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Infrastructure & PPPs in Bangladesh - Q42020 Update


Dec-20

CHINESE ENGINEERING COMPANY PLANS BANGLADESH HOSPITAL PROJECT

China Machinery Engineering Corporation (CMEC) is looking to develop a hospital chain project in Bangladesh in the PPP model; and the engineering company has sent an unsolicited proposal to Bangladesh Investment Development Authority (BIDA) to invest in a portfolio of hospitals to be located in the capital city of Dhaka as well as other regions in the South Asian country.

While the authorities are yet to reach a formal agreement with CMEC on the funding model or the size of the project, it is likely that it will be executed as a build-operate-transfer project, where the Chinese company will help fund and manage the development under a long-term concession following the completion of construction. A lack of international-standard medical facilities in Bangladesh has driven many citizens to travel to across the border to India for treatment.

CMEC is active in Bangladesh’s power and energy sectors. It received the go-ahead in November to develop a 43 MW energy-from-waste project in Dhaka North City Corporation district and signed an agreement with the country's North-West Power Generation Company last year for the joint development of solar, wind and other renewables projects with a combined capacity of 250 MW.

CMEC's proposal for the hospital project marks its entry into healthcare investment outside China at a time when the government is promoting its medical care prowess to developing countries amid the COVID-19 crisis.


IFC CONSIDERS LENDING USD 95M TO BANGLADESH TELECOM COMPANY

The International Finance Corporation (IFC) is considering lending USD 95m to fund the capital investment plans of Robi Axiata - Bangladesh's second largest telecom company by subscribers. The proposed loan is slated to have a tenure of seven years, according to a disclosure yesterday by World Bank-backed IFC. It did not mention the interest rate for the debt instrument.

The loan will be used to finance Robi Axiata's network upgrades across Bangladesh, business expansion and allocation of spectrum, the statement said, without disclosing further details of the capital investment.

The telecom company, which is 68.7%-owned by Malaysia's Axiata Group with the remaining held by India's Bharti Airtel, invested a total of USD 168m in its capital expenditure in 2019. Robi Axiata is in the process of launching an IPO on the Dhaka Stock Exchange to raise about BDT 5.2bn (USD 62m).


BANGLADESH AWARDS 55MW WIND FARM

Bangladesh has given the green light to a proposal from a Chinese-backed consortium to develop a 55 MW wind power project close to the country’s second-largest seaport by volume.

The consortium members are Envision Energy (Jiangsu) Co, SQ Trading and Engineering, and Envision Renewable Energy Bangladesh. As part of the 20-year power purchase agreement, the Bangladesh Power Development Board (BPDB) will buy electricity from the project at BDT 10.56/kwh (USD 12 cents), resulting in a total investment of USD 240m. The project will be located in the city of Mongla, which also has a namesake port.

The deal was signed after the government in 2019 reached out to some international developers for wind power investments at Mongla and Inani in Cox's Bazar city, a fishing and tourism hub, and Kachua in Chandpur district.

Envision Energy, which is headquartered in Shanghai and is one of the largest private sector wind developers in Asia by capacity, last year expressed an interest in developing wind farms in Cox’s Bazar. SQ Trading and Engineering, which specialises in power and utilities, is the Chinese company’s local joint venture partner.


BANGLADESH TRANSPORT AUTHORITY PREPARES EXPRESSWAY FEASIBILITY REPORT

Dhaka’s public transport authority is preparing a feasibility study for a 90km expressway, after which it will be sent to the Ministry of Road Transport and Bridges to examine the possibility of a public-private partnership, as per Dhaka Transport Coordination Authority (DTCA).

The study is being carried out jointly by a local and a South Korean consultant, and the six-lane expressway will connect the Narayanganj and Kapasia towns. The expressway will provide an alternate parallel route to the current north-south highway and ease congestion. The report also proposes a mass rapid transit system in the future.


Nov-20

CHINA'S CHINT ENERGY PARTNERS FOR BANGLADESH SOLAR PROJECTS

Chinese renewables company Chint Energy is partnering with a Bangladeshi textile company to develop a solar project pipeline in the South Asian country. The company, which specialises in solar panel manufacturing, signed an agreement with the energy division of Liz Fashion Industry Limited to co-invest in commercial and industrial solar as well as floating solar power projects.

The agreement was signed in view of the rising power demand in Bangladesh, its favourable solar radiation conditions, as well as preferential renewable power policies being rolled out by the government, the statement said. The country is set to reach 1 GW of total renewable capacity at the end of 2021 from the current 650 MW.

The agreement covers projects to be located in the capital of Dhaka as well as Mymensingh district, a spokesperson told Inframation, adding that under the current feed-in-tariff scheme, rooftop solar power in Bangladesh sells for as much as USD 12 cents per unit.

