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Central bank lifts loan cap for coal-fired power projects

Originally posted in The Business standard on 21 August 2022

The central bank has exempted coal-based power-producing companies from the single borrower exposure limit to keep money flow uninterrupted in the energy sector to facilitate power generation.

In a circular issued on Tuesday, the Bangladesh Bank relaxed the highest 25% single borrower exposure limit for five years.

The central bank took the decision to make electricity generation uninterrupted amid volatile oil and gas prices in the global market, said sources at the Bangladesh Bank. Officials at the Finance Division, on condition of anonymity, told The Business Standard that this decision will increase the risk exposure to the banks’ financial health.

At present, the country has two coal-fired power plants in operation with a total capacity of 1845MW.

Of these, three units of the 525MW Barapukuria plant are running on local coal while the 1320MW Payra plant is totally dependent on imported coal.

Meanwhile, the Bangladesh Power Development Board (BPDB), three public companies and two private companies are implementing six coal-based power plant projects in the southern part of Bangladesh.

The under-construction coal projects of BPDB and public companies are – Matarbari 1200MW Coal Power Plant, Patuakhali 1320MW Coal Power Plant and Rampal 1320MW Coal Power Plant, Payra 1320MW Power plant (2nd phase).

Two private companies – S Alam Group and ISO Tech Electrification Company Limited (ITECL) – are implementing Banshkhali 1224MW Coal Power Plant and Barishal 350 MW Coal Power Plant respectively.