There is no assurance of fuel (coal) supply, there is no environmental survey and projects are now on the verge of cancellation as there is no visible progress in eight years. Orion Group is lobbying for a loan from the Bangladesh Bank (BB) Reserve against that coal-based power project.
In developing countries, such lending is considered very risky and economists say such incidents are rare. The fear is that some of the beneficiaries and paid agents of Orion Group are trying to make payments from the reserves of Bangladesh Bank.
Orion Group signed an agreement with the government in 2012 to generate three coal-fired power plants in the first phase. These are: Mawa 522 MW, Khulna 282 and Chittagong 262 MW coal based power plants. Khulna and Chittagong Power Plants (two) are scheduled to start production in March 2018. The Mawa 522 MW coal-fired power plant is scheduled to go into production in July 2018. But there is no visible progress even after 7 years of agreements. Then in 2013, three more (Dhaka-272 MW, Chittagong 262 and Dhaka 835 MW) coal based power plants LOI (Letter of Interest) were issued. Then everything stopped. As the cost-effective power plants do not come into production on time, the sector has to pay a lot of fees to run oil-based power plants. Chaotic status in the master plan of electricity is prevailing.
Energy experts believe that the Mawa power plant is not commercially viable in any way. The navigability of the river here is not possible to supply huge coal by bringing the draft ship. However, Orion is now trying to move the power plant to Gajaria in Munshiganj. The government has decided to cancel the contracts of the power plants for various reasons. And to save the back, various tricks are being used.
Orion Group is pushing for a loan of 906.18 million dollar ( Tk. 7674 crore) against a project that is about to be canceled. He applied for the loan in the last week of July. There is no precedent for a company to borrow so much money from a single bank.
On July 26, Rupali applied to the bank for a loan from the central bank. Attempts are being made to take this loan through refinancing. If Orion fails to repay the money on time, the central bank will recover it directly from Rupali Bank.
According to sources, a dispute has erupted between senior officials of the central bank and Rupali Bank over lending to the Orion Group. A section of officials also began lobbying for Orion's loan. If Orion fails to repay the loan on time, Rupali Bank could face a major crisis. Rupali Bank agreed to Orion's loan despite opposition from several members at the board meeting. The proposal was sent to the central bank on August 19. Bangladesh Bank has sent the loan proposal in more detail. However, at the end of September, Rupali Bank changed its mind.
The total cost of the project is estimated at 1.13 billion ( Tk. 9,853 crore). Orion wants to invest only 20 percent of the total expenditure as capital. Efforts are being made to get the remaining 80 per cent loan from the central bank.
Economists believe that this loan would be a bad precedent. Other companies will try to borrow with this reference. Again unscrupulous officials can abuse this opportunity. If so, Bangladesh will be at risk. Bangladesh's past record is not an advantage at all. In 2015, the controversial conventional banking system was disregarded for restructuring loans worth Tk. 5,000 crore, including defaulters. Following this, the central bank was forced to restructure loans worth Tk. 15,000 crore to 11 businesses. Most of that money has not been returned yet.
This time Orion Group approached Agrani Bank. "Our foreign exchange reserves are now in surplus," Orion Group Chairman Obaidul Karim wrote in a letter to Agrani Bank. Under the direction of the Hon'ble Prime Minister, the government has now decided to invest in mega projects with money from the reserves. The power plant is such a big project. Such an initiative will play a role in saving the country's foreign exchange in the long run.
Orion reminded about several businesses to entice Agrani Bank. The bank will be able to earn good commission as service charge. More than 800 million in debetures will be opened through Agrani Bank, from which more commissions can be earned. Agrani Bank has not been able to come to a decision yet, sources said.
Rupali Bank's observer Md. Sirajul Islam, who was appointed by the central bank, told Barta24.com that Rupali Bank has moved away from the issue. I opposed at the board meeting. I do not want to talk about it now.
Responding to a question on lending from the Reserve, he said it would not be a single decision. What the government decides is a big issue. The government will surely think and decide for the good of the state.
Agrani Bank Managing Director and CEO Mohammad Shams-ul Islam was called several times but did not receive the call.