Time to invest in Bangladesh

International investors should look at Bangladesh as a lucrative investment destination as the fast-growing country offers immense growth opportunities, said Toshiro Kudama, chief executive officer of Jera Asia.

“Bangladesh is very promising and stabilised. I think it’s time to come to Bangladesh,” he told The Daily Star in an interview in Dhaka recently.

He was in Dhaka to meet senior officials of Summit Group and see the operations of the company.

Japan’s largest energy company Jera has recently acquired 22 percent stake in Summit Power International (SPI) for $330 million to establish major energy infrastructure, including power generation projects in Bangladesh. The SPI, a Singapore-based unit of Summit Group, is a holding company of all power assets of the Bangladeshi conglomerate.

The largest independent power producer in the country owns and operates power generation facilities that produce approximately 1.8 gigawatts of electricity, representing about 12 percent of Bangladesh’s capacity. Summit LNG Terminal Co Ltd, which has a capacity to supply 500 million cubic feet of gas per day, is a subsidiary of the SPI.

Kudama, a director of the SPI, said Bangladesh is one of the fastest-growing economies. The gross domestic product (GDP) is clocking in at 8 percent and the population is 170 million people.

“Population-wise, it is bigger than Japan. Also, the growth is there. So, why not support the country?”

He said there is stability in Bangladesh. The transportation sector faces difficulties and it is a little bit difficult to move in a smooth manner. Other than that, in 10 years’ time, the country will be like Singapore.

“I promise you -- you’ll become much more. You are changing. We are very happy to be involved in this initial stage of change and we would like to continue to do that. As a Japanese and a Japanese entity Jera, we will like to assist your country.”

In order to emulate Singapore, Bangladesh needs a lot of energy.

“We can contribute to supplying power and LNG (liquefied natural gas) together with Summit Group. The basis is to support Bangladesh.”

Jera is the world’s biggest LNG buyer and has been working in the sector for 50 years with no records of leakages and accidents.

Established about three years ago through a joint venture between two energy giants in Japan: TEPCO Fuel & Power Incorporated and Chubu Electric Power Company, Jera meets half of the domestic demand for the entire of Japan.

November 4, 2019 marks 50 years since LNG was first imported to Japan. Tokyo Electric Power Company (now Jera) and Tokyo Gas Co Ltd, through Mitsubishi Corporation acting as a buyer’s agent, started receiving LNG in 1969 from the Alaska LNG Project with Phillips Petroleum (now ConocoPhillips) as a seller.

Within the power generation portfolio it has domestic investments in 26 power projects with 67 gigawatts of electricity generation capacity and around 10GW of generating capacity overseas, including projects under development.

It has eight LNG terminals and more than 30 international projects in countries such as the US, the Philippines, Taiwan, Vietnam, Indonesia, and Thailand.

“Now we are very pleased to be coming to the Bangladesh market as we are exploring more opportunities,” Kudama said.

Demand for LNG and natural gas is expected to further increase globally, especially in the emerging countries. The role of LNG and natural gas is expected to expand further in the next half century, such as utilisation by LNG fired power plants to compliment power supply fluctuations of renewables which is rapidly growing throughout the world.

Bangladesh, amid fast-depleting natural gas resources and lack of significant discovery, added LNG to its energy mix in April last year.

In May, Summit Corporation and Jera Asia inked the initial agreement to initiate an energy infrastructure project at Matarbari in Cox’s Bazar involving an investment of more than $500 million. An energy hub is being developed in Matarbari.

Kudama said the Matarbari energy hub will bring much more positive change for Bangladesh.

He said Japan was one of the first endorsers of an independent Bangladesh and since then the Japan-Bangladesh relationship has been at a very high level.

“We are working in projects together and we are also assisting the rapid growth of Bangladesh.”

Speaking about Summit Group, he said Summit Group is a very reputable group among the conglomerates.

“I am really impressed to see their dedication to the country. They are strong and are willing to lead Bangladesh to grow. I’m convinced that we can work together for the betterment of Bangladesh.”

“We have lots of know-how and we like to improve much more. We would like to exchange engineers and share views. We would like to learn from Bangladeshi people to know how we can improve better.”

Jera is also interested in injecting money into Summit Group if there is any opportunity.

“If we are requested to invest more in Summit Group, we will inject equity. Summit Power International has a lot of projects in the pipeline and if Summit Group needs more equity, we can give it.”

Summit Group has business interests in areas such as power, energy, port, and telecommunications. Jera stands ready to extend assistance to Summit Group, said Kudama, who oversees the rapidly growing markets of Asia and the Middle East.

He said Jera is involved in renewable energy and renewables have good prospect in Asia and Bangladesh. It has business in the power grid distribution network and can bring the infrastructure to Bangladesh.

Kudama said because of Jera’s involvement in Bangladesh, a lot of Japanese companies would come to invest in the country. If the infrastructure, transportation and other things improve, much more will come.

He said going forward, Jera would become a much more international company.

Jera has acquired 49 percent of Reliance’s 750MW LNG-based combined cycle power project at Meghnaghat, Narayanganj which is under development.

“With Reliance Group, Jera is now finalising financial closures and the next year we’ll do that to commence the construction as soon as possible.”

The SPI is currently constructing power generation facilities with a capacity of about 590 megawatts.

“We should concentrate on these two projects at this moment and help Summit Group grow together,” said Kudama, who has a master’s degree in mechanical engineering from the graduate school of the Tokyo Institute of Technology.