Monday, May 27, 2024

Bangladesh Bank removes cap to loan coal-based power plants

Originally posted in The Dhaka Tribune on 09 November 2022

Bangladesh Bank (BB) in a directive has withdrawn the lending limit for coal-based power plants aiming to increase power generation.

As per the directive, banks can lend money to set up coal-based power plants as required for power generation in the next 5 years, reports UNB.

Md Ali Akbar Faraji, director of banking regulation and policy department, issued the notification as Bangladesh is struggling to run gas-based and diesel-run power plants amid rising oil prices because of the Russia-Ukraine war.

It says the banks can provide necessary loans for setting up coal-based power plants, including the purchase of land, import and purchase of machinery, expenses related to the installation of machinery, and maintenance of coal-based power plants.

As a result, the calculation of lending 25% of the reserved capital to get bank loans will not be effective for the next five years.

In July, Bangladesh Bank gave such instructions for six months.