Overcoming the energy problem Bangladesh govt is just serious on reality and execution .A government committee has recommended creation of Bangladesh Energy and Power Investment Fund in an effort to fix the shortage of finance in the power and energy sector.

The government is expected to provide Tk 1,500 crore in initial capital for the project.

A company will be set up to manage the fund, technically known as an infrastructure private equity fund.

In its report submitted to the power and energy ministry last month, the committee said the government can form the fund of Tk 1,500 crore-Tk 2,500 crore under public-private partnership.

The committee put forward a draft of the terms and conditions of the proposed company.

The government will have a 51 percent share of the fund, while the private sector will own the rest.

The 12-member committee headed by Deputy Governor of Bangladesh Bank Ziaul Hassan Siddiqui was formed in October 2009.

The fund will invest in power, energy, hydrocarbon, solar and wind power, biomass and biogas, energy-efficient products, LNG (liquefied natural gas) terminal, and recycling waste into products.

Both public and private entities can be financed under the project. This is not a subsidy fund but a commercially focused one with an appetite for long-term returns, the report says.

The government will appoint a professional fund manager from the private sector to run the fund.

An ‘investment committee’ composed of five members will be nominated by the fund manager.

The company to manage the fund may invest in listed or non-listed issuers or new projects with sponsors who have established operating track record and positive cash flow and projects sponsored by such type of entities.

The company will generally hold minority positions in the equity or debt profile of an issuer.

The tenure of the company will be 12-14 years and after that it will be liquidated, according to the report. The projects to be financed by the company will be commercially viable and the profit accruing from it will return to the fund and the profit will be distributed as per stake of the shareholders.

Power and energy ministry officials said a meeting has already been held with the finance minister over the formation of the fund.

The finance minister has asked the officials concerned to work out any possible problems, they said.

The minister has also called for such funds for other sectors, the power ministry officials added.

Power Division officials said initially the government will create the fund with Tk 1,500 crore but ultimately its size would go up. Bonds may be sold to the expatriates and released in the stockmarket for raising the fund.

They said the government considers a provision for whitening black money for making investment in the company.

According to the report, the government needs investment of about Tk 66,000 crore or $9.5 billion in the next five years for generation, transmission and distribution of power.
The government will issue bonds and debt instruments to local and foreign investors in a bid to raise a fund for financing projects including those of power and infrastructure.

The finance ministry yesterday issued a circular about creation of the Bangladesh Infrastructure Finance Fund (BIFF).

The circular said: “The BIFF will attract investment from local and foreign investors through internationally practised financing options such as bonds, debt instruments and equity offering. It will also invest in different companies that are implementing projects in Bangladesh’s infrastructure sector.”

Finance ministry officials said, of the Tk 2,100 crore kept for public-private partnership (PPP) projects in the revised budget of the current fiscal year, Tk 1,600 crore will go to the fund as its initial capital.

This is the first-ever allocation to be used for PPP projects.

The fund will soon be registered as a company

The government has declared its vision for power sector to free the country from load shedding beyond 2010 and make electricity available for all by 2020, the report said.

The government has set a target to generate 7,000 megawatts of electricity by 2013 and 20,000 megawatts by 2021

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