Investment of around Tk 5,500 crore by 59 joint ventures in the private sector approved by the government last year have come to a standstill mainly due to gas shortage and suspension of loan disbursement by the World Bank for a few of the projects.
According to a report of the Board of Investment, the major investments that are now hamstrung due to non-disbursement of loans and lack of gas connection are Tk 4,142.51 crore in the power generation sector, Tk 860.60 crore in manufacturing, Tk 362.50 crore in real estate, Tk 57.28 crore in information and communication technology, and 38.18 crore in the services sector.
Of them, two power generation projects of a consortium of Summit Industrial and Mercantile Corporation Private Limited and its partner GE Energy LLC Bangladesh worth $531 million have come to a standstill because of non-disbursement of loans committed by the World Bank.
Officials and entrepreneurs concerned said that the country’s development would be seriously hampered, if the
agencies concerned did not remove the constraints immediately.
The entrepreneurs received permission from the BoI last year and most of them have completed a significant part of the project implementation but they are yet to receive gas connection.
They said if the situation continued for long, it would affect the future investment in the country directly, particularly in the industrial sectors, which in turn would slow down the economic growth, resulting in increased unemployment and other problems.
In response to a query, Summit Group chairman Muhammad Aziz Khan told New Age that the World Bank Group disappointed his company as it had maintained silence about fund disbursement for installation of two power plants of 341MW generation capacity each at Bibyana in Sylhet.
Summit was reportedly assured that it would receive $117 million in loan from the International Finance Corporation of the WB Group and the Asian Development Bank each, $115m from the Bangladesh Bank’s Investment Promotion Financing Facilities, and $40m from the Infrastructure Development Company Limited.
Most of the sources of loan are controlled by the WB.
Aziz said they had been unable yet to strike any loan agreement with the lending agencies concerned, although the dates of financial closing of the projects had already been expired – one in last month and the other on March 12.
He, however, hoped that the WB Group would finally come forward with the promised funds to enable the consortium to complete the highly important power projects.
Petrobangla, the state-run Oil, Gas and Mineral Resources Corporation, fails to provide adequate gas to the existing industries since it is currently supplying around 2,100 million cubic feet of gas a day with a shortage of more than 500mmcfd.
When asked, Petrobangla chairman Hossain Monsur told New Age that the state-run corporation was trying its best to solve the crisis.
‘But it is not possible to increase gas supply within a short time. Basically, the industries will need gas for power generation through their captive generators as the power agencies cannot supply uninterrupted power to them,’ he said.
Monsur claims that the existing captive generators and boilers are too inefficient and, so, waste a huge volume of gas every day.
The government ordered gas distribution companies to suspend giving any new connection from July 2010 until gas supply to the national grid increased to 2,200mmcfd.
Later in 2011, a high-powered committee led by the prime minister’s energy adviser Towfiq-E-Elahi Chowdhury started giving permission to give gas connection to industries and other institutions on a ‘priority’ basis.