Bank of China (Beijing Branch) participates in $427.5 million syndicated loan for Barishal 350 MW (BEPCL) Coal-Fired Power Plant Construction Project

Project narrative

In April 2020, China Eximbank, the Beijing Branch of Bank of China Limited, and the Singapore Branch of Bank of China Limited signed a $427.5 million syndicated loan (facility) with Barisal Electric Power Company Limited (BEPCL) — a special purpose vehicle and joint venture of Barisal Energy (DFC) Holding Limited (92% ownership stake), Sinohydro (Hong Kong) Holdings Limited (4% ownership stake) and ISO Tech Electrification Company Limited (4% ownership stake) that was legally incorporated in October 2017 — for the Barishal 350 MW (BEPCL) Coal-Fired Power Plant Construction Project. The loan carries a 14.26-year maturity (final maturity date: July 1, 2034). The other borrowing terms of the loan are unknown. However, it is known that the Ministry of Finance of Bangladesh issued a sovereign guarantee in support of the loan on December 23, 2020 and a Sinosure credit insurance policy went into effect on October 27, 2021. The $557.89 million independent power plant (IPP) project was financed according to a 76.6:33.4 debt-to-equity ratio. The purpose of the project was to construct a 350-megawatt (MW) coal-fired power station in the Nishanbaria village of Taltali upazila within Barguna district and Barisal division. Shanghai Electric Power Construction Company Limited (SEPC) was the EPC contractor responsible for project implementation. Satellite imagery demonstrates that preliminary construction activities began between January 2019 and November 2019. Construction of a 217-meter chimney started on December 16, 2020. Then, in February 2022, the lifting of the steel inner tube of the chimney was completed, marking the completion of the main chimney at the power plant. The power plant’s 400kV electricity transmission line was completed on May 19, 2022. The power plant was connected to the national grid on October 29, 2022. The power plant was originally scheduled to reach its commercial operation date (COD) on January 12, 2022. It passed its 168-hour reliability test and began commercial operations on December 31, 2022. Satellite imagery from December 2022 revealed a plume at the project site. The project became a source of local controversy and public opposition. On August 2, 2018, villagers submitted a public petition to the Prime Minister urging the government to stop the project, alleging that BEPCL was purchasing lands with the help of illegal brokers with forged documents. In October 2018, the government said it would investigate the claims. In February 2019, Transparency International Bangladesh again called on the government to halt the plant's construction, claiming that the project had no approval from Bangladesh's Department of Environment — as well as claiming that local residents who have filed claims for compensation over land acquisition have been threatened and even assaulted. A study conducted by civil society organization the Bangladesh Working Group on External Debt (BWGED) says 153 families were directly impacted by the construction of the coal power plant. Of them, 142 were reportedly evicted by force. The BWGED study also noted that, when operational, the power station would emit 7,081 tonnes of carbon a day and damage several rich ecological zones nearby, including Tengragiri Wildlife Sanctuary, Sonakata Eco Park, Laldia mangrove forest, and Fatrar Char mangrove forest. It also raised the fear that hot water released from the plant into the Payra river would have negative effects on the hilsa population. Barges carrying coal to the plant will also reportedly move through a hilsa breeding ground. Hilsa is not only the favorite fish of Bangladesh but also a major revenue earner through exports. In May 2022, Transparency International Bangladesh (TIB) found substantive corruption involving the power plant.