Dhaka, Bangladesh (BBN) - The central bank of Bangladesh will finance installation costs of captive power plants along with small power projects (SPP) under its investment promotion and financing facility (IPFF) project, officials said.
"We'll provide funds to set up captive power plants after applicants fulfill our requirements," a senior official of the Bangladesh Bank (BB), the country’s central bank, told BBN in Dhaka on Wednesday.
The central took the move to reduce the pressure on the national power grid, he said, adding that some interested entrepreneurs have discussed the matter with the BB officials.
Besides, additional funds will be made available by the central bank shortly through two private commercial banks (PCBs) for setting up two more SPPs in Feni and Chittagong to add at least 33 Megawatt (MW) of electricity to the national grid, they added.
The Dhaka Bank Limited will finance the Doreen Powerhouse and Technology Limited to set up an 11MW SPP at Feni while the Eastern Bank Limited has agreed to provide loans to the Regent Power Limited for setting up a 22MW power plant in Chittagong, according to the officials.
"The central bank is now working to provide funds worth around US$13 million to install two SPPs by February this year," another BB official, adding that the BB has already financed over $24 million through the National Credit and Commerce (NCC) Bank Limited for setting up three SPPs.
The NCC Bank Limited financed the Doreen Power Generations and Systems Limited, a private company, to set up three SPPs, one each at Tangail, Narsinghdi and Feni to generate a total of 66MW electricity.
"Minimum 44 MW power have already been added at our national grid from the Tangail and Narsinghdi SPPs," a senior official of the NCC Bank Limited told BBN.
He also said that 22MW more would be added to the national grid by early February this year.
The NCC Bank Limited will repay the first installment of the loan on January 25 to the central bank in line with the agreement, according to the bank official.
The central bank of Bangladesh earlier identified the power sector as a priority area for allocations under the project, funded by the World Bank (WB), to meet the growing demand for power.
The BB official said the IPFF has been designed for long-term financing of infrastructure projects -- mainly in energy, power, communications and port sectors.
The criteria for disbursement of the fund have already been set by the authorities concerned to ensure public-private participation in infrastructural development.
Under the existing provisions, funds are disbursed on the basis of 70:30 debt-equity ratio. The central bank provides 56 per cent of the total loanable fund and the rest 14 per cent are invested by the banks or the financial institutions concerned.
Earlier, the WB provided $50 million for the IPFF Project for long-term financing of infrastructure projects under the Public-Private Partnership (PPP) framework while the government offered $10 million as co-financer of the project.