Finance minister AMA Muhith, who is chairman of the standing committee on non-concessional loan, on Sunday instructed the Economic Relations Division to go for further negotiation regarding terms and conditions of $132-million loan from two Chinese banks.
The committee, which held its first meeting on the Chinese loan on the day, did not approve the loan as it found its terms and conditions harder, an official present in the meeting told New Age on Sunday.
A joint venture of Bangladesh Power Development Board and Rural Power Company Limited on April 18 awarded a $156-million contract to a Chinese joint venture — CCCE-ETERN-FEPEC — to set up a 150MW duel fuel power plant at Kodda in Gazipur by September 2014.
The two Chinese banks — Export-Import Bank of China and Industrial and Commercial Bank of China — on July 2 signed an agreement with the Chinese joint venture to provide the $132-million loan under buyers’ credit to establish the power plant.
According to the agreement, the grant element of the loan is negative 3.85 per cent and the rate of interest is at 3.19 per cent plus the London Interbank Official Rate. The repayment period of the proposed loan is 12 years including 2 years of grace period. The loan has to be repaid on half-yearly basis.
The loans from other international lenders and development partners like World Bank, Asian Development Bank or Japan International Cooperation Agency to set up the power plants in the country carry interest rate between 0.01 per cent and 3.0 per cent against any borrowing with 22 to 40 years of repayment period including 10-15 years of grace period.
If the grant element stands below 35 per cent, the loan should be considered as hard-termed as per the agreement with the International Monetary Fund under its Extended Credit Facility programme in Bangladesh.
‘Therefore, we had sent the loan proposal to the non-concessional loan committee to get approval,’ a senior ERD official said.
The finance ministry and the power, energy and mineral resources ministry issued letter of guarantee on October 25, 2012 and December 12 respectively to implement the project.
The EPC (engineering, procurement and construction) contract was signed on January 1. The Department of Environment also issued the site clearance on April 18 for the project.
Now the Chinese banks are waiting to get final letter of guarantee from the Finance Division of the government.
-With New Age input
