Bank of China contributes to syndicated buyer's credit loan for Unit 3 of 220 MW Sirajganj Combined Cycle Power Plant Project (Linked to Record ID#56541)

Project narrative

In June 2017, North-West Power Generation Company Limited signed a $196.7 million syndicated buyer's credit loan agreement with a group of Chinese and non-Chinese lenders (including Standard Chartered Bank, Bank of China, Siemens Bank, and Deutsche Pfandbriefbank AG) for Unit 3 of the 220MW Sirajganj Combined Cycle Power Plant Project. Standard Chartered Bank acted as Mandated Lead Arranger for this transaction. Other roles performed by Standard Chartered Bank includes Structuring Bank, ECA Coordinator, Account Bank, Intercreditor Agent, Hermes Facility Agent, Sinosure Facility Agent, Commercial (MIGA) Facility Agent and Security Agent. The transaction was structured as a long-term loan with a maturity of 15 years and a grace period of 3 years. The loan was scheduled for repayment in 24 semi-annual installments. The loan was split into 3 tranches: a $118.36 million Sinosure-insured loan tranche from Bank of China and Siemens Bank; a $34.03 million Euler Hermes-insured tranche from Deutsche Pfandbriefbank AG, and a $44.34 million commercial tranche insured by MIGA NHSFO from Standard Charted Bank. The Euler Hermes-insured tranche carried an interest rate of 6-month LIBOR plus a 1.8% margin, while the Sinosure-insured tranche carried an interest rate of 6-month LIBOR plus a 3% margin and the MIGA-insured carried an interest rate of 6-month LIBOR plus a 1.8% margin. The loan had achieved an 81.6% disbursement rate ($160.68 million out of $196.7 million) as of June 30, 2019 and a 97% disbursement rate ($190.87 million out of $196.7 million) as of June 30, 2020. The Government of Bangladesh provided a sovereign guarantee for debt service. The loan was also secured (collateralized) with a charge on project assets, including the power plant facility and bank accounts, as well as assignment of project contracts. The syndicated loan covered 80% of the costs of the project, with the other 20% coming from North-West Power Generation Company Limited. The borrower (NWPGCL) was expected to use the proceeds of the loan to partially finance an Engineering, Procurement and Construction (EPC) contract that it signed with a consortium consisting of China National Machinery Import & Export Corporation (CMC) and Fujian Electric Power Survey & Design Institute (FEDI) on July 12, 2015. The purpose of the project was to construct the third power generation unit (Unit 3) of the 220 MW Sirajganj Combined Cycle Power Plant. More specifically, the project involved the involves the installation of one gas turbine generator (GTG) capable of operating on natural gas and/or High Speed Diesel (HSD), one Gas Booster Compressor, one heat recovery steam generator (HRSG), evaporators, cooling towers, main and by pass stacks connected to a steam turbine Generator (STG) of condensing type for indoor installation, condensate and feed water system, cooling water system and auxiliary equipment. The project site is located about 15 km south-east of Sirajganj town and 135 km north-west of Dhaka on the western bank of the River Jamuna. It is located in Khas Barashimul Mouza in the Saidabad Union of Sirajganj Sadar Upazilla (sub-district) of Sirajganj District. The closest settlements to the project site, Boroshimul and Ponchosona, are both located approximately 1 km from the complex. China National Machinery Import and Export Corporation (CMC) was the EPC contractor responsible for overall project management. FEDI was responsible for providing technical expertise, including concept design and basic engineering. Under the EPC contract, the contractors were required to commission the project within 2.5 years of the start date. Construction of the third unit of electricity generators (Sirajganj 3) began on October 19, 2017. Unit 3 was connected to the grid on May 27, 2018. The plant began commercial operations on January 20, 2019. CMC and FEDI were also the contractors responsible for the implementation of the Bank of China and China Eximbank-financed Unit 2 of the 220MW Sirajganj Combined Cycle Power Plant Project, which is captured via Record ID#56541.