Shearman & Sterling advised International Finance Corporation (IFC), along with Singapore-based specialist provider of structured finance solutions, Clifford Capital, and CDC Group plc, the UK government’s development finance institution, as the lenders in connection with the financing of the approximately $412 million, 414MW (gas) / 333MW (fuel oil) greenfield, dual-fuel Sirajganj Independent Power Producer (IPP) power project.
The project, located in the Sirajganj region of Bangladesh, marks the first IPP in recent years to be financed on a limited-recourse basis. This will be the second largest independent power plant in the country and represents the largest foreign direct investment into this sector in recent years.
The debt package is approximately $309 million and is divided among the lenders, as well as the Japan International Cooperation Agency, brought in by IFC. A portion of Clifford Capital’s tranche will be covered by the Multilateral Investment Guarantee Agency. The tenor of the loans is the longest project financing debt tenor to be achieved in Bangladesh.
The project was procured as public-private partnership on a build, own and operate (BOO) basis and is scheduled to commence simple cycle operations in 2018. The BOO project was awarded to Sembcorp Utilities by the Government of Bangladesh in September 2015, the first of its kind with a foreign investor in the power sector in Bangladesh.
SembCorp Utilities will own 71% in the project and the Bangladesh state-owned North West Power Generation Company Ltd. will hold the remaining 29%. Upon completion, the plant will supply power to the grid under a 22.5-year power purchase agreement with the Bangladesh Power Development Board.
The Shearman & Sterling team was led by partner Bill McCormack, with support from associates Jean-Louis Neves Mandelli, Lachlan Clancy and Matthew Mullarkey (all Singapore-Project Development & Finance).