With the fast-growing economy of Bangladesh, the demand for energy in the country is also increasing gradually, creating opportunities for the foreign investors to come here. A leading engineering conglomerate of Sri Lanka, LTL Holdings (PVT), came to Bangladesh in 2010 as an EPC (Engineering, Procurement & Construction) contractor of a local power generation company. A specialist in the power sector, the Sri Lankan company by now created a strong footing in the power sector of Bangladesh and eyeing expanding its investment not only in the power sector, but also across all the segments of the energy sector.
Nuhuman Marikkar, Managing Director of Raj Lanka Power Company Limited and Deputy Chief Executive Officer of LTL Holdings, spoke about the company’s venture into Bangladesh in an exclusive interview with Energy & Power reporter Mohiuddin Miah.
LTL Holdings (PVT) is a major player in the power generation sector in Sri Lanka. Now the business is diversified and about to spread to Asian and African region. So, what is the present status of your company?
Well, we started our business in 1982 as a transformer manufacturer. After that in 1996 we gradually moved into the business of Independent Power Producer (IPP) which was the first initiative of IPP business among the SAARC member countries. Once the company started to grow locally, we thought to extend our business outside of Sri Lanka. Primarily we moved to Africa and successfully operating transmission and distribution businesses in Uganda, Kenya, Tanzania and Ethiopia. Besides, we are exporting transformers almost in 25 countries including India, Pakistan, Middle East and Africa regions from Sri Lanka.
Which state of affairs encouraged you to come to Bangladesh and invest in the power sector?
We have identified potentials in Bangladesh early. The country was growing faster during the last decade and the demand for electricity is increasing rapidly. The economic fundamentals and indicators are impressive. The average cost of labor and other related costs are comparatively cheaper in Bangladesh. When we entered into the power sector of Bangladesh, the electrification rate of the country was low as compared to other countries in South Asia.
So, we thought it would be a good opportunity for us to come and invest here. We decided to engage in the power sector and started the journey in 2010 as an EPC (Engineering, Procurement & Construction) contractor. Our first project was with Orion Group which is to provide EPC facility for two 100 MW power plants.
we studied the master plan of the government of Bangladesh and did a correct decision to invest in Bangladesh. The support we got from Bangladesh Power Development Board (BPDB), Ministry of Power, Energy and Mineral Resources (MPEMR), Board of Investment, Bangladesh Bank, Financial Institutions, and other regulatory bodies was commendable. The final result was the continuous expansion of our business in Bangladesh.
What are your views about the present market of power sector in Bangladesh and how do you evaluate the investment situation in Bangladesh for companies like yours?
In Bangladesh, the investment opportunity is very high and the market is more reliable and stable comparing to the past. The authorities like Bangladesh Bank, Customs, Financial Institutions and other regulatory bodies also understood that the foreign investment should get more facilities and they are providing desired support to the investors. I think, if the regulations are little bit more relaxed, the environment would be more investment friendly in future.
Moreover, the Bangladeshi government has permitted the power plant operators to import their own fuel, which is a very good sign. In other countries, even in Sri Lanka, it is highly regulated by the government. Therefore, your government has taken a very good decision to liberalize the fuel import, otherwise we have to depend only on Bangladesh Petroleum Corporation or Petrobangla.
Another important thing, which is noticeable, is skilled human resources are being developed in the recent years. When we first came here, we had to bring the engineers and experts from Sri Lanka, which was costly. Now, we are running our operations in Bangladesh through the local experts. We appointed the fresh graduates and finally found that they are committed to their responsibilities.
How many projects are you operating in Bangladesh?
As you know, we started our entry into Bangladesh as an EPC contractor in 2010 to build two power plants of 100MW each for Orion Group. We did our contract work within the given time frame and budget by meeting all quality standards. With those two contracts, we learnt the Bangladesh power sector well and had participated two international tenders in 2011 to construct two power plants of 52.2 MW each in Natore and Cumilla. We won the contracts as the most competitive bidder.
We have constructed those two power plants within the projected time in 2014, amid many difficulties such as hartals and work stoppages, and commissioned successfully.
In 2017, we again won an international tender floated by the BPDB to set up 114MW HFO-fired power plant in Feni and now we are in the process of implementing the project after signing the Power Purchase Agreement (PPA) and Implementation Agreement (IA).
In addition, we were able to sign five EPC contracts to build four power plants with total a capacity of 437 MW with two reputed power companies in Bangladesh. This is a clear example of confidence placed by major power companies in Bangladesh on LTL Holdings as a professional power plant builder and operator in the region.
You have two Heavy Fuel Oil (HFO) based power plant operating in Bangladesh. Do you have any plan to go for other fuel-based plants like LNG, gas or coal?
Well, in Sri Lanka we have several renewable mini power plants, which are anything less than 10 MW. We have potentials in solar, hydro and little bit wind. In Bangladesh, we would like to go into mainly in solar and wind. We submitted a proposal to the government to establish a 15 MW solar plant in Trishal, Mymensingh.
Recently, we won a 350 MW gas-fired plant in Sri Lanka and we would like to have this kind of project here in Bangladesh. We are looking for LPG-based and gas-based options, because these kinds of plants have higher capacity than the HFO-based plants. If you are planning to establish small plants with capacities like 50 MW, 100 MW or 150 MW, the ideal fuel would be HFO. But, if you want higher capacities like 300 MW, 350 MW or more, the fuel should be gas or LPG or LNG.
Do you have any plan to collaborate with the local investors for investing in various projects?
Yes. Even in our first power plant company, Raj Lanka Power Company Ltd (RLPCL), is a joint venture with A & A Fashion Sweater Ltd, Bangladesh and its Managing Director Md Abdul Wadud Dara, MP is a Director of RLPCL.
We focus on strategic and win-win partnerships with Bangladeshi entrepreneurs and companies who could add value to our investment and share with us for long term business relationships.
The government is concerned in Public Private Partnership (PPP) formation for investments. Do you have any interest or plan to invest in this kind of formation?
Of course, we value that PPP model is the best-suited investment mechanism for infrastructure investments in developing countries. We are keenly exploring opportunities which will match our corporate goals and plans. No sooner than we find such opportunities, we will definitely invest.
You built two HFO-based power plants in Natore and Cumilla. How much did you invested on those projects and what was the investment source?
Our total investment for both these projects is US$ 100 million approximately. Our power generation arm, Lakdhanavi Ltd, Sri Lanka owns the majority of the equity. We raised funding from local and international lending institutions on project finance basis. Now, we are operating the power plants by meeting the interests of all stakeholders.
What are the future projects of your company in the power sector of Bangladesh?
We see that Bangladesh power sector offers us many opportunities, especially, the building of power plants on Build, Own and Operate (BOO) basis, EPC contracts, construction of power transmission & distribution lines, sub stations etc. Also, we learned the organization and management culture in Bangladesh. We developed very good rapport with the government officials, regulators, financiers and other stakeholders. Now, we are ready for our next leap forward -- diversifying our business in the power sector.
However, our business is more or less as IPP and EPC player. We also interested to invest in the energy market. Coal, LNG and LPG business are opening up here in Bangladesh. So, as a company, we are thinking about moving into the energy market.
What supports do you need from the government side to sustain efficiently in the power sector?
In fine, reduce some bureaucracy from the system. Of course, they all are supporting you. However, I think, the system could be more efficient if it is possible to lessen some bureaucracy from the structure.