YOG INFRA Q4 2023 insights
SOUTH ASIAN countries - Bangladesh, Nepal, Bhutan and Sri Lanka saw subdued project development activities. We see that a majority of infrastructure projects are being developed under G2G or bilateral mode of private sector participation. This highlights the need for development of strong policy & regulatory frameworks to promote a larger shift towards PPPs, including requirement of a visible & viable project pipelines in these countries.
Read more about key developments in Infrastructure and PPPs in the four countries in our insight.
Bangladesh
CHINESE DEVELOPER PLANS 300 MW WIND PROJECTS IN BANGLADESH
Wuling Power Corporation is considering greenfield investments in 2 onshore wind farms in Bangladesh of a combined capacity of about 300 MW. The State Power Investment Corporation-owned company will conduct preliminary feasibility studies and surveys in two potential locations – one in Chattogram and the other at Cox’s Bazar city. It will look to submit proposals to the Bangladeshi government for approvals and subsequently sign power purchase agreements with the state grid operator.
The Chattogram city project will have a capacity of about 68 MW and will be approximately 100 km away from downtown Chattogram. The developer plans to install 15 wind turbines, each capable of generating 4.5 MW. The proposed 245 MW Cox’s Bazar onshore wind farm will have 49 turbines, each with a 5 MW capacity. The developer will also build substations, power transmission lines and access roads.
BESTSELLER TO INVEST USD 100 MN IN RENEWABLE ENERGY IN BANGLADESH
Fashion company Bestseller is committing up to USD 100 Mn in a groundbreaking offshore wind energy project in Bangladesh. This investment represents Bestseller's largest sustainability initiative, aiming to reduce greenhouse gas emissions in the fashion industry's value chain. The company's support for renewable energy solutions aligns with broader efforts to address environmental concerns and promote sustainability in manufacturing processes.
By 2028, energy created by near-shore wind turbines could flow into the electricity grid in Bangladesh and supply companies with renewable energy. This is the ambition behind a large wind energy project in Bangladesh, where many international fashion companies have production and thus an interest in strengthening the green energy infrastructure.
3 DEALS INKED WORTH USD 443 MN FOR DEVELOPMENT OF BANGLADESH'S RENEWABLE ENERGY
3 loan and grant agreements were signed among Bangladesh, European Investment Bank (EIB) and the European Commission (EC) involving EUR 407 Mn (USD 443 Mn) to support the renewable energy sector of Bangladesh in Belgium.
The first agreement “Bangladesh Renewable Energy Facility” was signed between Bangladesh and the EIB for an EU-guaranteed framework loan of up to EUR 350 Mn (USD 381 Mn) to support climate action investments in Bangladesh.
The second one was signed between the EIB and the EC of an EU blending grant of EUR 45 Mn (USD 49 Mn) -- comprising EUR 6 Mn (USD 6.5 Mn) of technical assistance to ensure that all sub-projects comply with international market practices and EIB’s environmental and social standards, and of EUR 39 Mn (USD 43 Mn) of investment grant -- to bring in concessional lending tools to support the first renewable energy utility scales projects in Bangladesh.
The third agreement “Partnership for Green Energy Transition”, signed between Bangladesh and the European Commission costing EUR 12 Mn (USD 13 Mn) and co-financed by Germany, aims to work on policy, legal framework and investment climate to facilitate an inclusive green energy transition.
BANGLADESH AWARDS PATENGA TERMINAL PPP TO SAUDI OPERATOR
The Chittagong Port Authority (CPA) in Bangladesh awarded a concession to the Saudi Arabia-based Red Sea Gateway Terminal to refurbish, equip and operate the newly built Patenga container terminal. The initial investment for the 22-year concession will be USD 170 Mn. This will be a mix of equity and debt with the financing to come from overseas banks.
10 years into the contract, the concessionaire needs to upgrade and change the equipment, so they will incur an additional cost at the time. The Patenga terminal - which was built by the CPA - will be able to process 500,000 twenty-foot equivalent units (TEU), berthing 3 vessels simultaneously along its 600-metre quay. It will be able to accommodate ships requiring a draft of about 9.5 metres. The terminal has about 16 acres of land, which can store about 4,500 TEUs.
