Govt issues over Tk2,000cr bonds to repay power companies' dues

The government has issued bonds for the first time to repay the outstanding debts of private power companies.

The Ministry of Finance yesterday issued bonds worth over Tk2,000 crore to Pubali Bank and City Bank to settle the debts of several power companies.

Summit Power, Confidence Power, Anlima Power, United Power, Feni Lanka Power Limited, Bangla Trac Power, Baraka Power, and Energypac are among the independent power producers (IPPs) that were repaid after the bond issuance.

Officials of the Treasury and Debt Management Division of the Finance Department said the outstanding debts of all IPPs will be repaid gradually. That will require the government to issue bonds worth nearly Tk15,000 crore, they said.

Yesterday, a bond worth Tk1,983 crore was issued to City Bank and a bond amounting to Tk78 crore was issued to Pubali Bank. The two bonds have a maturity period of 10 years with an interest rate equal to the repo rate of the Bangladesh Bank, which is currently 8%.

Faisal Khan, president of Bangladesh Independent Power Producers' Association, and also director of Summit Group, told The Business Standard that the Bangladesh Bank backed by the Ministry of Finance started issuing bonds to local commercial banks where IPPs had working capital loans against receivables from Bangladesh Power Development Board (BPDB).

"The bond amounts are the subsidy that BPDB had not received from the finance ministry. With these bonds, our undisputed receivables from BPDB are cleared until 30 September 2023," he said.

He further said the IPPs are happy to get a solution to the long overdue payments.

Faisal Khan said although the receivables are cleared, IPPs are still required to take working capital loan from banks as 3-4 months payments are still due from BPDB.

"We hope BPDB will regularise the monthly bills and start clearing bills within 30 days as per the contracts so IPPs can generate electricity as per demand," he added.

Last week, State Minister for Power Nasrul Hamid said the outstanding debts of IPPs would be repaid within a week. He also said that he had spoken to Finance Minister Abul Hasan Mahmood Ali about the issue.

The Finance Division has already taken the initiative to issue bonds to repay the outstanding subsidies for IPPs and fertiliser sector. On 4 January, the finance ministry issued a special bond worth Tk3,316 crore to repay the outstanding dues for import of fertilisers.

So far, the government has issued bonds worth more than Tk7,000 crore in favour of five banks for the subsidy of the fertiliser sector. Of the amount, Tk2,557 crore has been issued to Sonali Bank, Tk1,896 crore to Janata Bank, Tk2,000 crore to Islami Bank Bangladesh, Tk459 crore to IFIC Bank, and Tk397 crore to City Bank.