On December 28, 2012, MIGA issued a guarantee of $221.4 million to Hong Kong Shanghai Banking Corporation (HSBC) of the United Kingdom to cover its non-shareholder loan to Ashuganj Power Station Company Ltd. (APSCL) in Bangladesh. HSBC coordinated and arranged a $406 million financing package to APSCL for the project. On March 8, 2013, MIGA issued additional coverage of $30 million covering a swap arrangement to hedge against long-term interest rate risk. MIGA’s guarantees are for a period of up to 13.5 years against the risk of non-honoring of sovereign financial obligations. The Ministry of Finance of Bangladesh has provided an unconditional sovereign guarantee covering payment obligations of APSCL under the debt financing and the swap.
The project consists of the construction of a 450-megawatt combined cycle gas-fired plant on the basis of a contract awarded by APSCL to a consortium of TSK Electronica y Electricidad S.A. (Spain) and Inelectra International AB (Sweden). This project will replace certain existing units in the Ashuganj facility that will be decommissioned once the new plant is completed.
Bangladesh currently faces an acute shortage of power generation capacity. This impairs the country's economic and social development and constrains growth. The government of Bangladesh has made energy a high priority and recently adopted an updated Power Sector Master Plan, which includes this project. This project will help meet the country‘s growing demand for power, using a domestic gas resource and efficient technology.
MIGA's participation in this transaction is critical to mobilizing the debt financing for this project. The project is consistent with MIGA's strategic priorities of supporting investment into IDA countries and complex projects.