China Eximbank provides buyer’s credit for 330MW Khulna Combined Cycle (Duel Fuel) Power Plant Construction Project

Project narrative

In 2002, the Chinese Government and the Government of Bangladesh signed a memorandum of understanding (MoU) for the 210MW Khulna Power Plant (Orion) Construction Project. Shortly thereafter, a change in government caused the project to stall. Then, in 2010, the project was reinstated when China National Machinery and Equipment Import and Export Corporation (CMEC) signed another MoU offering to build and finance the power plant. However, this deal also fell through when an international tender was posted in May 2015 and the plant's capacity was increased to 330MW. In May 2014, Orion reportedly signed agreements with Alstom and Doosan worth $189 million to prepare primary designs for turbine equipment for the plant. Then on November 17, 2016, a Chinese consortium consisting of Harbin Electric International Co Ltd (HEI), and Jiangsu Etern Co Ltd signed an agreement with the Government of Bangladesh to implement the project. At the time, China Eximbank was expected to provide a $340 million loan to cover 85% of a $400 million commercial contract. The Government of Bangladesh was expected to provide counterpart funding for the remaining 15%. Then, in December 2018, the Bangladesh Power Development Board (BPDB) signed a buyer’s credit (loan) agreement with the Jiangsu Branch of China Eximbank worth approximately $238,850,000 for the 330MW Khulna Combined Cycle (Duel Fuel) Power Plant Construction Project. The loan carries a 15-year maturity, a 3-year grace period, an interest rate of 6-month LIBOR plus a 2.8% margin, a 1% management fee, and a 1% commitment fee. The Government of Bangladesh issued a sovereign guarantee in support of the loan on January 24, 2019. The borrower was expected to use the proceeds of the loan to finance 85% of the costs of a $281 million commercial contract between BPDB, Harbin Electric International Co Ltd (HEI), and Jiangsu Etern Co Ltd. The purpose of the project was to construct a 330MW combined cycle (duel fuel) power generation unit — known as ‘Unit 2’ — in Khalishpur Upazila and Khulna District (exact coordinates: 22.86589, 89.53969). Harbin Electric International Co Ltd (HEI), and Jiangsu Etern Co Ltd. were the EPC contractors responsible for implementation. The project was originally scheduled to commence in January 2017 and conclude in June 2019. However, the Government of Bangladesh subsequently pushed out the expected completion date to June 2022. The project was ultimately completed on September 6, 2023, after a successful 168-hour trial operation.