Project Finance

by Tahmidur Remura Wahid | Sep 4, 2025 | Uncategorized | 0 comments

Project Finance in Bangladesh (2025): A Complete, Practitioner-Level Guide for Sponsors, Lenders, and Foreign Investors

By Tahmidur Remura Wahid (TRW) Law Firm — Dhaka • Dubai • London

1) Why Bangladesh, Why Now?

Bangladesh is entering its infrastructure decade. Power generation, transmission and distribution, roads and bridges, metro and BRT corridors, industrial and economic zones, ports and container terminals, water & waste, telecom/data centers, and social infrastructure are all scaling. The policy machinery for public-private partnerships (PPP) has matured; debt capacity is building across local banks, DFIs and ECAs; and sponsors increasingly structure bankable, non-recourse financings with robust security and step-in mechanics. The Bangladesh Public-Private Partnership Act, 2015 (the “PPP Act”) created a coherent institutional gateway and procurement framework, and the PPP Authority (PPPA) continues to publish guidelines (procurement, unsolicited proposals, VGF) that international lenders recognize in diligence.

At the same time, Bangladesh is a foreign-exchange controlled jurisdiction. All cross-border funding, hedging, security, and cash repatriation questions must be structured to pass Bangladesh Bank’s Guidelines for Foreign Exchange Transactions (GFET 2018, as updated), and to align with practical banking norms on the ground.

This guide distills how we at TRW structure bankable project financings in Bangladesh, and how we align with London (LMA-style) and Dubai (DIFC/UAE) market practice so that global credit committees can green-light Bangladesh risk with confidence.

2) Bangladesh’s Project Finance Architecture — The Laws & Institutions That Matter

Core PPP/Project Laws & Institutions

PPP Act 2015: Establishes the legal backbone, PPPA’s mandate, and the project lifecycle (screening → approval → procurement → contract management). The Procurement Guideline for PPP Projects (2018) and Guidelines for Unsolicited Proposals (2018) operationalize process and timelines; VGF rules address viability.
Sector Regulators: For energy and utilities, tariff/standards oversight sits with Bangladesh Energy Regulatory Commission (BERC); power off-take commonly runs through BPDB/DPDC/DESCO with Implementation Agreements (IAs) and PPAs forming the backbone of bankable revenue streams.
FX & Banking: Bangladesh Bank (BB) administers the GFET (2018; updated circulars), governs foreign loans, hedging, guarantees, securities flows, and repatriations (dividends/interest). Recent circulars and portals streamline profit/dividend repatriation, yet approvals, document completeness, and correct banking channels remain critical.
ESG: BB’s Environmental & Social Risk Management (ESRM) Guidelines (2022) require banks/FIs to integrate E\&S risk in credit approval; DFIs overlay IFC-like standards. This shapes E\&S deliverables (ESIA, RAPs, community engagement) and loan covenants.

Security, Perfection & Enforcement

Security Creation: Immovable mortgages (Transfer of Property Act 1882 + Registration Act 1908), movable security and assignments (including new secure-transactions reforms aimed at movables), share pledges, account charges, receivables/insurances assignments, and direct agreements with step-in rights.
Perfection/Registration:
Mortgages and certain instruments require registration with the local Sub-Registrar under the Registration Act 1908 (with specific fees and stamp requirements).
Corporate charges must be filed at the RJSC (Form XVIII for creation, Form XIX for modification, Form XXVIII for satisfaction) within statutory timelines (commonly 21 days).
Foreign Lenders & Enforcement: Foreign lenders typically appoint a Bangladeshi scheduled bank as security agent so enforcement proceeds through the Money Loan Court Act, 2003 (Artha Rin Adalat) for speed and practicality; foreign lenders themselves face constraints (e.g., they cannot hold title to land upon foreclosure; proceeds are realized via sale and repatriated).

