MIGA backs 220MW power plant in Bangladesh

The World Bank affiliate will provide Sirajganj 2 with a guarantee of about $70m for up to 15 years.

The Multilateral Investment Guarantee Agency (MIGA), the World Bank’s political risk insurance and credit enhancement arm, has backed two loans to build a state-owned power plant in Bangladesh.

The financing is being provided by Standard Chartered and Siemens. MIGA’s $68.9 million guarantee, which runs until 2030, covers against the risk of sovereign default on payments.

It is intended to support the construction and operation of Sirajganj 2, a 220-megawatt (MW), dual-fuel combined cycle power plant located on the west bank of the Jamuna River.

The plant will use natural gas as its main fuel, MIGA said, with high-speed diesel serving as a secondary energy source.

“MIGA's involvement has been crucial for this project to move forward, as insurance in the private market was unavailable and bilateral export-credit agencies were not able to increase their participation,” the agency said in a statement.

Sirajganj 2 is the second MIGA-supported power project in the country. The organisation backed the Ashuganj South 450MW power plant with a guarantee of $251 million in January 2013.

Earlier this week, the agency teamed up with the International Finance Corporation (IFC) to provide $2.2 billion in debt and guarantees to Oyu Tolgoi, as part of a $4.4 billion project finance package raised to develop the gigantic Mongolian mine.

IFC is offering a total loan facility of $1.22 billion for the project, including syndicated debt from 13 mostly commercial banks. MIGA is providing a guarantee of up to $1 billion to the same group of lenders.