Withdrawal of funds from debt-service reserve account for instalment payment against a loan for a state-owned power plant has created concerns among its multiple foreign financiers, officials said.
They raised a number of questions to learn the current and future liquidity position of the Ashuganj Power Station Company Ltd (APSCL) and the Bangladesh Power Development Board (BPDB) following their failure to arrange requisite funds for payment.
In recent months, repayment of many foreign loans, particularly taken by power-sector companies, faced repeated delays due to scarcity of required foreign currency.
The APSCL has a sovereign guarantee-backed loan worth US$420 million provided by nine international lending banks, three European ECAs, and MIGA.
The corresponding bank in a recent letter to the APSCL, power division, finance division and the central bank wrote that an instalment payment worth $23.6 million was due on June 20. However, on the day, some $12.7 million was short for the instalment payment and so was fulfilled by adjusting the funds from available USD Debt Service Reserve account.
"Kindly note, this withdrawal from Debt Service Reserve account has triggered significant concerns among all the nine international lending banks, three European ECAs, and MIGA, and raised multiple queries to understand the current and future liquidity position of Ashuganj, and BPDB…" the letter reads.
The loan is backed by a sovereign guarantee issued by the ministry of finance, and also covered under currency-repatriation undertaking, mentions the letter sent by HSBC Bangladesh.
The communication further says the withdrawal from the USD Debt Service Reserve account, which is a security fund maintained as per loan agreement, was "exceptionally" approved by lenders and ECAs and MIGA under a number of conditions.
They include immediate recoup of USD Debt Service Reserve account which is now short of approximately $12 million and regularisation of upcoming monthly debt-service accrual top-up funding.
The HSBC Bangladesh management requested the APSCL to arrange $12 million by July 10 to recoup the Debt Service Reserve account.
APSCL officials could not be reached for a comment whether they could arrange the fund or not.
Contacted Tuesday, Naushad Ekramullah, Country Head of International, HSBC Bangladesh, declined to disclose information about any particular customer.
"We have limitations," he said, adding: "These limitations are not set by the bank, also by the central bank."
