Summit requests govt action to safeguard $3b investment plans

The Summit Group has urged key government agencies, including the Criminal Investigation Department, Bangladesh Bank, Investment Development Authority, Power Development Board, Rural Electrification Board and Petrobangla, to take swift action against what it describes as false allegations of money laundering and tax evasion.

In a letter addressed to Chief Adviser Muhammad Yunus, Summit Power International Chairman Muhammed Aziz Khan requested that the interim government authorities clarify the situation publicly.

Aziz Khan underscored the need for government support in upholding contractual agreements and facilitating future investments totalling $3 billion over the next five years, with a focus on sustainability and zero carbon emissions.

In the letter, Aziz Khan stated that these false allegations are harming Summit's goodwill and damaging Bangladesh's reputation as a destination for foreign investment. Following media reports of alleged investigations into money laundering and tax issues, government officials reportedly visited Summit's offices in Dhaka to seek confidential documents.

The Summit letter expressed concern that such actions, based on unfounded media claims, could undermine confidence in the country's investment environment. The company urged a swift government response to protect its operations and the broader interests of Bangladesh's economy.

Overview of SPl's foreign investment in Bangladesh

Summit Power International (SPI) of Singapore, currently co-owned by Jera of Japan, acquired the shares of Summit Corporation Limited (SCL) in Bangladesh in 2016 for $167.9 million, according to the letter.

This transaction was financed by the International Finance Corporation, namely, EMA Power Investment Limited (funded by the Islamic Development Bank) and Daelim Energy Co Ltd, a South Korean infrastructure developer.

The transaction was fully endorsed by the World Bank Group and undertaken in accordance with applicable laws of Singapore and Bangladesh.

SPI has invested $2.4 billion in Bangladesh in partnership with General Electric of the USA and Taiyo Life Insurance Company of Japan, generating a capacity of over 2,500MW of electricity, for the PDB and REB.

Business under pressure due to multiple challenges

Summit's businesses are under significant pressure due to several factors. These include extremely delayed payments by BPDB, the sharp depreciation of the Bangladeshi taka against the US dollar without true-up, high interest rates, a shortage of liquidity in the banking sector, and recent mob attacks on some of its facilities, says the letter.

Summit has recently been subjected to unfounded, baseless and defamatory media reports. These media reports falsely accuse Summit and the undersigned of financial misconduct, including money laundering, and question SPl's investments.

Baseless investigation

"While we welcome any investigation by the Government of Bangladesh, we humbly submit that based solely on false and incendiary media reports, officers from various government agencies visited our Dhaka office seeking confidential documents purportedly to investigate money laundering, tax, etc," reads the letter.

"We believe this diminished Summit's goodwill as well as Bangladesh's. Further initiation of enquiries based on false, irresponsible, and thoughtless media reporting further risks prepayments under the various international financing arrangements of the Summit Group currently in place with institutions."

Capacity payments in power projects and lowest tariffs

"We further submit that the media's misunderstanding and misreporting of capacity payments for power plants have also contributed to confusion. The 'Private Sector Power Generation Policy of Bangladesh 1996 (PSPGPB)' was enacted to encourage private investments in the power sector," reads the letter.

The PSPGPB defines capacity payment as a part of the tariff "that will cover debt service, return on equity, fixed operation and maintenance costs, insurance, and other fixed costs." 

By guaranteeing a portion of revenue and cashflow through capacity payments, private investors, financiers, and development agencies are more likely to fund large infrastructure projects.

"We beg to assure you that SPI's power plants were awarded at the lowest tariffs available at the time and remain among the most efficient in Bangladesh, as evidenced by their placement in BPDB's Merit Order Dispatch," said Aziz Khan.

"Comparing the cost of electricity generation from different energy sources without evaluating variables leads to inaccurate conclusions. SPl's capacity payments per megawatt are among the lowest in Bangladesh, showing our commitment to providing affordable energy solutions."

Aziz Khan clarifies Forbes report on his wealth

Meanwhile, in the letter Aziz Khan has clarified misconceptions regarding his wealth following a Forbes magazine report. He explained that his net worth likely stems from the publicly available financial statements of Summit Power International (SPI), which are audited by KPMG.

According to SPI's 2023 financials, the company's total assets stand at $2.49 billion, with liabilities of $1.46 billion, resulting in an estimated net worth of around $1.03 billion for shareholders.

"While calculations of Forbes are proprietary, we guess this financial statement audited by KPMG is the source for Forbes' assessment," the letter reads.

"It may also be noted that Forbes themselves declare that "Summit Group has interests in power, ports, fibre optics, and real estate, all in Bangladesh," and "Japan's JERA has a 22% stake in Summit Power International, which owns a portfolio of infrastructure assets in Bangladesh."

Aziz Khan said the attributed wealth represents physical assets in Bangladesh, owned by his entire family, all of whom hold permanent residency outside the country. He added that he is a Singaporean citizen and has been a permanent resident of Singapore since 1988.