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The energy advisor has criticised banks for lending without assessing borrowers' financial capabilities, leaving accounts empty
Published : 30 Nov 2024, 06:21 PM
Power, Energy and Mineral Resources Advisor Fouzul Kabir Khan has alleged that accounts of major corporations like Beximco and S Alam Group are empty even though they borrowed billions of takas.
The banks relied on balance sheets instead of checking if borrowers have enough collateral or financial strength, he said.
The advisor highlighted the alarming financial mismanagement at a seminar titled "Rapid Transition to Renewables: Role of Domestic Financial Institutions", jointly organised by the Economic Reporters' Forum, or ERF, the Centre for Environmental and Participatory Research, or CEPR, and the Coastal Livelihood and Environmental Action Network, or CLEAN.
“Banks have issued loans based on balance sheets, often making decisions at dinner or lunch tables without verifying the capacity of borrowers. This has led to non-performing loans reaching nearly Tk 3 trillion,” said Fouzul.
The energy advisor revealed that Beximco and S Alam Group have borrowed thousands of millions but now lack funds to pay salaries.
"Their financial reports revealed no actual money in the accounts—just numbers on balance sheets, which banks used to approve loans," he said.
Beximco’s employees have taken to the streets demanding overdue wages.
The government had to intervene, providing loans to help settle wages.
The situation at S Alam Group is reportedly similar, with its chairman allegedly fleeing to Singapore after controlling eight private banks during the Awami League government’s tenure.
The fall of the Awami League government on Aug 5, following a mass uprising, has brought to light the plight of several businesses closely linked to the administration.
Former prime minister Sheikh Hasina fled the country, while her private industry and investment advisor Salman F Rahman is currently imprisoned on charges related to a student murder case.
S Alam’s departure to Singapore has been widely reported, with sources indicating he has sent letters to the interim government seeking support to salvage his industrial ventures.
Meanwhile, labour unrest continues at the Beximco Industrial Park, where workers are demanding salaries.
The government has set up a high-level committee comprising advisors from various ministries to investigate the ongoing crisis.
NO POLITICAL TIES NEEDED FOR GOVERNMENT CONTRACTS
Fouzul stressed the importance of transparency in public procurement, saying: “We want to procure all government goods and services through competitive processes. Open tenders will determine who gets the work.
“Knowing a minister, their relatives, or senior officials will no longer be necessary,” he said.
The energy advisor added that the aim is to bring the government closer to the people by eliminating corruption and favouritism.
Criticising the Energy Act 2010, Fouzul alleged it was designed to facilitate corruption.
“This law allowed direct awarding of contracts without tenders, providing immunity to energy sector businessmen, ministers, and bureaucrats. This led to widespread corruption,” he said.
The interim government has repealed this law, reverting to the Bangladesh Public Procurement Authority Act, 2023, under which all tenders will now be conducted transparently.
DRAFTING A NEW POLICY FOR ELECTRICITY PROCUREMENT
The energy advisor announced the abolition of the Independent Power Producer, or IPP, policy that allowed the government to purchase electricity from private power plants.
Under a proposed Merchant Power Policy, or MPP, private power plants will have to find their consumers, although the government may still purchase electricity if required.
“Private plants will be allowed to use the national grid at a rental cost, and they will pay the government for transmission line usage. If necessary, the government will also construct interconnections or transmission lines in industrial zones,” said Fouzul.
The advisor said a draft of the MPP has already been prepared and will be published soon.
However, the government is awaiting a full copy of the High Court's verdict on the IPP policy's repeal before finalising the new policy.
SOLAR PANELS ON GOVERNMENT LAND
Energy advisor Fouzul dismissed concerns over land scarcity hindering renewable energy growth, saying: “Various ministries, especially the railway, possess vast unused land, including hundreds of acres allocated to power plants. This land can be repurposed for renewable energy production.”
The government plans to prepare land for industrial use, allowing businesses to set up factories under a plug-and-play model for quick operational readiness.
Highlighting the renewable energy requirements of the garment sector, Fouzul pointed out that H&M, a key buyer of Bangladeshi garments, has mandated that at least 15 percent of the electricity used in its partner factories come from renewable sources. The United Nations is reportedly set to approve this requirement.
The energy advisor estimated that meeting these demands would require between 2,500 and 7,000 megawatts of renewable energy.
“There is no alternative but to invest in renewable energy,” he said.
Fouzul urged banks to seize the investment opportunities in renewable energy.
“By providing loans against assets, banks can ensure profitability and secure loan repayments,” he remarked.
At the seminar, CPD Research Director Khondaker Golam Moazzem highlighted that bank financing in renewable energy remains minimal.
He proposed large-scale investments through syndicate loans and suggested collaboration with 18 international financing institutions already active in the sector.
