BB clears $3.2m LC disbursement
Bangladesh Bank has approved the disbursement of nearly $3.2 million against a letter of credit (LC) for SS Power-1 Limited, a power company owned by the controversial S Alam Group, despite the group’s outstanding loans running into thousands of crores of taka.
The central bank’s Banking Regulation and Policy Department-2 issued a notification on Wednesday conveying the approval, which has been sent to all banks in the country.
The move follows an earlier decision last Sunday granting the company permission to open the LC in the first place.
According to the notification, the approval covers the disbursement of the remaining $3,197,561 from a foreign currency syndicated loan sanctioned by Rupali Bank in favour of SS Power-1, along with permission to open a fresh letter of credit.
The notification, signed by Bangladesh Bank Deputy Governor Md Kabir Ahammed, states that the disbursement and LC opening have been approved under the powers granted by Section 121 of the Bank Company Act, 1991, and that the restrictions under Section 27Kaka(3) of the Act will not apply in this case.
However, the central bank has attached a key condition: Bangladesh Bank will bear no liability arising from this loan facility, and Rupali Bank will not be able to claim any financial assistance from Bangladesh Bank on this account in the future.
Why the exception was made
Bangladesh Bank officials said the plant is currently operational and supplying electricity to the national grid, and that a shortage of raw materials could halt power generation altogether.
In the interest of keeping production running, SS Power-1 was allowed to open the LC despite being a loan defaulter – a concession officials said has previously been extended to other companies on employment and production grounds.
About the power plant
The 1,320-megawatt coal-fired power plant was built in the Gandamara area of Banshkhali, Chattogram, as a joint venture between S Alam Group and two Chinese firms.
The plant has two units with a generation capacity of 660 megawatts each, and has been commercially supplying power to the national grid since September 2023.
Sources familiar with the matter said S Alam Group holds a 70 percent stake in SS Power-1, while the remaining 30 percent is held by China’s SEPCO III and HTG Development Group.
A wider pattern of exceptions
Bangladesh Bank data show that loans taken out by various S Alam Group entities, under their own and other names, exceed Tk 225,000 crore, a large portion of which are classified as defaulted.
Under normal banking rules, defaulting companies are barred from receiving fresh loan facilities or LCs from banks. Officials said, however, that such exceptions are being made in view of the broader circumstances surrounding the group’s operations.
S Alam Group has faced sustained scrutiny in recent years over allegations of using its extensive banking-sector influence to secure loans through nominee and shell entities, with regulators and banks under pressure to balance recovery efforts against the risk of disrupting an operational power plant that feeds directly into the national grid.
