World Bank Country Director Ellen Goldstein yesterday said two Bibiyana private power projects did not fit the criteria to be funded under the Bank's Investment Promotion Financing Facility (IPFF).

In other words, local company Summit that was awarded the two Bibiyana projects would not get its expected $115 million from the IPFF.

Construction of both these projects failed to begin as per schedule due to financing problems. Summit has meanwhile started construction of another large plant in Meghnaghat without completing financial arrangement.

Talking to journalists at a regional seminar on infrastructure at Sonargaon Hotel, Goldstein said, “The Bibiyana project does not actually meet the criterion to be financed under the IPFF. Unfortunately, that operation was not appropriate for financing that project.”

She added that the WB has informed its stance to Summit many months ago.

Summit chief Muhammad Aziz Khan told The Daily Star that indeed such lower power projects did not meet the IPFF criterion, which was founded to finance smaller-scale schemes.

But not getting the IPFF is not the main problem with the Bibiyana financing. The WB had promised the government of $100 million Performance Risk Guarantee (PRG) for each of the three power projects of Meghnaghat and Bibiyana. The PRG helps the project contractor to get loans from other banks.

“But they have not given the PRG. As a result, we did not get loans. However we are continuing to pursue rightful remedies and hope that the project will be implemented,” Aziz added.

As per the agreement with the government, Summit was supposed to close its finance in February for the Bibiyana power projects -- each with 341 megawatt capacity. Summit won the bidding for these power projects by submitting a very low price of around Tk 2.6 per kilowatt hour for 22 years.

Summit claimed that it is facing the problem because the WB refrained from giving the PRG apparently as it will not fund anything unless the Padma bridge corruption allegation is cleared.

The Daily Star/ Bangladesh/ 10th May 2012