Dhaka, Bangladesh
BPDB signs deal to build 3,600MW power plant

GE brings big investment in power sector

BPDB signs deal to build 3,600MW power plant

News Report American industrial giant General Electric (GE), has come up with one of the largest private foreign direct investment (FDI) in the power sector of Bangladesh signing a 3,600MW LNG-based power deal with BPDB and a separate joint venture agreement with Summit. The US powerhouse has the deal with Bangladesh Power Development Board (BPDB) to build a 3,600MW LNG-based power plant on the southeastern island of Moheshkhali. The Switzerland unit of GE will own 30 percent of the joint venture, while BPDB will hold 51 percent with the remaining 19 percent left for a future strategic investor. The development of 5,600-acre land is estimated to cost $1.6 billion and the power plant will cost $2.8 billion, according to details of the memorandum of understanding signed in the city on Wednesday. BPDB Chairman Khaled Mahmood and GE Power President and CEO Russell Stokes signed the MoU. Prime Minister’s Power, Energy and Mineral Resources Adviser Tawfiq-e-Elahi Chowdhury, State Minister for Power, Energy and Mineral Resources Nasrul Hamid, US Ambassador Marcia Bernicat and Power Secretary Ahmad Kaikaus were also present. Earlier in the day, GE signed a separate memorandum of understanding with Summit, the largest private power producer in Bangladesh, to join a joint venture already planned by Summit and Japan’s Mitsubishi Corporation for a $3 billion power project. In a statement on Wednesday, Summit billed the joint investment as the largest FDI attracted by any Bangladeshi private company. Summit, Mitsubishi and GE will build a 2,400-megawatt power plant. Summit will hold 55 percent equity while Mitsubishi will take 25 percent and GE 20 percent. This is in continuation with an earlier MoU - signed for a joint venture with Mitsubishi Corporation in Singapore in March last in presence of Prime Minister Sheikh Hasina. GE will be investing in equity and technology in the four 600 MW each combined cycle power plants with a total capacity of 2,400 MW. Mitsubishi Corporation will be the partner for the complete integrated project. The project will be using world’s most efficient and environment-friendly technology. The combined cycle power plants would run on GE’s flagship 9HA gas turbines, which are the world’s largest and most efficient gas turbines in both 50 Hz and 60 Hz categories. The LNG terminal will be using cutting-edge technology so that there is no boil-off, utilizing all the gas for electricity generation. In 2012, the US conglomerate offered to pour in more money into Bangladesh’s power and energy sector. Chairman and Chief Executive of GE Jeffrey Immelt, expressed the interest during a meeting with Prime Minister Sheikh Hasina at her office. Immelt visited Dhaka, accompanied by President and CEO of GE India and South Asia John Flannery, Vice President - Growth Initiatives Vishal Wanchoo, and President and CEO of GE Healthcare India and South Asia Terri Bresenham. The CEO described Bangladesh as the ‘new tiger of Asia’ and praised its socio-economic development, Azad added. Prime Minister Sheikh Hasina told Immelt that American companies like General Electric were playing a major role in Bangladesh’s economic progress. She said that GE could help Bangladesh develop human resources in power and energy sector and improve power management. “We hope we will get General Electric as the sponsor in private projects and it will help us in public sector projects,” the Press Secretary quoted her as further saying. With its innovation and advanced technologies, the General Electric is a leader in energy, health, transportation and finance. Immelt became the Chairman in 2001 and has since been the pioneer in converting GE to ‘America’s Most Admired Company’, as branded in a poll by the Fortune magazine. It was voted as one of ‘The World’s Most Respected Companies’ by Barron’s and Financial Times. Earlier, he served as the President and CEO of GE’s Medical Systems division now known as GE Healthcare. In 2014, President and Chief Executive for GE South Asia Banmali Agrawala, told an Indian Mint newspaper that GE was seeking to move away from India to Bangladesh for its power generation business, attracted by the country’s fast decision-making. Power projects with an aggregate capacity of 9,322.5 MW are lying stranded in India for lack of enough gas. So gas-rich Bangladesh has emerged as the destination of choice for GE for its power business, a report in ‘Mint’ said. “In our region we have Bangladesh where we continue to do business. They have gas and let me be tongue in cheek and say that they take decisions. From the power generation perspective, at the moment there is more activity we have for the newer gas-based power plants in Bangladesh,” said Agrawala. Bangladesh has substantial gas reserves of 135.8 billion cu.m. and installed capacity of 10,264MW, with plans to achieve 24,000MW capacity in five years. Slowing growth, high borrowing costs and delays in securing regulatory approvals have hit many infrastructure projects in India, including power plants, hurting the ability of their promoters to repay creditors and vendors. India has a power generation capacity of 237,745MW, of which 21,382MW is fuelled by gas. For these projects to operate at a plant load factor—a measure of average capacity utilization—of 70%, a supply of 71.7 million standard cubic metres per day (mscmd) of gas is required. But the total gas supply is much less. Also, Andhra Pradesh, Delhi, Haryana, Jharkhand, Karnataka, Odisha and West Bengal have deferred raising electricity tariffs with the Election Commission putting the decision on hold because of the elections. “We believe the governments of some other states may also be waiting for elections to conclude before announcing power tariff hikes. If implemented, the tariff hikes would be good for the state electricity board package, and would benefit the sector,” UBS Global Equity Research said in a 3 April report. GE has called for faster decision-making and clarity on policies by the Indian government. This has found resonance in the ongoing election, with the opposition Bharatiya Janata Party’s election manifesto stating, “UPA (Congress-led United Progressive Alliance) Government has unleashed ‘Tax terrorism’ and ‘uncertainty’, which not only creates anxiety amongst the business class and negatively impacts the investment climate, but also dents the image of the country.”

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