China Eximbank pledges to provide a $340 million USD loan for 330MW Khulna Power Plant (Orion) Construction Project

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 cause 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 also fell through because an international tender was posted in May 2015. At the same time, the plant's capacity was increased to 330MW. In May 2014, it was reported that Orion had signed agreements with Alstom and Doosan worth $189 million USD to to prepare primary designs for turbine equipment for the plant. On November 17, 2016, a Chinese consortium comprised of Harbin Electric International Co Ltd (HEI), and Jiangsu Etern Co Ltd signed an agreement with the Government of Bangladesh to implement to project. At the time, China Eximbank was expected to provide a $340 million USD loan covering 85% of the $400 million USD commercial contract. The Government of Bangladesh would then be expected to provide counterpart funding for the remaining 15%. The Government of Bangladesh also gave a sovereign guarantee, with an outstanding amount of 2,391.99 in June of 2021. However, after 19 months of negotiations, the Chinese consortium was only able to come up with a draft loan agreement. The project faced suspension as the contract between the Chinese consortium and the Government of Bangladesh was terminated. In June 2021, the Bangladesh State Minister for Power, Energy, and Mineral Resources announced the government was officially dropping ten coal plant projects in its master energy plan totaling over 8 GW of power due to delays in implementation. The Khulna Power Plant was among the ten cancelled coal plants.

Additional details

This loan could possibly be export buyer's credit because the borrower is foreign and the loan would cover 85% of the commercial contract. However, since no final financing agreement was ever signed, it is unclear whether the would-be loan was denominated in USD or not. Therefore, AidData codes the flow type as a loan for now. Status is coded as pledge, not suspended or cancelled, because China Eximbank never formally committed financing in the first place.

Number of official sources

2

Number of total sources

14