China Machinery Import and Export Company (CMC), the foreign partner of Patuakhali’s Payra 1320 MW power plant, has incurred financial losses due to non-payment of coal import dues.
The Chinese company has indicated it will not refinance even if the dues are paid. This has created uncertainty about the functioning of the Payra thermal power plant.
It is known from an emergency letter sent by Payra Power Plants Mother Company Bangladesh-China Power Company (Pvt) Limited (BCPCL) to Ministry of Power, Energy and Mineral Resources on January 25.
In a letter sent to BCPCL on December 29 last, CMC said their bank’s credit rating has been downgraded due to unpaid coal import bill of $151.53 million. As a result, CMC faced business losses in China. CMC have expressed reluctance to finance coal supplies from January 2023 until full dues are paid.
Talking to the Business Post, BCPCL Managing Director AM Khorshedul Alam said CMC had been paying the coal bill for so long and now BCPCL is not able to pay the bill and they (CMC) have told us they are in business loss.
It will be possible to pay the bill within the next week, he added.
BCPCL informed, the BCPCL owes to CMC $151.53 million; of which, $57.84 million till October 2022, $58.30 million till November and $35.39 million till December.
As per the agreement, CMC is financing coal imports to Payra till December 2022. As of December 19, 2022, CMC’s total debt is around $477.39 million, of which $151.53 million is outstanding due within 180 days.
Payra power plant project lender Exim Bank of China (CEXIM) imposed a condition to ensure coal supply for the entire operating period of the power plant.
For this, BCPCL signed a 10 year coal supply agreement with Indonesia’s PT Bayan Resources Tbk in 2019.
Initially, BCPCL imported coal at the commissioning stage with its own financing, but due to the working capital crisis and the long delay in receiving power selling money, there was uncertainty in the regular coal import. In that case, CMC, 50 per cent shareholder of BCPCL, agreed to pay the coal import cost to PT Bayan with a delay of 180 days for the operation of the power plant.
According to the agreement, CMC has made the payment till December 2022. But, in a letter sent to BCPCL on December 29, CMC said the company will not pay any coal bills from January 2023.
The CMC wanted to inform later whether the re-supply of coal would be financed subject to payment of dues. In this situation, coal import has been completely stopped since January 1, 2023.