(EnergyAsia, September 29 2015, Tuesday) — Singapore’s Sembcorp Industries said a subsidiary will lead a joint venture firm to build a 426MW plant in Bangladesh valued at US$390 million.

The Bangladesh government awarded the build-own-operate contract to Sembcorp Utilities to develop the project in the Sirajganj district by 2018. To be fuelled primarily by natural gas, with high speed diesel as backup fuel, the combined cycle plant will supply power to the grid under a 22.5-year power purchase agreement with the Bangladesh Power Development Board (BPDB).

Sembcorp will own a 71% stake in the project while North-West Power Generation Company, a subsidiary power generation company of the BPDB, will hold the remaining 29%.

A joint venture company, Sembcorp Sirajganj Power Company, will be incorporated in Bangladesh to undertake the project.

“With Sembcorp’s track record in developing greenfield projects in emerging markets, we are confident of delivering this project successfully and look forward to working closely with our partner, North-West Power Generation Company. Bangladesh offers strong growth potential and we see the opportunity for us to further grow our utilities and other businesses in the country,” said Tang Kin Fei, Sembcorp’s Group President and CEO.

“This is the first public-private partnership project with a foreign investor in the power sector in Bangladesh. Sembcorp brings with it proven capabilities in developing, owning and operating energy facilities globally,” said A.M. Khurshedul Alam, managing director of North-West Power Generation Company.

Bangladesh’s power demand is growing rapidly to support its economy which is expected to expand by six percent year through 2030.

According to Sembcorp, Dhaka plans to add about 10 gigawatts of capacity over the next decade, opening up plenty of opportunities for the company.

According to Sembcorp, the project will be funded through a mix of limited recourse project financing and equity, with financial closure by next year. Lenders will include multilateral agencies and commercial banks.

Sembcorp said its equity investment of approximately US$68 million will be financed by internal funds and borrowings.