BB allows Rupali Bank to release $3.2m loan, LC opening for S Alam power plant

The Bangladesh Bank has allowed state-owned Rupali Bank to release nearly $3.2 million in remaining syndicated foreign-currency loans and open a new letter of credit (LC) for SS Power-1 Limited, a power plant owned by the controversial S Alam Group.

The central bank issued the instruction today (19 August), granting the exemption under Section 121 of the Bank Company Act, 1991. The directive was sent to all banks in the country.

According to the Bangladesh Bank circular, Rupali Bank has been authorised to release $ $3,197,561.28 from the remaining portion of the syndicated foreign-currency loan approved for SS Power-1 and open an import LC for the company.

The central bank has also exempted the facility from the provisions of Section 27Ka(3) of the Bank Company Act, which restricts banks from providing certain facilities to loan-defaulter companies.

The latest approval follows another Bangladesh Bank directive issued on 16 August, which allowed Rupali Bank to open import LCs for SS Power-1 against a 100% cash margin. The facility is set to remain in force until December 2027.

However, Bangladesh Bank imposed a specific condition on the latest facility.

The central bank said it would bear no liability arising from the loan facility, while Rupali Bank would not be allowed to seek any financial assistance from Bangladesh Bank in the future in connection with it.

According to Bangladesh Bank officials, SS Power-1 is currently operational and supplying electricity to the national grid. A shortage of raw materials could disrupt generation, prompting the central bank to allow the company to open LCs despite its status as a loan defaulter. Similar facilities have previously been provided to companies to keep production and employment running.

SS Power-1 operates a 1,320MW coal-fired power plant in Gandamara of Banshkhali, Chattogram. The plant was built as a joint venture between S Alam Group and two Chinese companies, with its two units each having a generation capacity of 660MW.

The plant began commercial generation in September 2023 and supplies electricity to the national grid.

S Alam Group owns 70% of SS Power-1, while China's SEPCO III and HTG Development Group hold the remaining 30%.

Under normal banking rules, loan-defaulter companies are not eligible for new credit facilities or the opening of LCs. The latest Bangladesh Bank approval effectively provides SS Power-1 an exemption from those restrictions.

The Bangladesh Bank data shows loans taken by various S Alam Group entities, both directly and through other entities, exceed Tk2.25 lakh crore, with a significant portion already classified as defaulted.