Bangladesh-India Friendship Power Company Ltd. (BIFPCL) has sought a $110 million loan from Exim Bank of India to boost its coal reserves.
The 1,320-megawatt Bangladesh-India Friendship Power Plant, which began commercial operations in December 2022, is facing a coal shortage. With reserves nearly depleted, the plant authorities have requested an emergency loan from the bank to import fuel and sustain electricity generation.
Officials informed that the plant operator is now seeking a working capital loan of $110 million from the Exim Bank of India to open a letter of credit (LC) for coal import.
Dr Md Mokhles Ur Rahman, chairman of the company and senior secretary of the Ministry of Public Administration, has sought the finance secretary's intervention in a letter to ensure a working capital loan from the bank.
Exim Bank of India financed $1.6 billion for the thermal power plant established under the guarantee of the Bangladesh government.
In the letter, Mokhles Ur Rahman wrote, “It is important to ensure adequate coal supply to continue power generation, especially amidst the increasing power demand during summer.”
The senior secretary further mentioned that the power plant requires a working capital of about Tk 36 billion to ensure adequate coal supply. However, the power plant currently has a working capital of Tk 17 billion.
With this money, coal supply has been ensured until May 5. Therefore, it has become urgent to open a letter of credit (LC) for the next period, he continued.
The power plant is a joint venture between Bangladesh Power Development Board (BPDB) and India's NTPC Limited, adjacent to the Sundarbans. The letter states that BIFPCL has also applied for working capital from local banks, but due to procedural delays, it may take 2-3 months to get the money, which is posing a risk to power generation.
As an alternative, the company has applied for a working capital loan of $110 million from Exim Bank of India in Mumbai on April 2 this year.
The letter said, “Although Exim Bank of India does not normally disburse such loans, the bank may consider it if it follows the previous financing model and comes under the sovereign guarantee of the Bangladesh government.”
“This loan is very important to be able to repay the term loan installments in June, September and December 2025 and to continue production,” the letter furthered. The institution said that the proposed loan is planned to be repaid by December next year and will be within the approved credit limit of $ 1.6 billion.
However, the Rampal Thermal Power Plant Authority has sought effective intervention of the country’s finance ministry to discuss with the Indian government to continue the operation of the power plant.
BIFPCL board member ANM Obaidullah said that in the past, the power plant has continued production by taking ‘internal measures’ during coal shortages. He said, the agreement mentions that the power plant will have to maintain effective capital for uninterrupted operations. We are in discussions with some local banks and the Exim Bank of India for effective capital.
Translated by bd-pratidin English/ AM
