Move to motivate banks to invest in power sector

Dhaka,  Wed,  26 July 2017
Published : 17 Jul 2017, 00:29:13
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Move to motivate banks to invest in power sector

Rezaul Karim


The government has moved to motivate the country's banking sector to invest in the power sector aiming to meet the growing demand for electricity, officials said.

In this connection, a high-powered inter-ministerial committee will be formed to scrutinise the Bank Company Act, 1991 and other related rules and regulations and identify policy barriers to investment by the county's banks, they said.

The committee will submit its recommendations within next 15 days, they mentioned.

The decision was taken at a meeting held in June last. Officials concerned of the power division, finance ministry, Bangladesh Bank (BB) and top executives of different banks were present.

The meeting took decision to invest Islamic investment fund of Bangladesh Bank in the power sector in the form of bond. The size of Islamic investment fund is Tk 55 billion.

Besides, the power division will take initiatives to issue long-term bond. The Bank and Financial Institutions Division (BFID) will make efforts for short-term and long-term investment in the sector. It will also take a move to provide one-stop service in this regard.

According to Section 26 (kha) of the Bank Company Act 1991, banks can now give loan of up to 25 per cent of their paid-up capital to an individual borrower.

It will not be possible for the country's banks to make large investments in the power sector if the section concerned of the Bank Company Act is not amended, a BB source said.   

Currently, there exists a substantial volume of excess liquidity with the country's banking sector. The fund can easily be invested in the power sector to help meet the shortage of electricity in the country, he said.

Excess liquidity with the commercial banks was at Tk 1.0 trillion in the last week of April, according to statistics of Bangladesh Bank (BB).

The banks can invest in different projects of the power sector. The government will allocate land to help implement the projects, state minister for power, energy and mineral resources Nasrul Hamid said at the meeting.

Currently, it has also taken up projects of 6-to-9-month duration. The banks can invest in these projects, he said.

There are huge opportunities to invest in different projects of the country's power sector. About US$ 30.0 billion would be needed for the power sector within 2021, Abul Kalam Azad, Chief Coordinator for Sustainable Development Goals (SDG) Affairs at the Prime Minister's Office, said at the meeting.

On the other hand, some US$ 85 billion will be required for the power sector up to 2041, secretary of the power division Dr Ahmad Kaikaus told the meeting.

More new power plants will be set up in a couple of months to meet power shortage in the country.

Bangladesh Power Development Board (BPDB) has taken a massive capacity-expansion plan to add about 11,600 mw in next five years to achieve 24,000mw capacity, according to PSMP-2010 by 2021 with an aim to provide electricity to all the people of the country.

The entity started its operation with installed generation capacity of only 200 mw which has now increased to 15,379 mw, according to the official page of the board.

Despite frequent attempts over phone, Nasrul Hamid, MP could not be reached for his comments on the issue.

Additional secretary of the finance ministry Jalal Ahmed, who is the convenor of the committee, also could not be reached over phone.

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