MIGA Facilitates Actis Acquisition of Bhola Power Plant in Bangladesh
WASHINGTON, D.C., August 8, 2022 — The Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group has issued guarantees totaling $407 million for the acquisition and refinancing of a power plant in Bhola District in Bangladesh.
The guarantees will cover equity investments by Actis against the risk of breach of contract-arbitral award default for a period of up to 20 years. They also will cover non-shareholder loans made by a group of international banks for up to 18 years against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract-arbitral award default. Mizuho Bank, Ltd. is the MIGA coordinating bank for the lending group that includes DBS Bank Ltd., and the Singapore branches of the Bank of China Limited, ING Bank N.V., Société Générale, and Sumitomo Mitsui Banking Corporation.
MIGA’s guarantees will allow Actis to acquire Nutan Bidyut (Bangladesh) Ltd (NBBL), the project company that owns the fully operational Bhola-2 220MW, dual fuel (gas/HSD), combined cycle power plant. MIGA’s coverage has also made it possible for NBBL to refinance existing loans from development finance institutions through a new commercial lending syndicate that includes two commercial lenders that are participating for the first time in a project finance transaction in Bangladesh.
“This transaction ensures that an important energy asset in Bangladesh is operated efficiently and is enhanced to improve its resilience to climate events,” said Hiroshi Matano, MIGA Executive Vice President. “Importantly, it is also helping new lenders mobilize capital to Bangladesh.”
Over the past 30 years, MIGA has supported eleven projects in Bangladesh with gross guarantee amounts totaling $976 million. Of these projects, five are in the power sector and remain active. With this new Bhola Power Plant project, MIGA now has issued guarantees for six power projects in Bangladesh, totaling 2 GW in generation capacity, which accounts for over 10 percent of the country’s power generation capacity. MIGA’s support for the project aligns with the World Bank Group’s engagement and Bangladesh’s long-term strategy for energy security and ensures that the plant is operated efficiently and in a progressive manner that is more responsive to climate issues.
Lim Suy Meng, Mizuho Head of Power & Infrastructure, added: "Mizuho is honored to be appointed as the MIGA coordinating bank for this transaction, and we look forward to more opportunities to work with MIGA on exciting new projects. We are also keen to work with experienced infrastructure fund investors, such as Actis, that are looking to develop projects in emerging economies."
Bangladesh, which accounts for approximately 0.3% of global CO2 emissions, is making bold steps in its role to support global efforts for combating climate change. Through ambitious actions set out in its updated Nationally Determined Contributions, the country is seeking to move toward a low-carbon and climate-resilient economy, and the power sector is playing a vital role. Bangladesh has been successful in implementing off-grid solar programs even as climatic conditions and geographic constraints in the country present challenges to developing utility-scale renewable power generation.
Highly efficient and cost-effective gas-based power plants such as this project have been identified as a key feature for Bangladesh’s decarbonization pathway. Gas-based generation provides a reliable baseload capacity for the system and is cleaner than other more carbon-intensive fossil fuel alternatives. The baseload power also provides essential grid stability that helps an electricity network manage the intermittency challenges of renewable energy and is thus a vital component in the transition to a low-carbon energy future. While providing these valuable benefits to the Bangladeshi grid, the Bhola-2 plant is also a highly efficient facility that employs best-in-class technology that produces less GHG emissions than comparable power plants of its size and utilizes a captive source of domestic gas.
Demonstrating its commitment to investing in sustainable infrastructure and prior to acquisition, Actis initiated an extended flood risk analysis and developed an action plan to significantly improve the climate resilience of the plant and reduce the likelihood of adverse impacts to the neighboring community.
Actis Partner Sanjiv Aggarwal, commented on the transaction: “Southeast Asia is a region which has a strong need for gas power to meet its growing power demands. We’re delighted to have worked with MIGA on the acquisition of Bhola Power Plant in Bangladesh, where we can leverage Actis’ proven strategy of aggregating energy assets into a scalable regional platform which enables a just and equitable energy transition.”
Actis is a leading global investor in sustainable infrastructure. We deliver competitive returns for institutional investors and measurable positive impact for countries, cities, and communities in which we operate. Our global experience, operational knowhow and strong culture allow us to create global sustainability leaders. We do it at scale. And have been doing so for decades. Since inception, we have raised $24 billion to invest in a better tomorrow. Actis is a signatory to the United Nations-backed Principles for Responsible Investment, an investor initiative developed by the UNEP FI and the UN Global Compact. The firm has consistently been awarded the highest rating score in the UN Principles for Responsible Investment independent assessment.
In March 2022, Lucy Heintz, Partner and Head of Energy Infrastructure at Actis, was awarded the 2022 MIGA Gender Leadership Award.
Learn more about Actis’ Impact Measurement Framework and Transition Tool here:
Actis Press Contact:
+44 (0) 207 379 5151
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued over $70 billion in guarantees across 122 developing countries.
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