Banks issued loans to Beximco, South Alam without checking assets: Energy Advisor

Fuzul advised banks to approve loans based on the assets of a company or individual

TVS report

November 30, 2024, 15:25

Last modified: November 30, 2024 4:17 pm

Energy Advisor Dr Muhammad Fuzul Kabir Khan spoke at a seminar titled ‘Role of Smart Grid in the Future Energy Grid’ at the United International University (UIU) in the city on Saturday (November 9). Photo: UNB

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Energy Advisor Dr Muhammad Fuzul Kabir Khan spoke at a seminar titled ‘Role of Smart Grid in the Future Energy Grid’ at the United International University (UIU) in the city on Saturday (November 9). Photo: UNB

In the past, banks gave loans to Beximco Group and S Alam Group only on the basis of their balance sheets without checking the assets of the two conglomerates, Energy, Power and Mineral Resources Advisor Muhammad Fuzul Kabir Khan said today (Nov 30).

“Before approving a loan, banks usually check the company’s balance sheet rather than analyze the assets. Such decisions are also made during lunches and dinners,” he said.

Following this system, “the banks did not examine the assets of Beximco and S Alam, but only checked their balance sheets before approving loans. That is why there is no money in the bank accounts of both groups now. They are all empty,” the adviser added. .

He made the remarks while speaking at a seminar titled “Rapid Transition to Renewable Energy: Role of Domestic Financial Institutions” organized by the Economic Reporters Forum (ERF) in Dhaka.

Fuzul said that ordinary entrepreneurs cannot attend such lunches or dinners as entrepreneurs in the renewable energy sector do. “As a result, ordinary entrepreneurs have a hard time getting loans.”

He advised banks to approve loans based on the assets of a company or individual.

During the 15-year rule of the now-ousted Awami League, the Beximco group and its associated companies received loans totaling TRY 36,865 crore from seven banks in the country.

During the same period, S Alam Group and its associated companies raised Tk 95,331 crore from six banks between 2017 and June 2024, with 79% of the amount coming from Islami Bank.

Stating that a new policy for the renewable energy sector is being developed, the adviser said the interim government will provide land and related facilities for projects in the sector.

“Entrepreneurs will just plug and play. Efforts are being made to utilize unused land of railways, highways and other government agencies for the renewable energy sector,” he said.

However, import duty on equipment used in this sector will not be reduced to create a backward linkage industry at the local level, he added.

“The government is moving away from the IPP policy and creating a commercial energy policy under which power producers will find their customers. The government will no longer be the only consumer and producers will be able to use government distribution and transmission lines. by paying fees,” Fuzul said.

He also said that the government will only buy 10% to 20% of power from new power plants that are under development and this will reduce the pressure on the government to pay power bills.

“The lack of competition in government procurement is a serious problem for the country’s economy. That is why we have decided to make everything public so that no one needs to know the relatives of any minister or secretary to do business with the government,” the energy adviser said.

Urging the government to make it easier to finance the renewable energy sector, Khondaker Center for Policy Dialogue Research director Golam Moazzem said: “To facilitate financing in this sector, 18 types of instruments are being used around the world. In Bangladesh, only non-concessional loans are issued. Financial instruments must be increased and the path for foreign investment must be made easier.”

Center for Environment and Participatory Research Chairman Guranga Nandi gave a keynote address at the workshop in which he proposed the creation of a special fund to facilitate the financing and sale of additional energy by individual generators to the government.

The event was moderated by ERF Secretary General Abul Kashem and chaired by ERF President Refayet Ullah Mirdha.