Payment delays put Thakurgaon power plant's foreign IPP in quandary

Foreign owners of the EPV Thakurgaon 115-megawatt power plant rue recurrent payment delays that cause severe financial and operational difficulties to the company.

The independent power producer -- one of numerous ones hired by the past government -- has alleged the payment backlog in a letter as Bangladesh Power Development Board (BPDB) repeatedly failed bill payment in agreed time.

As mentioned, the board has "routinely failed" to make payment in accordance with the 30-day term of payment stipulated in the Power Purchase Agreement, with delays extending up to 165 days.

However, the amount of payment arrears is not mentioned-neither could it be known yet.

"These delays are having a significant impact on EPVTL and threatened its continued ability to operate and generate electricity for the people of Bangladesh," writes Stephen Vineburg, chairman, EMA Power Investment Ltd, the owning company of the power plant, in a letter to the energy adviser of the interim government.

He has sought "immediate action" of the adviser in resolving the delay in settling energy payments payable to the EPVTL.

The independent power producer also sent a copy of the letter to the ministry of finance for necessary action, sources said.

"It is imperative that the outstanding payments are settled immediately and maintained in the future in line with the terms of the PPA," writes Mr Vineburg.

He also has mentioned that as a direct consequence of BPDB's failure to make timely payment, EPVTL was unable to fulfil its payment obligations for importing heavy fuel oil.

This led to substantial foreign-exchange-related losses of US$12 million, further increasing the financial strain on the company.

Additionally, banks have stopped providing working-capital loans, which has severely limited EPVTL's ability to maintain the necessary fuel inventory, eroding its ability to meet the National Load Dispatch Centre (NLDC) demand.

The EPVTL is a fully owned entity of EMA Power Investment Ltd, which is an investment platform established by the Islamic Development Bank Infrastructure Fund II and DL Energy Co Ltd, a subsidiary of Daelim Co Ltd of Korea.

"The debt and equity investments supporting EPVTL are entirely from foreign sources and there is growing concern among international capital providers with these delays under the PPA," the chairman's letter reads.

"Any further delay in payment from BPDB jeopardizes foreign direct investment, local employment and suppliers, the reliability of energy supply and the future of independent power producers in Bangladesh," Mr Vineburg remarks.

Contacted, a BPDB official acknowledged the delay in making payment of the energy bills due to fund constraints. "We are trying to resolve the payment issue with the company."

A finance division official, when contacted, however, did not agree to comment on this issue until getting an update note from the power division in this regard.

syful-islam@outlook.com