Sri Lanka
SRI LANKA TO EXPAND WEST CONTAINER TERMINAL AT COLOMBO PORT
The Sri Lanka Ports Authority (SLPA) is planning to use a public-private partnership (PPP) to expand the West Container Terminal at the Port of Colombo. A feasibility and detailed design study will be carried out, funded by a grant from the Asian Development Bank. The multilateral lender initially highlighted the potential for West Container Terminal (WCT) during the design stage of the south harbour, which now has 3 operational terminals.
The WCT2 project will be awarded through a global competitive tender process, without providing an exact timeline or a cost estimate. The SLPA expects to go ahead with the expansion, once the West Container Terminal – currently under construction by the ports arm of India’s Adani Group – starts operations. Container throughput at the Port of Colombo increased by 0.3% from January to October 2023, reaching 5.79 Mn TEUs compared with the same period in 2022.
ADANI GREEN TO INVEST USD 750 MN IN SRI LANKA POWER SECTOR
Adani Green, a unit of the Adani Group, has announced a substantial investment of USD 750 Mn in Sri Lanka’s power sector, as revealed by Adani Ports and Special Economic Zone (SEZ). The decision is aimed at bolstering Sri Lanka’s energy infrastructure and promoting the transition to cleaner and more sustainable sources of power. Sri Lanka, like many nations, is prioritizing the development of its energy infrastructure to meet the growing demand for electricity while reducing the environmental impact. Adani Green’s substantial investment is expected to play a pivotal role in achieving these goals and ensuring a more sustainable energy future for the country.
DFC COMMITS USD 553 MN TO PORT INFRASTRUCTURE IN COLOMBO, SRI LANKA
The U.S. International Development Finance Corporation (DFC) has committed more than half a billion dollars to support the development of a deepwater shipping container terminal in the Port of Colombo, Sri Lanka, that will provide critical infrastructure for the South Asian region.
The new terminal reflects DFC’s commitment to financing high-quality infrastructure that supports its partner’s development needs, invests in local communities, and is respectful of local financial conditions. The investment further demonstrates the United States’ enduring commitment to Sri Lanka’s economic growth and its regional economic integration, including with India. DFC’s commitment of USD 553 Mn in private-sector loans for the West Container Terminal will expand its shipping capacity, creating greater prosperity for Sri Lanka – without adding to sovereign debt – while at the same time strengthening the position of our allies across the region.
INDIA TO BUILD 10,000 HOUSES IN SRI LANKA'S TEA PLANTATION AREAS
India will build 10,000 more houses in the plantation areas of Sri Lanka in an extension of its housing project in the country. The High Commission of India signed two significant agreements for the construction of 10,000 houses in plantation areas of Sri Lanka under Phase-IV of the Indian Housing Project. Separate agreements with the two Implementing Agencies namely National Housing Development Authority (NHDA) and State Engineering Corporation (SEC) are aimed at early rollout of the construction of the 10,000 houses. Phase IV of the Indian Housing Project is spread across 11 districts and 6 provinces of Sri Lanka.
ADB PLEDGES SUPPORT FOR NEW PROJECTS IN SRI LANKA FOR NEXT 5 YEARS
The members of the Board of Governors of the Asian Development Bank (ADB) engaged in extensive deliberations with Prime Minister regarding Sri Lanka’s financial requirements for projects for the next 5 years. Acknowledging Sri Lanka’s commendable and swift economic recovery following 2022 crisis, the ADB delegates expressed their contentment and commitment to supporting the country’s visionary projects.
The members of the Board have emphasized a positive response towards proposed initiatives focusing on digitalization and information technology, enhancement of public transportation, human resource development and education, water management and the promotion of small and medium enterprises (SMEs). The ongoing projects cover areas such as strengthening public financial management and governance, fostering private sector development and improving access to public services and deepening inclusion, social protection, equitable access, health, climate, and agriculture modernization.
