up a 225-megawatt combined cycle power plant.
The London-based bank yesterday signed a deal with Ashuganj Power at Bidyut Bhaban in the capital for the fund backed by export credit agencies (ECAs).
“We have arranged 85 percent costs of the project as ECA loans,” said Abrar A Anwar, managing director and head of origination and client coverage at Standard Chartered Bank in Bangladesh.
The bank has arranged the ECA-backed finance from K-Sure in Korea and Euler Hermes in German. The interest rate of the project is LIBOR+ 3.69 percent a year.
ECAs provide financing services such as guarantees, loans and insurance to local companies to promote exports.
This is the second ECA deal signed by Ashuganj Power. Earlier, on December 21, it signed another contract with HSBC for a $420 million fund for its 383MW combined cycle power plant.
“ECA loan is an innovation model of financing as it will help the government secure international funding from non-conventional sources,” said Md Anwar Hussain, chairman of the power company.
The loan will be drawn within three years of the availability period and should be repaid by the next 10 years after project completion.
The average tariff for 25 years' lifetime is Tk 1.68 per unit, which will help reduce the overall power generation cost substantially, said Hussain.
Ashuganj Power had signed a contract with its EPC contractor -- South Korean Hyundai Engineering Company and Daewoo International Corporation -- on October 5 last year to build the 225MW power plant.
On November 28 this year, the government's Hard-Term Loan Committee gave a go-ahead to two ECA funding totalling $622 million.
Ashuganj Power is the second largest power plant in Bangladesh with installed capacity of 724MW and de-rated capacity of 642MW, meeting 15 percent of the country's electricity requirements.
Bangladesh has plans to add 16,048MW power by 2016 to its current production capacity of about 6,000MW. But the fund crisis has been a big challenge.
To overcome the problem, the government has taken various steps, including lending from multiple donor agencies, supplier's credit, buyer's credit and ECA funding. Power Division Secretary (in-charge) Monowar Islam also spoke.