The Asian Development Bank (ADB) today signed the finance agreements for a loan of $75 million to Summit Bibiyana II Power Company Limited for a private sector gas-fired power plant in Bangladesh to help the country address severe power shortages.
“The project will benefit households, business and industry by improving access to electricity,” said Hayato Hoshi, senior investment specialist with ADB’s Private Sector Operations Department. “It will also help to further promote private sector investment in Bangladesh’s energy sector where few major independent power producers of this size have materialized in the last decade.”
Due to frequent power outages many industrial and commercial businesses depend on inefficient and expensive alternatives of generating electricity, such as burning diesel or oil. The power shortages also caused periodic load shedding and adversely impact the country’s economic growth and poverty reduction efforts.
To address power deficits, the government of Bangladesh has a master plan to develop 12,000 megawatts (MW) of additional power capacity over the next 5 years to meet demand, increase its electrification rate and diversify its fuel sources including renewable energy.
The Bibiyana II Gas Power Project involves the design, engineering, construction, and operation of a 341 MW combined-cycle gas-fired power plant to be located on the south bank of Khushiyara River, about 180 kilometers northeast of the capital city Dhaka. Construction is expected to be completed by October 2015, and the plant will produce around 2,500 GW-hours of power annually.
Summit Bibiyana II Power Company Limited is a joint venture between Summit Industrial and Mercantile Private Limited, a leading local independent power producer (80% ownership) and General Electric Energy with a well-developed global business in gas fired power projects (20% ownership). The company entered into a 22-year power purchase agreement to sell all electricity generated from the project exclusively to the Bangladesh Power Development Board, the country’s state-owned electricity company.
ADB is co-financing the project with the International Finance Corporation and the Islamic Development Bank.