Dispute Resolution: Arbitration Wins Over Judgments

Bangladesh is a New York Convention state; foreign arbitral awards are enforceable under the Arbitration Act. In contrast, foreign court judgments require navigating reciprocity and CPC formalities—time-consuming and uncertain. For bankability, international arbitration (e.g., LCIA/SIAC) seated in a neutral venue is standard, with onshore submissions for specific local-law security and land issues.

3) Typical Deal Anatomy — From Term Sheet to First Draw

i) SPV & Capital Stack

Project SPV (Bangladesh-incorporated), ring-fenced, with sponsor equity and quasi-equity/mezz; senior debt from a mix of local banks/NBFIs, DFIs/MDBs (IDCOL/BIFFL plus multilaterals), ECAs, and at times sukuk/green bonds. IDCOL (for renewables/infra) and BIFFL (public sector infra) remain key long-tenor lenders/investors.
Syndication/Club: Bangladesh banks often club into senior facilities; cross-border tranche is aligned on LMA-style documentation for international participants. London teams will benchmark to LMA precedents (terms, CPs, covenants, ICAs), which we adapt to local enforceability and stamping realities.

ii) Key Project Contracts

Revenue Contract: PPA/Concession/Availability-based O\&M; tariff regime must be stable (regulatory clarity, indexation/escalation).
Construction: EPC with performance LDs, tested completion regime, wrap or multi-package with robust interface risk management.
O\&M: SLA with KPIs, termination mechanics, replacements upon step-in.
Land: Leasehold/ownership diligence, right-of-way, utility interconnections, environmental permits.

For large utility projects, a Government Support/Implementation Agreement often addresses currency convertibility, change-in-law, political force majeure, and step-in—central to bankability and credit ratings.

iii) Security Package

Immovables: Registered mortgage over leasehold/freehold, with fixed charge.
Movables & Contracts: Hypothecation/assignment of plant, receivables, insurances, material contracts (including PPA/EPC/O\&M—subject to counterparty consents).
Shares: Pledge of SPV shares with power of attorney and blank transfers.
Accounts: Waterfall and blocked accounts (RA/DSRA/Major Maintenance/Insurance Proceeds/Retentions), with control agreements.
Direct Agreements: Lenders’ cure periods, step-in, novation rights.

iv) Local Perfection & Cross-Border Overlay

RJSC filings (Form XVIII/XIX/XXVIII), Sub-Registrar registrations, and stamping; security agent arrangements to Artha Rin standards; foreign lenders’ interests routed through the security agent to avoid title obstacles at enforcement.

4) Foreign Currency, Repatriation, and Hedging — What Global Credit Committees Ask First

A. Foreign Loan Approvals & Debt-to-Equity

Private-sector foreign loans to Bangladesh SPVs require approvals/clearances under GFET and often BIDA vetting (including debt-to-equity ratios by sector; e.g., power projects often accommodated at higher leverage). BB circulars clarify which guarantees require prior approval and which corporate guarantees may proceed once the external loan is approved.

B. Repatriation of Interest, Fees, Dividends

Dividends and interest can be repatriated through Authorized Dealers upon compliance with GFET Chapter 10 and relevant circulars; BB maintains a portal/guidance for profit & dividend repatriation. Documentation quality, tax clearance, and banking channel discipline are critical to avoid delays.

C. FX Convertibility & Hedging

Facilities in USD with onshore revenue in BDT require FX risk analysis; common mitigants include tariff indexation, convertibility undertakings in Implementation Agreements for strategic PPPs, and hedging (where available). BB’s guidance on FX risk management and prudent treasury controls informs loan covenants and CPs.

5) Dubai & London Context — Aligning Documentation and Enforcement

London (LMA) Perspective

Most global banks and funders benchmark LMA risk allocation: positive/negative covenants; completion tests; MAE; representations; Intercreditor Agreements (waterfalls, voting, enforcement standstill, hedging). For Bangladesh, we tailor LMA mechanics to local perfection (RJSC/Sub-Registrar/stamping) and Artha Rin enforcement architecture.

