Bangladesh-China Power Company Limited is going to borrow $1547 million from the Export-Import Bank of China to implement the Payra 1320 MW Thermal Power Plant (Phase II) project.
A loan proposal for Payra Thermal Power was presented at a meeting of the Standing Committee on Non-Concessional Loans (SCNCL) chaired by Finance Minister AHM Mustafa Kamal on Thursday, sources said.
The meeting was attended by the Governor of Bangladesh Bank, Executive Chairman of Bangladesh Investment Development Authority, Senior Secretary Ministry of Railways, Secretary Economic Relations Department, Secretary Planning Department, Secretary Finance Division and other concerned secretaries and senior officials.
According to sources, in order to meet the demand for electricity, Payra Power Plant has been installed in Patuakhali district to produce 1320 MW. On March 20, 2017, Prime Minister Sheikh Hasina approved of the implementation of Thermal Power Station (Phase II) Phase Project by Bangladesh-China Power Company (PRC) Limited (BCPCL). The Engineering, Procurement and Construction (EPC) contract was subsequently signed with the selected contractor at the end of all the activities through tender invitation.
The total cost of the project is estimated at $ 2,063.60 million. China Exim Bank will finance 75 percent of the project cost, or $1,547 million. The loan term is 15 years with a grace period of 4 years. The finance ministry has agreed in principle to provide a state guarantee against 50 per cent of the loan taken by Bangladesh-China Power Company Limited.
Since the grant element of that loan is 21.18 percent which is less than 25 percent. The loan proposal was therefore submitted to SCNCL for approval.
According to the source, the request was made to the Economic Relations Department (ERD) of the Ministry of Finance to obtain a soft loan for the project. For this reason, financial initiatives have been taken under ECA for the implementation of the project.
It is learned that in the light of the government's power generation plan, Bangladesh North-Point Power Generation Company Limited (Naupajeco) and China National Machineries Import and Export Corporation (CMC) China have set up a 50:50 Bangladesh Companies Act, 1994 to set up Bangladesh coal-fired power plants. A company called China Power Company (Pvt.) Ltd. (BPCL) was formed. The 1st unit of the Payra 120 MW Thermal Power Station (Phase 1) project, currently being implemented by Bangladesh-China Power Company (Pvt) Ltd, has already been successfully completed and is now supplying electricity to the national power grid on a commercial basis as per NLDC demand since last 15 May.
The work of the 2nd unit of the project is nearing completion. It is possible to supply electricity from the 2nd unit to the national power grid on a commercial basis by next December.
Payra 120 MW: Thermal Power Plant (Phase 1) project is being implemented under the Export Credit Agency (ECA) with a loan from the Export-Import Bank of China.
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