The government has made plans to raise USD 1 billion for mega power projects by issuing bonds of power companies on Singapore’s stock market in the near future. Talking to journalists on the sidelines of a seminar yesterday, state minister for power, energy and mineral resources, Nasrul Hamid, said, “Such an entry into a global stock market will not only enhance the transparency and accountability of the companies, but also create a ‘branding’ of Bangladesh.”
It will also provide an opportunity to expatriate Bangladeshis to invest in a reliable global market, he added.
The seminar, titled ‘Listing Process of Debt Instruments in Singapore’, was jointly organised by the Bangladesh Energy and Power Research Council (BEPRC) and the Dhaka Stock Exchange (DSE) at Bidyut Bhaban yesterday.
When the reporters asked Hamid as to why foreign investors would evince interest in buying the bonds of Bangladeshi power companies, since progress in some of the on-going mega power projects is very slow, the state minister replied: “If we want to go to a global market, we need to disclose all information.”
“The more transparent we become, the less the corruption there will be. The companies will have to be transparent about disclosing their information. Also, in that way, it will enhance their efficiency and accountability, and when the companies increase these, investors will be interested,” he said.
The state minister also said Bangladesh now has a better rating than other countries. “I think it is the best chance to enter a global market. We can brand our market as a secure market for investment,” he added. “For long, we have been very traditional. Now we need to think out of the box,” he said.
“If we think out of the box, we can even create a financial product out of bill collections. Two companies— Dhaka Power Distribution Company Limited (DPDC) and Dhaka Electric Supply Company Ltd (DESCO)—collect Tk 1,000 crore every month. If they can make that money a product and invest in the stock market, then it would increase the capital immensely,” he noted.
“BPDB has an asset value of not less than Tk 20,000 crore. Just think how much capital could be raised if they go to the market,” he said.
“Our problem is that we can’t think out of the box. Also, we don’t have the right people at the right places. If you put a person specialising in audit into business development, then that person would never think of expanding the business,” he added.
Speaking on the occasion, BEPRC chairman Dr Ahmed Kaikaus said, “We have roughly estimated that by 2040, we will need USD 35 billion in the power sector. Raising that amount through a government mechanism is not possible.”
“Again, if we want to get that money from development partners, we have to go through stringent terms and conditions. Also, if we wish to have big investment, I think banks are not a very good solution in the long run,” he added.
“We have to seek alternative financing. We have successfully implemented Export Credit Agency (ECA) financing. Now we need to know more about the bond process. This is an Asian market. So we prefer Singapore because it is close to our home and, in terms of bonds, the Singapore market is one of the best,” he said. Presenting the keynote paper at the seminar, Farhana Siddiqui, director (corporate and finance) of Drew & Napier LLC, a leading law firm of Singapore, said listing in Singapore is easier than other markets.
She also said Bangladesh is always a good country to invest in. “Every day I get four to five requests as to whether Bangladesh is going to issue any sovereign bond request,” she said. “I think the market is ready for Bangladesh-backed bonds,” she added.
She further said Singapore will be a better option for Bangladesh as it is within Bangladesh’s geographical proximity and time zone. “The problem with being listed with London and New York stock exchanges relates to the timing and trading hours. Here, in Singapore, there is no such problem,” she added. Noting that Singapore is one of the largest foreign currency exchange centres in Asia, Farhana said the issuers can efficiently convert their funds raised into their preferred funding currencies.
