Japanese non-profit organization Japan International Cooperation Agency (JICA) is co-investing with the International Finance Corporation (IFC), a member of the World Bank Group to help Bangladesh significantly expand its power generation capacity.
JICA will invest US$30 million in Sembcorp North-West Power Company Ltd., a joint venture of Sembcorp Utilities and Bangladesh’s state-owned North-West Power Generation Company Ltd. for the construction of a 414-megawatt (MW) dual-fuel combined-cycle power plant at Sirajganj, Bangladesh.
JICA’s US$30 million is part of the total financing package of US$165 million that includes a loan from IFC’s own account as well as additional loans mobilized through partners. The total project cost is estimated at around US$412 million.
JICA’s Senior Vice-President Kenichi Tomiyoshi said the project is expected to be one of the most efficient plants in Bangladesh that will help the country modernize its power sector. “JICA is privileged to partner IFC and other investors in this ambitious agenda to meet the power needs of millions of people,”Tomiyoshi said.
This transaction is IFC’s first co-investment with JICA since the two organizations signed a master cooperation agreement in April 2015.
Tang Kin Fei, Group President and CEO, Sembcorp Industries, said, “Sembcorp’s commitment towards supporting Bangladesh’s vision for continued growth and development is further strengthened with support from JICA, IFC, and other global investors. Sembcorp’s Sirajganj power plant will provide cost-effective and reliable energy solutions to the country for more than 22.5 years after its completion.”
“Bangladesh is on an ambitious growth path. Addressing the electricity gap is an immediate need. With JICA’s first investment into the country, IFC is confident of making a positive impact on the economy and the quality of life of Bangladeshi people. The project will help address the electricity gap while lowering the cost of generation,” said Hyun-Chan Cho, IFC’s Asia-Pacific Head for Infrastructure.
Nearly 40% of Bangladesh’s 160 million population live without access to electricity. Citizens encounter frequent blackouts. Severe power shortages are a major bottleneck for the growth of the job-creating manufacturing sector, hampering economic growth and poverty-alleviation efforts.
The power plant will be the second largest power plant in the country and represents the largest foreign direct investment into this sector in recent years. The success of the project will demonstrate the profitability and sustainability of public and private-sector partnerships in Bangladesh’s power sector to international players, helping attract additional capital to the sector.
IFC promotes sustainable growth and private-sector development in Bangladesh by investing in critical infrastructure, boosting financial inclusion, enhancing textiles competitiveness, and supporting reforms to make doing business easier for the private sector. IFC committed US$635 million in Bangladesh, in own and mobilized funds across 13 projects, for the fiscal year ended June 30, 2016. IFC’s committed portfolio in Bangladesh is about US$1 billion in 47 projects.