MIGA Supports First Power-Sector Credit Facility Agreement in Bangladesh
World Bank agency's guarantees underpin clean power plant in energy-starved nation
Washington, January 31, 2013—The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance arm of the World Bank Group, announced its support to the power sector in Bangladesh through its backing of a financing package arranged by HSBC of the United Kingdom to Ashuganj Power Station Company Limited (APSCL), a state-owned utility. The financing is for the construction of the 450-megawatt combined-cycle gas-fired Ashuganj South power plant, which is expected to provide nearly 12,000 households with electricity.
The shortage of power generation capacity has impaired Bangladesh's economic and social development and constrained growth. This project will contribute enormously to the country's power sector objectives, adding clean generation capacity through an indigenous fuel source.
MIGA's guarantee of $221 million is providing coverage against the risk of non-honoring of sovereign financial obligations for a period of up to 13 and a half years. The Ministry of Finance of Bangladesh has provided an unconditional sovereign guarantee covering debt obligations of APSCL under its loan agreement with HSBC.
"Bangladesh is one of the most energy-starved countries of the world," noted Izumi Kobayashi, MIGA's Executive Vice President. "This project will bring significant benefits to the people of Bangladesh, 38 percent of who currently lack access to power."
MIGA's involvement was crucial for this important project to move forward, as insurance in the private market was limited due to the lengthy tenor of the loan. This underscores the value of the World Bank Group's instruments in support of infrastructure investments where the needs are greatest.
MULTILATERAL INVESTMENT GUARANTEE AGENCY
A Member of the World Bank Group
1818 H Street, NW, Washington, DC 20433
Mallory Saleson, MIGA
Tel: +1 202 473-0844
Rebecca Post, MIGA
Tel: +1 202-473-1964
Cara Santos Pianesi