In Bangladesh, public sector power companies are facing trouble in loan repayment to their Chinese creditors amid the forex crisis. The state-run power-producer B-R Powergen Ltd is latest in the list, asking the Bangladesh government for help to pay Chinese loan instalments.
The B-R powergen Ltd, owns 150 MW power plant in Gazipur, which remained idle for around 80 percent of time last year according to media reports, was constructed with Chinese loan in the year 2022-23.
The public sector power producer signed an agreement with Industrial and Commercial Bank of China (ICBC) and EXIM Bank of China for buyer’s credit in a $129 million syndicated loan.
Earlier last month, the Exim Bank of China had forewarned Bangladesh-China Power Company Ltd (BCPCL), being marked as a defaulter due to excessive delay in loan repayment. The company was supposed to pay $140.892 million as the 6th instalment of the loan of which it could pay $88.445 million until November 30. And $52.447 million remained unpaid until December 4th while the cut-off date was December 8th, reports Financial Express.
The Finance Division of the Government of Bangladesh had provided a sovereign guarantee in favor of the banking duo – ICBC and Exim Bank – against the loan.
According to local media reports, the government of Bangladesh has received a number of such requests from the state-owned power companies as their banks were facing problems in arranging dollars for them to pay the loan instalments.
Amid heightened dollar crisis, increasing debt servicing is one of the major issues for the Bangladesh government. Bangladesh’s foreign exchange reserves have been depleting fast since the beginning of the year 2022 due to international turmoil. Meanwhile, the government is forced to go for a strict conditional loan of US 4.7 billion dollars from the International Monetary Fund (IMF).
Bangladeshi Taka is continuously weakening against the US dollar due to dollar shortage. Bangladesh Bank has been releasing dollars from its foreign reserve to stabilise Taka against USD and to settle imports bills but falling forex reserve is now a great concern for the Bangladesh economy.