Dubai Perspective (DIFC/UAE Law & Islamic Finance)

For multi-jurisdictional deals, DIFC can serve as governing law or security-filing venue for certain offshore holding-company structures, taking comfort from DIFC’s new Law of Security (2024) modeled on UNCITRAL principles; UAE’s federal Movables Security Law (2020) modernized perfection and enforcement across movables. Sponsors with GCC banks often add Shariah-compliant tranches (Ijara, Istisna-Ijara, Musharaka) alongside conventional debt.

Bridging the Three Systems

Governing Law & Dispute Resolution: English law for finance documents; Bangladesh law for local security; international arbitration (LCIA/SIAC) for disputes; Bangladesh courts for security enforcement formalities.
Security Agent: Recognized onshore security agent (scheduled bank) for Bangladesh assets; offshore security over upstream shares/receivables can be DIFC/English-law governed.

6) Step-by-Step: What We Ask Clients to Prepare

A. Early Feasibility

Detailed feasibility and bank model with sensitivities (demand, tariff, FX, construction inflation, COD slippage).
Land/title pack (khatian chain, mutation, surveys), grid/water/gas interconnects, and E\&S baseline aligned with BB ESRM and DFI standards.

B. Bid/Concession Essentials (PPP or Regulated)

Bankable PPA/concession terms, concession period, termination payments, change-in-law, political force majeure, indexation, and receipt currency.
Implementation/Government Support where applicable (convertibility assurances, step-in, termination payment mechanics).

C. Finance Process

Term sheet (LMA-aligned), agreed risk matrix; parallel tracks for local and foreign tranches; CP/CS lists; KYC/beneficial ownership; sanctions & AML.
Foreign loan approvals pathway (BIDA+BB), account structure (RA/DSRA/Proceeds), and cash waterfall; tax and withholding analysis synced with fund flows.

D. Security & Perfection

Drafts of mortgage deeds, hypothecation/assignment, share pledge, account charge; registrar checklists (RJSC Form XVIII/XIX/XXVIII), stamping schedules; local security agent engagement for Artha Rin pathways.

E. Completion & Operations

COD tests (mechanical/electrical reliability), ramp-up covenants, DSCR/LLCR covenants, O\&M KPIs, consent mechanics for variations and refinancing.

7) Risk Allocation: What Foreign Sponsors & Lenders Must Be Careful About

1) FX, Convertibility, and Payment Timing
Ensure the Implementation Agreement or off-take framework mitigates convertibility/transfer delays and sets a clear payment currency regime. Build DSRA buffers and reserve policies for FX cycles; confirm GFET compliance for interest/dividend remits.

2) Land & Permits Risk
Title fragmentation and survey mismatches are common. Lock land earlier than peers, run double diligence (title + ground truth), and confirm Sub-Registrar capacity for timely registration of mortgages and long leases.

3) Security Enforcement Practicalities
Assume local enforcement via an onshore scheduled bank security agent; foreign lenders should not expect to take title to land—sales are conducted locally and proceeds remitted. Draft remedies and step-in around Artha Rin timelines.

4) Force Majeure, Change-in-Law, and Tariff
BERC frameworks and line-ministry policy updates matter. Hard-wiring change-in-law compensation, indexation, and escrows for arrears improves recoverability profiles.

5) ESG & Community Interface
Bangladesh Bank’s ESRM imposes bank side checks; DFIs will insist on IFC-like compliance (stakeholder engagement, livelihood restoration where relevant). Build this into budget and CPs.

6) Insolvency & Restructuring Pathways
The Bankruptcy Act 1997 and Companies Act 1994 provide liquidation and compromise mechanisms; formal corporate rehabilitation tools are evolving. Intercreditor and standstill mechanics should anticipate local court practice.

