The government is set to issue a Tk 120 billion sovereign bond to settle outstanding electricity bills owed to independent power producers (IPPs). The bond will be issued to 42 commercial banks, with an anticipated interest rate of 7.5% and maturity ranging from 7 to 9 years.
The move addresses the government’s significant debt to IPPs, reaching Tk 230 billion as of October. The Bangladesh Power Development Board relies on subsidies from the Ministry of Finance to bridge payment gaps due to selling power at subsidized rates. The subsidy, which was over Tk 40 billion per month in 2022, has reduced to approximately Tk 30 billion. The government has paid Tk 1.04 trillion to IPPs and rental power plants in the last 15 years, with Meghna Power Limited and Aggreko International Projects among the top recipients.