The government is getting ready to issue bonds worth US $ 417 million to settle outstanding payments to commercial power producers in an effort to lessen financial strains within the power industry. Official sources state that the Finance Ministry is presently seeking final approval of this proposal.
According to a top representative of the government-owned Bangladesh Power Development Board (BPDB), all required procedures have been fulfilled and the plan is currently in the hands of the Finance Ministry, which should approve it this week. According to the BPDB, the bond offering will involve roughly 25–27 institutions from the public and private sectors, continuing a trend from earlier initiatives.
This is an important step, particularly since the nation’s ready-made garment (RMG) sector is still suffering from persistent power outages. Regular power outages have made it more difficult for manufacturers to meet export deadlines, disturbed production schedules and raised operating costs. Leaders in the industry have pointed out that the RMG sector, which is a vital component of Bangladesh’s economy, confronts serious difficulties in the absence of a steady power supply, which could have an effect on foreign investments and job levels.
Approximately US $ 3.5 billion is the current amount that the BPDB owes private power companies, of which US $ 584 million is particularly owing to independent power producers (IPPs). Additional obligations include US$ 1.4 billion for unpaid gas bills and US$ 83 million for public sector power plants owned by the state. It is anticipated that the Adani Group and other Indian businesses will earn approximately US $ 66.8 million from these payments.
In an earlier attempt to stabilise the electricity industry, the government issued US $ 1.7 billion in bonds, which were made possible by City Bank and Pubali Bank, two private banks. On 25th January, a recent complete deal was achieved, demonstrating the government’s commitment to resolve financial problems in the electricity industry.
With an eight per cent coupon rate linked to Bangladesh Bank’s repo rate, this upcoming bond issue intends to give struggling power producers instant financial assistance. The bonds’ ten-year maximum term reflects how urgent the problem is.
This effort has the potential to assist major participants in the power sector, such as Summit electricity, United Power, Confidence Power and others. In order to methodically resolve the financial liabilities of the sector, the Finance Division is also developing phased agreements with additional institutions, such as Bank Asia and BRAC Bank.
Banking executives have observed that the government will be able to stabilise the power sector and, as a result, boost the RMG industry and the whole economy by using these bonds with Bangladesh Bank to give it much-needed financial flexibility.
