Plans for a 50MW plant in Bangladesh lie on the brink of failure after the builder admitted financing has yet to be secured eight months before the agreed delivery date.
The US$56 million the Mymensingh project was due to raise from financial institutions – a 70% of total project costs of US$80 million – has not been “forthcoming”, Singaporean developer SHS Holdings told shareholders in a note dated on 20 February.
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The document, signed by CEO Han Kok Ng, warns a failure to secure a fresh extension to a construction deadline already pushed to 31 October 2019 would constitute a default under the PPA and implementation agreements.
This, SHS adds, could result in the Bangladesh Power Development Board (BPDB) terminating both documents. According to the firm’s estimates, such a scenario would see it recoup only US$3 million to US$8 million of the US$21.7 million it has already invested in the Mymensingh project.
Founded in 1971, Singapore-listed SHS Holdings expanded to solar in 2016, going on to sign in April 2017 a 20-year PPA with the BPDB for the 50MW plant; at the time, it was billed as the largest solar project in Bangladeshi history.
Construction by the firm’s HDFC SinPower subsidiary was initially due to begin in 2017, with plans to start supplying power to the BPDB by early 2018.
Last December, the Bangladeshi Ministry of Power granted an extension from April to October this year in return for US$2,500 in daily compensation until the project was delivered. As SHS admitted this week, meeting the postponed deadline would require construction to begin no later than this February.
Despite the fallout with the Bangladeshi project, the remaining assets in SHS’ solar portfolio – rooftop and ground-mounted PV through the Sinenergy Holdings subsidiary, plus a 300MW plant in the works in Vietnam – appear to be faring well.
The firm’s latest available performance figures, corresponding to Q3 2018, showed solar operations were among the key drivers a 118% year-on-year jump in the group’s overall profits. “The momentum of securing new orders for rooftop solar projects in Singapore has gained pace,” said SHS as its solar division posted revenue and profit rises compared to Q3 2017.
In Bangladesh, the setback for a high-profile PV project comes hours after an even larger one saw the light. This week, BPDB chair Khaled Mahmud signed a deal with a member of the United Arab Emirates royal family for the development of a 100MW plant in Bangladesh.
See here to read the shareholder note in full