Summit strikes deals to finance three power projects

http://www.thedailystar.net/newDesign/news-details.php?nid=172050

Summit strikes deals to finance three power projects
Star Business Report

Local Summit Group and US General Electric (GE) signed an agreement on Thursday with IDLC to receive $115 million from the World Bank’s Investment Promotion Facilitation Fund to implement two 341-megawatt power projects in Bibiyana.

On the same day, the two companies signed another deal with Janata Bank and Industrial and Infrastructure Development Finance Company (IIDFC) to raise Tk 1,500 crore through zero-coupon bonds. This fund will be pumped into the Meghnaghat dual fuel 335MW power project.

Summit was awarded the Bibiyana gas-fired projects and the Meghnaghat power project about four months back. The Bibiyana projects will need $560 million (Tk 3,920 crore) and Meghnaghat Tk 2,100 crore investment.

The Thursday’s deal ensures a large part of financing for these three power projects expected to begin production in early 2013 of the cheapest electricity costing less than Tk 2 per kilowatt hour.

Summit Group Chairman Muhammed Aziz Khan said Janata Bank and IIDFC would provide Summit with Tk 1,500 crore against a sanction of Tk 2,100 crore financing. The remaining Tk 600 crore is deducted as advance interest for the next four years.

“As infrastructure like this has long gestation periods, zero-coupon bonds enable companies to implement these projects with an optimised cash flow.”

The bonds carry a 5 percent discount and 12 percent convertible to the shares of Summit Meghnaghat Power Company at net asset value of the company.

Summit Power Ltd has recently become the lowest in yet two more power tenders, Syedpur 100MW power plant and Shantahar 50MW power plant. Reports say the prime minister signed the work award orders on January 21.

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