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    Jera Buys into Bangladesh Power Company

Summary

The 22% stake is worth $330mn.

by: Shardul Sharma

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Natural Gas & LNG News, Asia/Oceania, Liquified Natural Gas (LNG), Security of Supply, Gas to Power, Corporate, Mergers & Acquisitions, Import/Export, Investments, News By Country, Bangladesh, Japan

Jera Buys into Bangladesh Power Company

Japan’s Jera has agreed to acquire a 22% in Bangladesh’s power company Summit Power International for $330mn, the companies said in separate statements October 7.

The new investment was made in accordance with the memorandum of understanding on the development of energy infrastructure projects in Bangladesh that was concluded between Jera and Summit Power in May 2019.

“By capitalising on the strong business foundation established through Jera's investment in Summit Power, Bangladesh's largest independent power producer, Jera will strive to explore business opportunities in the country and further expand its earnings base,” the Japanese company said.

International Finance Corp, IFC Emerging Asia Fund, and EMA Power were shareholders of Summit from 2016 until now and will exit through this transaction. However, IFC will continue to be a large lender to Summit, Summit Power said.

Summit is the largest independent power producer in Bangladesh with a generating capacity of 1.94 GW, a 583 MW under construction and more than 3 GW in the pipeline. Summit also owns and operates a floating storage and regasification unit vessel and supplies 500mn ft3/day of re-gasified LNG to Bangladesh. Summit had earlier received equity investment in FSRU project from Mitsubishi Corporation and for power project from Taiyo Life Insurance. 

Bangladesh is seeing a rapid increase in electricity demand. While gas-based generation accounts for roughly 60% of total generation, domestic natural gas production is starting to decline. The country is, therefore, promoting LNG imports as part of its national energy policy.  

Jera in its statement said because the demand for electricity in Bangladesh is expected to grow rapidly with steady economic growth, it has positioned it as a priority country for investment. Last month, Jera entered into an agreement to acquire a 49% interest in a proposed gas-fired thermal power generation project being developed by India’s Reliance Power in Bangladesh.