Dhaka, Bangladesh (BBN)- The government is going to create first ever fund for energy sector to encourage public-private partnership (PPP) projects with an option to raise money from the capital market amid growing power outage and demand.
It will be a general pool of fund operated under a company and it will be used in PPP projects on equity or debt basis, officials said, adding that the projects can also have the option to raise fund from the stock market to gather necessary funding.
The government would create the fund to encourage the private sector to come forward with new energy-related projects.
A committee, which was assigned to find out a way to raise funds for the power sector, submitted its report to the government recently. Deputy Governor of Bangladesh Bank Ziaul Hasan Siddiqui headed the committee.
Initially, the government would provide BDT 15 billion as seed money for the fund and BDT 10 billion will be raised from non-resident Bangladeshis and other investors, Securities and Exchange Commission (SEC) Member Mohammed Yeasin Ali told the Financial Express, a local newspaper.
Mr. Ali, also a member of the committee, said the fund will be a ‘patient capital’ which means the return from the investment will be long-term in nature but with commercially viable profit.
The committee proposed that the fund will be a limited company for long-term capital appreciation and it will only consider those projects which have over 15 per cent internal rate of return (IRR), the report said.
The government’s seed money of BDT 15 billion can be channelised from the BDT 25 billion PPP fund earmarked in the current budget, it added.
BBN/SS/SI/AD-10March10-9:46 am (BST)