7) Withholding Taxes & Treaty Relief
Interest, fees, and services may attract withholding; model net-of-tax flows and assess treaty positions. Align AD bank protocols with GFET for smooth remittance.

8) Funding Sources & Instruments — Building the Capital Stack

Local Banks & NBFIs
Bangladeshi banks provide BDT tranches for construction and working capital, often clubbed; pricing references local base rates. Lenders apply BB ESRM and internal credit rating methodologies.

DFIs/ECAs/Multilaterals
IDCOL and BIFFL are cornerstone institutions for longer tenors; global DFIs/ECAs (ADB/IFC/etc.) crowd in. ECAs support turbine, rail/port, grid and process equipment supply chains.

Islamic Finance / Sukuk
Bangladesh increasingly contemplates asset-based sukuk for brownfield refinancings and capex; for regional syndicates, Ijara/Istisna-Ijara structures sit alongside conventional tranches.

Green & Sustainability-Linked Loans
International standards (GLP/SLLP) can be overlaid with measurable KPIs (emissions intensity, water reuse, safety metrics). London credit committees benchmark to LMA and ELFA guidance for term sheet completeness.

9) Documentation Suite — What Makes a Bangladesh Deal “Bankable”

Finance Documents

Facilities Agreement (multi-tranche; LMA-style bespoke), Common Terms Agreement, Intercreditor Agreement, Security Trust/Agency, Account Control Agreements, Hedging.
Bangladesh law security documents: Mortgage Deed, Deed of Hypothecation, Deed of Assignment (receivables/insurances), Share Pledge, Power of Attorney, Account Charges.
Direct Agreements: with off-taker, EPC, O\&M, key suppliers.
Conditions Precedent: sector permits, land and ROW, E\&S approvals, corporate and foreign loan approvals, perfection evidence (RJSC/sub-registrar), insurance binders, financial model sign-off, fee letters, officer’s certs.

Government/Regulatory

PPP approvals chain; BERC/line ministry permits; BIDA/BB approvals for foreign loans; GFET compliance for cash movements; tax clearances for repatriations.

Governing Law & Disputes

English law for cross-border finance; Bangladesh law for security and land; international arbitration (LCIA/SIAC), with onshore filings limited to perfection/enforcement.

10) Execution Timeline — The Realistic Critical Path

Mandate & Term Sheet (4–8 weeks): Risk matrix, funding plan, role of DFIs/ECAs, preliminary foreign-loan pathfinding (BIDA/BB), and security map.
Bid/Award/Concession (variable): PPP processes under PPPA guidelines; grid/water tie-ins; tariff/availability model.
Diligence & CP Build (8–16+ weeks): Land/title/ROW, permits, E\&S, tax; drafting of all finance and security documents; RJSC/sub-registrar appointment calendars for execution windows.
Foreign Loan Approvals (in parallel): BIDA/BB sequencing, GFET-compliant remittance mechanics, account opening and waterfall testing.
Signing & Perfection: Stamping; RJSC filings; security registration; account controls; drawdown CP fulfillment.
Construction to COD: Testing, COD certificates, ramp-up, and operational covenants.

11) Hard-Learnt Bankability Enhancements (From Our Desks in Dhaka, Dubai & London)

Use a Bangladesh scheduled bank as Security Agent from day one. It streamlines Artha Rin filings and enforcement, while keeping foreign lenders insulated from on-title constraints.
Right-size the FX risk: tie payment currency and indexation in the IA/PPA; pre-build hedging language and waterfall releases matched to GFET.
Register everything correctly and quickly: miss a 21-day RJSC deadline and you can undermine priority; synchronize stamping and registration calendars.
ESG isn’t a formality: BB’s ESRM + DFI covenants will drive cost and schedule—bake them into the base case, do not leave for post-FC closing.
Seat arbitration outside Bangladesh, keep security local: London/Singapore arbitration for disputes; Bangladesh law and courts for perfection/enforcement realities.
Leverage Dubai: GCC liquidity, Islamic windows, and DIFC-law security for upstream/holding structures; UAE movables law enables modern collateral approaches that credit committees recognize.

