On September 29, 2016, MIGA issued a $97.3 million guarantee covering non-shareholder loan from HSBC, to the Bangladesh Power Development Board (BPDB). The coverage is for a period of up to 15 years against the risk of non-honoring of sovereign financial obligations.
The $333 million in financing being coordinated and arranged by HSBC will be used to upgrade the Ghorasal power complex, 40 kilometers from Dhaka. The Ministry of Finance of Bangladesh will provide an unconditional sovereign guarantee covering debt obligations of BPDB under its loan agreements. The project involves changing an existing 210 megawatt steam turbine unit into a combined-cycle power plant of more than 400 megawatts. This will significantly improve the efficiency of the existing unit, increasing the generation of low-cost electricity without the need to draw upon additional gas supplies. The power complex is connected to the grid and will use the existing gas supply arrangement from Petrobangla.
Bangladesh currently faces an acute shortage of generation capacity, which is a serious impairment to the country’s economic and social development and growth. Frequent outages have prompted industries, shops, and households to install expensive and inefficient self-generation. The government estimates that the peak demand for electricity will grow from 8,500 megawatts in 2013 to 24,000 megawatts by 2021. To meet this need, the government is installing new generation capacity under its Power Sector Master Plan. These include multiple projects at the Ghorasal facility and the Ashuganj south (supported by MIGA) and north facilities.
MIGA’s proposed support for this project is consistent with the Agency’s priorities of supporting investment into countries eligible for concessional financing from the International Development Association and complex infrastructure projects.