IFC, a member of the World Bank Group, will provide US$165 million in debt financing to Sembcorp Utilities, a wholly-owned subsidiary of the Singapore-based Sembcorp Industries, to significantly expand power generation capacity in Bangladesh.
The financing will be provided through a combination of a US$103-million loan from IFC’s own account and an additional US$62 million mobilized through partners.
The financing will help Sembcorp set up a greenfield 414 MW dual-fuel combined-cycle power plant at Sirajganj, Bangladesh. The total project cost is estimated at around US$412 million. In addition to IFC’s financing, the U.K. government’s development-finance institution, CDC Group, and the Singapore-based infrastructure project-financing firm, Clifford Capital, will each contribute US$103 million in debt.
A portion of Clifford Capital’s tranche will benefit from risk cover from MIGA, a member of the World Bank Group. MIGA will also provide a risk guarantee to Sembcorp to cover its equity investment of US$103 million in the project.
Tang Kin Fei, Group President and CEO of Sembcorp Industries, said:
“The project reflects Sembcorp’s strong capabilities as a developer, owner, and operator of energy and water assets. With IFC, Clifford Capital, and CDC, we have strengthened our commitment towards supporting Bangladesh’s vision for continued growth and development. Sembcorp’s Sirajganj power plant will allow us to provide cost-effective and reliable energy solutions to the country over a period of 22.5 years upon its completion.”
Philippe Le Houérou, IFC’s Executive Vice President and CEO said:
“This project has the potential to have a significant development impact by alleviating Bangladesh’s chronic electricity shortages, lowering the cost of generation, and helping the country meet its growing demand for power.”
This transaction marks IFC’s first investment with Sembcorp Utilities and its first joint engagement with MIGA in Bangladesh. IFC’s financing with partners in Singapore has grown four-fold since 2011.
The power plant will be developed by Sembcorp North-West Power Company Ltd., a joint venture of Sembcorp Utilities and Bangladesh's state-owned North-West Power Generation Company Ltd. It will be the second largest power plant in the country and represents the largest foreign direct investment into this sector in recent years. The success of the project will demonstrate the profitability and sustainability of public and private-sector partnerships in Bangladesh’s power sector to international players, helping attract additional capital to the sector.