12) Sector Snapshots

Power (Thermal & Renewables)

PPA/IA precedents are well-trodden; lenders focus on fuel supply risk, dispatch/take-or-pay, curtailment compensation, and convertibility. IDCOL has deep renewables experience (utility solar, rooftop, biomass/biogas), often catalyzing co-lending.

Transport (Roads/Bridges/Rail/Ports)

Availability-based concessions and hybrid annuity models are gaining traction. For ports, link land/berth rights with tariff frameworks and throughput forecasts.

Economic Zones & Logistics

EZ concessions often blend real estate, utilities and industrial services; get land aggregation and utility interconnects de-risked before debt marketing.

Digital (Data Centers/Fiber/Towers)

Currency-mismatch risk is central; wrap long-term offtake (hyperscaler/anchor tenant) and capex flexibility to pass investment-committee thresholds.

13) The Foreign Investor’s Checklist (Bangladesh-Specific)

Corporate & Structuring
Incorporate the SPV, lock shareholder agreements, and file all charges (RJSC) on time.
Consider upstream holding in DIFC/English law for shareholder arrangements and fund flows.
Land & Permits
Secure clean title (khatian chain & mutation), registered long-term lease/mortgage, utility interconnections, and E\&S consents aligned with BB ESRM.
Finance & FX
Map BIDA/BB approvals for foreign loans; model withholding taxes; confirm GFET pathways for interest/dividend repatriation.
Bankability
Government Support/IA for convertibility and change-in-law; robust step-in via Direct Agreements; onshore scheduled bank security agent.
Disputes
International arbitration; local courts for security perfection/enforcement only.

14) How TRW Aligns Dhaka, Dubai, and London for You

From Dhaka, we quarterback land, permits, security, stamping, registrations, and BIDA/BB interactions. From Dubai, we layer Islamic structures and, where helpful, DIFC-law security/holding solutions recognized by GCC lenders. From London, we align to LMA standards, run intercreditor and DFI/ECA interfaces, and calibrate dispute resolution to your funders’ preferences.

For background on setting up the Bangladesh SPV itself, see our internal resource on Company Formation in Bangladesh (TRW site).
👉 Internal link: Company Formation in Bangladesh — step-by-step incorporation, directors, capital, and early compliance.

15) Frequently Asked Practical Questions

Q1: Can foreign lenders take security directly over land?
They can take a mortgage granted by the Bangladeshi SPV, but foreign lenders cannot hold title to land on foreclosure. The usual path is appointing a Bangladesh scheduled bank as security agent to enforce and sell locally, with proceeds flowing to lenders.

Q2: Is repatriation of dividends and interest reliable?
Yes—through Authorized Dealers under GFET and relevant BB circulars, if documentation and tax compliance are correct. Plan your AD and cash waterfall early.

Q3: What dispute mechanism do you recommend?
International arbitration (e.g., LCIA/SIAC) for finance/major project disputes; Bangladesh law and courts only for security perfection/enforcement steps.

Q4: Which public institutions co-lend or catalyze infra debt locally?
IDCOL (renewables/infra) and BIFFL (public sector infra), often alongside commercial banks and DFIs/ECAs.

Q5: How do we integrate Dubai/London investors?
Use LMA-style documentation and Intercreditor structures; consider DIFC platforms for holding and security over certain upstream assets; add Islamic tranches for GCC banks.

