Bank of Communications contributes $50 million to syndicated loan for the Chapainawabganj 100 MW Heavy Fuel Oil (HFO) Power Project

Project narrative

On May 25, 2015, the Bangladesh Power Development Board (BPDB), the Hong Kong and Shanghai Banking Corporation (HSBC), and Bank of Communications signed a $112 million USD loan agreement. The Bank of Communications reportedly contributed a $50 million USD export buyer's credit to this loan syndicate. The loan reportedly has a a maturity of 12 years, a grace period of 2 years, and a sovereign guarantee from the Government of Bangladesh. The loan covers 100% of the EPC costs and comes with full ECA cover from Finnvera and Sinosure. Associated costs and expenses have been financed under an uncovered facility. Finnvera is covering a total of $46.9 million USD with Sinosure guaranteeing the remainder. Both guarantees effectively reinsure a 100% sovereign guarantee from the Bangladeshi government, which owns BPDB. China Export & Credit Insurance Corporation was the accountable party of the credit agreement. The proceeds of the loan are being used to finance the EPC contract and turbine procurement from the Hubei Electric Power Survey and Design Institute and the Wärtsilä Corporation. The $131 million USD project was sponsored by Bangladesh Power Development Board (BPDB) and it involved around $47 million USD for 12 Wartsila 20V32 heavy fuel oil engines, with the remainder covering EPC costs generated by Hubei Electric Power Survey and Design Institute, which is building the plant under a 450-day turnkey EPC contract and is providing a two-year warranty and a four-year service and maintenance contract. Although the plant came with a relatively high generation cost (Tk21.70 per kilowatt-hour [kWh] as compared with between Tk6.0 and Tk18 per kWh for other Bangladeshi HFO plants), the project has significant political backing as it is part of Bangladesh’s Power System Master Plan 2010 and will help improve the overall electricity supply to export processing zones that have been established in the north-west of the country. Implementation of this project began in May of 2015. This power plant was successfully connected to the grid on or around April 13, 2017.