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DCCI organises seminar on issues and challenges of financial closure of mega power projects

Dhaka Chamber of Commerce and Industry (DCCI) organised a seminar on issues and challenges of financial closure of large and mega power projects at DCCI on Saturday.

Economic Adviser to the Prime Minister Dr. Mashiur Rahman was present as the chief guest while Secretary of Planning Division Tariq-Ul-Islam was present as special guest in the seminar, said a press release.

DCCI President Hossain Khaled in his address of welcome said power is the basic prerequisite for socio-economic development.

Bangladesh aspires to heighten power generation capacity to 24,000 MW by 2021 and 39,000 MW by 2030, he said.

He said local and joint venture initiatives of mega power plants are often being challenged by financing options including financial closure.

He also said delay in financial closure hampers sourcing fund and projected date of commercial operations. With the view of settling financial closure in due course, he recommended to equip project implementation agencies including PPP office.

He also proposed for a long term Power Financing Funding Facility likewise Investment Promotion & Financing Facility (IPFF) project can be introduced with the participation of Bangladesh Bank and all financial institutions.

Mashiur Rahman, Adviser to the Prime Minister on Economic Affairs said, we have to create investors’ confidence for uninterrupted cash flow in the mega power projects. PPP initiative could be the best financing modality for mega power plants.

In terms of investment, taxation policy should be consistent and attractive specially to the foreign investors. He said for a large power plant project of 350-400 MW capacity, management and skilled work force are crucial. In our country, 6 to 8 per cent inflation rate will not affect the economy, he further said. 

He also said government can introduce long-term Bond system to mobilize fund for large and mega power projects.

Secretary of Planning Division Tariq-Ul-Islam said that 100 per cent population of 6 Upazilas of Bangladesh are now have access to electricity.

He said still there are problems in financing large power projects, land acquisition and legal vetting. But government is working hard to solve all these.

He said government is planning to allocate a budget under the Finance Ministry from where investors can lend money for mega power projects before project approval and land acquisition. He also informed that government is strengthening Board of Investment (BoI).  

Former Power Secretary Dr. M. Fouzul Kabir Khan presented the keynote paper. He that financial closure of large projects means the execution and delivery of the financing documents between the sponsors and the lenders that evidence sufficient financing for the construction, testing, completion and commissioning of the facility and evidence of the commitments for such equity as is required by the company to satisfy the requirements of the lenders.

He said balance sheet, land acquisition, tendering methods, limited credit worthiness, legal vetting, procurement law, environmental and social resettlement issues are some of the challenges for financial closure of a large projects.

Director General of Power Cell Engr. Mohammad Hossain said government is now generating 14,000 MW electricity and has a target to generate 24,000 MW by the year 2021 and 39,000 MW by the year 2030. He said government plans to procure 20-30 per cent power from the local investors.

He also said that government has measured all aspects of environmental issues for Rampal mega power project and the project will not have any adverse effect on Sundarban. CEO of Riverstone Capital Limited Ashraf Ahmed and Vice President of IDCOL Tanvir A. Siddiqui also spoke as discussants.

They suggested to raise fund from capital market for large and mega power projects and stressed for simplified credit disbursement process.

DCCI’s Senior Vice President Humayun Rashid, Director Salim Akhter Khan, CEO of Bangladesh Infrastructure Finance Fund Ltd. (BIFFL) SM Formanul Islam, DCCI’s former President Engr. Rashed Maksud Khan and Convenor MS Siddqui also spoke on the occasion.  

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