16) Model Clauses & Term Sheet Flags (Abbreviated)

Change in Law — compensation and tariff reset triggers tied to regulator/Ministry orders.
Payment Currency — USD receivables or hard-currency index; convertibility assurance in IA (where applicable).
Completion Tests — output/efficiency tests with LDs and sponsor support during ramp-up.
Opex Pass-Throughs — fuel/indexed inputs, utility costs.
Debt Service Coverage — DSCR floors with pre-defined cure rights; LLCR covenants.
Reserves — DSRA, Major Maintenance, FX reserve.
E\&S Covenants — BB ESRM compliance plus DFI (IFC-like) standards.
Step-In — cure rights, interim O\&M takeover, replacement contractor/off-taker consents.
Refinancing — sweeps and margin ratchets; consent mechanics in ICA.
Arbitration & Courts — foreign seat for disputes; Bangladesh courts for perfection/enforcement items.

17) Illustrative Closing Checklist (Condensed)

Corporate: Certificate of Incorporation; AoA; board/shareholder resolutions; RJSC charge filings.
Regulatory: PPP approvals; sector permits; BIDA/BB foreign loan clearances; import licenses (if any).
Security: Executed and registered mortgage/hypothecation/assignments; share pledge; account charges; direct agreements (off-taker/EPC/O\&M).
Insurance: CAR/EAR, third-party liability, DSU/ALOP, O\&M year-1 binders with lender loss payee and assignment endorsements.
E\&S: ESIA approvals; RAP (where needed); lender E\&S action plan adoption consistent with BB ESRM.
Finance: Executed LMA-style suite; ICA; fee letters; hedging confirmations; model audit.

18) Closing Thought

Project finance in Bangladesh is no longer “frontier” — it is disciplined execution. Sponsors who internalize GFET pathways, RJSC/Registrar perfection, Artha Rin enforcement, and ESRM covenants can deliver bankable deals. Aligning Dhaka (local law & process) with Dubai (GCC liquidity/Islamic finance) and London (LMA standards & arbitration) is precisely where TRW operates, day in and day out.

Summary Table — Project Finance in Bangladesh (Quick Reference)

Topic	What to Know	TRW’s Practical Tip
PPP & Procurement	PPP Act 2015; PPPA guidelines (procurement, unsolicited, VGF).	Build your risk matrix aligned to PPP screening & Cabinet approvals.
FX & Repatriation	GFET governs foreign loans, interest/dividends repatriation via AD banks.	Socialize the repatriation dossier early with your AD bank.
Security & Perfection	Register mortgages (Registration Act 1908); file charges at RJSC (Form XVIII/XIX/XXVIII).	Calendar the 21-day RJSC window and Registrar slots; don’t miss priority.
Enforcement	Use a Bangladesh scheduled bank as security agent; Artha Rin court for speed.	Foreign lenders shouldn’t plan to hold title to land; sell locally and remit proceeds.
Disputes	New York Convention arbitration enforceable; foreign judgments are harder.	Seat arbitration (e.g., LCIA/SIAC); keep Bangladesh courts for perfection/enforcement.
ESG	BB ESRM (2022) binds local lenders; DFIs require IFC-like standards.	Treat ESG as CP-critical; budget for community engagement & monitoring.
London/Dubai Alignment	LMA docs; DIFC/UAE movables law and Islamic windows.	Combine LMA plus DIFC-law overlays for upstream security and GCC participation.
Public Lenders	IDCOL/BIFFL anchor infra tenors, catalyzing co-lending.	Engage early to anchor tenor and pricing expectations.

Contact TRW Law Firm

Tahmidur Remura Wahid (TRW) Law Firm — Bangladesh’s largest, technology-driven, cross-border practice for banking & finance, projects, and PPP.

Call us:
+8801708000660 • +8801847220062 • +8801708080817

Email:
[email protected] • [email protected] • [email protected]

Global Offices:

Dhaka: House 410, Road 29, Mohakhali DOHS
Dubai: Rolex Building, L-12 Sheikh Zayed Road.

If you’d like, we can tailor a bankability audit for your specific project (PPP or merchant), mapping BIDA/BB pathways, security/perfection calendars, and a term-sheet redline aligned to your lenders’ London/Dubai expectations.

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