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SHS warns of possible default on solar plant project on financing woes
CONSTRUCTION firm SHS Holdings' delayed solar power project in Bangladesh could face default and a termination of key agreements if required financing is not obtained on time, the company said on Wednesday before the market opened.
If a default is triggered under the agreement with the Bangladesh Power Development Board (BPDB), the group will only be able to recover between US$3 million to US$8 million of the US$21.7 million already invested into the solar project, SHS said.
SHS's HDFC SinPower unit is building a 50-megawatt solar plant under agreements with the BPDB and the Ministry of Power, Energy and Mineral Resources. But SHS said construction is now facing further delays due to a lack of financing after the deadline had already been pushed back by more than a year from the initially scheduled April 2018 to October 2019 currently.
SHS said funding of up to 70 per cent of the total cost of the solar project – translating to up to US$56 million – was meant to come from financial institutions. Its unit HDFC is now exploring "alternative financing", and is in talks with various parties to secure such financing for the construction of the solar power plant. It will then pursue another extension from the current deadline of Oct 31, 2019.
Under current terms, the construction of the solar power plant needs to start by February 2019 to meet the October deadline.
SHS had earlier cited reasons such as land issues, regulatory approvals, and weather conditions, as reasons for the delays, on top of financing woes.
Shares of SHS last traded at S$0.187.