Nepal
ADB APPROVES USD 166 MN PACKAGE FOR URBAN INFRA IN NEPAL
The Asian Development Bank (ADB) has approved a USD 166 Mn financing package to boost the local economy in Nepal by building climate- and disaster-resilient cities. The ADB programme aims to contribute to the economic growth in Devdaha, Lumbini Sanskritik, Sainamaina, Siddharthanagar, and Tilottama municipalities, as well as Janakpur sub-metropolitan city and Pokhara metropolitan city. A 150-kilometre-long storm water drainage, 100 km of roads, and 45 km of footpaths will be taken up under the ADB project.
This project supports the government's current National Urban Development Strategy to improve planning and investments in urban corridors and drive sustainable economic growth. It also continues ADB's long-term engagement with Nepal to strengthen municipal governance.
EV INFRASTRUCTURE AND STATE POLICY: CART BEFORE THE HORSE
Nepal Electricity Authority and the private sector have been setting up charging stations amid the country’s rising demand for electric vehicles (EVs). But Nepal still lacks a plan for how and where to set up charging stations, and developments in the EV industry have outpaced government policy.
The Water and Energy Commission Secretariat of the Ministry of Energy, Water Resources and Irrigation has selected a bidder to prepare the Master Plan for Public Charging Infrastructure for electric vehicles on major national highways. The master plan will make its recommendations based on the need and the availability of land, at the points on strategic roads where the charging stations can be set up. In December 2020, Nepal introduced its second Nationally Determined Contribution (NDC) for the 2021-2030 period in line with the Paris Agreement. As per the NDC, sales of EVs in 2025 will be 25 percent of all sold private passenger vehicles, including two-wheelers, and 20 percent of all four-wheel public passenger vehicle sales.
Bhutan
BHUTAN UNVEILS PLAN FOR 1,000-SQUARE KM MEGA CITY IN GELEPHU ALONG ASSAM BORDER
Bhutan's King has unveiled plans for development of a new 'international city' in Gelephu, on its border with Assam. The king's announcement came during his 116th National Day address, at the Changlimathang stadium in Thimpu, pitching the project as an “economic corridor connecting South Asia with Southeast Asia via India’s northeastern States”.
The land connection from Gelephu or Samdrup Jongkhar through Assam and Northeast Indian states, to Myanmar, Thailand, Cambodia, Laos, Vietnam, Malaysia and Singapore, is a vibrant economic corridor linking South Asia to Southeast Asia. Spanning an area of 1,000 sq km, or 250,000 acres, the Gelephu Special Administrative Region (SAR) will link Bhutan economically with Assam to spur regional and sub-regional integration. The plan for Gelephu includes an international airport, which will be Bhutan’s second, and geared to land larger planes than its present airport at Paro, 'zero emission' industries, a 'mindfulness city' that plays to Bhutan’s strength in tourism and wellness, as well as infrastructure companies.
INDIA-BHUTAN RAILWAY INFRASTRUCTURE PROJECTS PROVIDE FRESH IMPETUS TO DEVELOPMENT IN THE NORTH-EAST
India and Bhutan agreed to move ahead with the final location survey of the proposed cross-border link connecting Kokrajhar in Assam to Gelephu in Bhutan. A preliminary engineering/traffic survey has already been conducted by the Indian Railways of the proposed 57-km rail link that is expected to be part of Bhutan’s plan to set up a special economic zone in Gelphu.
The Kokrajhar-Gelephu rail link aside, the two sides also agreed to consider an additional rail link connecting Banarhat in West Bengal to Samste in Bhutan. There was also some discussion of designating a Haldibari (West Bengal) to Chilahati (Bangladesh) rail link as another trade route between Bhutan and Bangladesh.
INDIA, BHUTAN AGREE TO EXTEND ENERGY PARTNERSHIP TO NON-HYDRO RENEWABLES
India and Bhutan have agreed to extend their existing energy partnership to include non-hydro renewables, such as solar, as well as green initiatives for hydrogen. The Prime Minister reaffirmed India's unwavering commitment to its unique ties of friendship and cooperation with the neighboring country. They positively assessed the expanding partnership between the two nations, covering new areas of connectivity in its broadest form, cross-border trade infrastructure, mutual investments, energy, health, education, skill development, space technology, and environmental conservation. Additionally, they emphasized the importance of close people-to-people contacts.
List of Key Transactions - Bangladesh Q4 2023
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