The two companies will first construct solar power installations on the rooftops of Liz Fashion’s factories as well as develop some that are close to lakes. Liz Fashion's factories are mainly located in Gazipur, a major industrial city 25km north of Dhaka, and Mymensingh, which is bordered on the north by the Indian state of Meghalaya.



BANGLADESH SEEKS FOREIGN FUNDS FOR USD 11BN RAILWAY PROJECT

The Bangladesh government plans to seek foreign partners to develop the USD 11bn Dhaka-Chittagong High-speed Railway, the country's largest-ever infrastructure project. The authorities will consider using the public-private partnership (PPP) method in either the build-operate-transfer or build-own-operate-transfer models, as per Bangladesh Railway.

While Bangladesh has not yet decided whether it will launch an international open tender, it plans to work out more details on the financing over the next six months. Construction will take three to four years, with an estimated completion date beyond 2024, according to a government report.

The high-speed railway will have a designed speed of 300km/h. The project, linking the Bangladeshi capital of Dhaka to Chittagong, its second-most populous city, will carry around 50,000 passengers per day. The national industrial hub of Chittagong is home to its namesake port, which is the biggest by capacity in the country.

The 227km rail track, mostly elevated, will run along the Dhaka-Chittagong Highway, with the travel time per journey estimated at 73 minutes. In total, there will be six stations: At Dhaka, Narayanganj, Comilla, Feni, Pahartali and Chittagong.



BANGLADESH LOOKING FOR WIDE INVESTOR BIDS FOR USD 2BN EXPRESSWAY PPP

The Bangladesh government is looking for investors to help build Dhaka East-West Elevated Expressway, a USD 2bn expressway in the public-private partnership model. The international tender is going to be launched in 2021.

The road, which is aimed at reducing congestion in the capital city of Dhaka, has a pre-tax financial IRR of 7.21%, according to the project feasibility study. It is part of a strategic road network agenda under the Dhaka Structure Plan and the Asian Highway Network. It is in the early stage of preparation by the Bangladesh Bridge Authority for international procurement.

​​​​The 40km elevated expressway, with a designed speed of 80km, will allow traffic to travel around the western perimeter of the Dhaka Aricha Highway and the Dhaka Chittagong Highway with connections to Highway N8. Construction of the road, which will interchange with the Dhaka-Maowa highway, will take five years.

The concessionaire will be responsible for designing, building, financing, operating and maintaining the expressway, while the Bangladesh Bridge Authority will finance land acquisition and resettlement.


Oct-20

BANGLADESH'S FIRST EXPRESSWAY PPP FACES TWO-YEAR DELAY

The USD 1.2bn expressway, the first expressway PPP project in the country, was originally scheduled to be completed in 2022. The Bangladesh Bridge Authority (BBA), which is the procuring authority for the project, has secured approval from the country’s Planning Commission to finish work by 2024. Land acquisition and the need to relocate utility services will likely delay Bangladesh’s first PPP expressway project by two years.

Italian-Thai Development (ITD), which is developing the project, had faced problems with financial closure; and finally signed financing agreements with Industrial and Commercial Bank of China (ICBC) and China Eximbank in February this year, following earlier attempts to secure funding from the International Finance Corporation, China Railway Construction Corporation and Chinese Investment Global Foundation Company.

The 20km expressway will start from Hazrat Shahjalal International Airport - the country's largest airport by capacity - and extend to the Kutubkhali area on the Dhaka-Chittagong Highway via the Mohakhali, Tejgan and Kamalapur areas of Dhaka.


SPIC AND CHINA HARBOUR TO BUY BANGLADESH WIND FARM

A State Power Investment Corporation (SPIC) unit and China Harbour Engineering Corporation (CHEC) have agreed to acquire majority control of a 66 MW onshore wind farm in Bangladesh.

Wuling Power Corporation, a central China-based unit of State Power Investment Corporation, will buy a 60% stake in Envision Energy Hong Kong, which a stock exchange disclosure said owns 90% of a project company for the Cox's Bazar Wind Farm in Cox’s Bazar city. China Communication Construction Company (CCCC)-owned CHEC will purchase a 40% stake in Envision.

Cox's Bazar city is a fishing port, tourism centre and district headquarters in southeastern Bangladesh. The facility, covering about 18 sq km, will be the first large-scale onshore wind farm in the South Asian country.

The USD 120m Cox’s Bazar Wind Farm will be financed by USD 34m in equity, with development approvals already obtained from both the Chinese and Bangladeshi governments. China Eximbank's Hunan branch is providing debt financing for the project.

The Cox’s Bazar Wind Farm, developed in the build-own-operate mode, will sell electricity under a 20-year PPA with the state utility.

China Energy Engineering Group Yunnan Electric Power Design Institute is the engineering, procurement and construction contractor. The project will also include the construction of 132 KV transmission lines.


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