Bangladesh Bank Grants S Alam SS Power Special LC Permission Despite Loan Default

💰 Bangladesh Bank (BB) has granted special permission to SS Power-1 Limited, owned by the controversial S Alam Group, to open letters of credit (LCs), despite the company being a loan defaulter. State-owned Rupali Bank will be allowed to open LCs for the company against a 100 percent cash margin. Prothom Alo English reported the development on August 25, 2026.

📝 Permission Details

• 🏛 Authorised bank: Rupali Bank (state-owned)
• 💰 Cash margin: 100 percent
• 📅 Facility valid until: December 2027
• 📜 Legal basis: Section 121 of the Bank Company Act
• 📰 Directive sent: Sunday night to all banks
• 📰 Source: Prothom Alo English, August 25, 2026

⚡ Power Plant Details

The 1,320MW coal-fired power plant was built in the Gandamara area of Banshkhali in Chattogram as a joint venture between S Alam Group and two Chinese companies. Each of the plant's two units has a generation capacity of 660MW. The plant began commercial generation and started supplying electricity to the national grid in September 2023.

• ⚡ Capacity: 1,320 MW (2 units x 660 MW)
• 📍 Location: Gandamara, Banshkhali, Chattogram
• 🛢 Type: Coal-fired power plant
• 📅 Commercial generation started: September 2023
• 🌏 Supplies electricity to national grid

🤝 Ownership Structure

According to sources familiar with the matter, the ownership of SS Power-1 Limited is divided as follows:

• 🏢 S Alam Group: 70% stake
• 🌏 SEPCO III (China): Part of 30% foreign stake
• 🌏 HTG Development Group (China): Part of 30% foreign stake

💲 Loan Default Context

According to Bangladesh Bank data, loans taken by various S Alam Group entities, both in their own names and through other entities, exceed Tk 2.25 trillion. A large portion of these loans is in default. Under existing rules, banks are not permitted to extend new credit facilities or open LCs in favour of loan-defaulter companies.

• 💰 Total S Alam Group loans: Exceeds Tk 2.25 trillion
• ⚠ Large portion in default
• 🏛 Existing rules prohibit LC opening for defaulters
• ⚠ Special exception granted under Section 121

🏛 Rationale for Special Permission

Bangladesh Bank officials said the power project is operational and supplying electricity to the national grid. A shortage of raw materials could force the plant to suspend generation. To ensure uninterrupted power generation, SS Power-1 has been allowed to open LCs despite being a loan defaulter.

"Similar facilities have previously been extended to a number of companies in the interests of employment and continued production," Bangladesh Bank officials said.

• ⚡ Plant is operational and supplying national grid
• ⚠ Raw material shortage could force suspension
• 👥 Uninterrupted power generation is priority
• 🤝 Similar facilities extended to other companies before

📊 Energy Crisis Context

The special permission comes amid Bangladesh's ongoing energy crisis. Gas shortages have halted production at over 100 factories across the country. The Finance Minister has stated that the energy crisis will take two years to resolve. Ensuring that operational power plants like SS Power-1 can continue generating electricity is critical for the economy.

• ⚠ Gas shortages affecting 100+ factories
• 📅 Energy crisis: 2 years to resolve (per Finance Minister)
• ☀ Big businesses turning to solar (potential 600MW self-generation)
• 💰 LNG import costs doubled compared to pre-war rates

🏛 Banking Sector Implications

The decision to allow a loan-defaulter company to open LCs raises questions about banking sector governance and equitable access to financial services. While the central bank has justified the move on national interest grounds, it highlights the challenges of managing the banking sector when large conglomerates with significant loan defaults control critical infrastructure.

Bangladesh's banking sector has been undergoing significant reforms, including the merger of five banks into Sammilito Islami Bank PLC with capital of approximately Tk 350 billion. The sector faces challenges including high NPLs, governance issues, and capital adequacy concerns.

🌏 S Alam Group Controversies

S Alam Group has been at the centre of multiple controversies in Bangladesh's banking sector. According to a BFIU report, the group laundered Tk 2.25 trillion. A court has ordered the seizure of assets of S Alam and his wife in Cyprus. The group's influence over multiple banks has been a subject of significant public and regulatory scrutiny.

📊 The special LC permission for SS Power-1 highlights the complex interplay between banking sector governance, energy security, and economic stability in Bangladesh. While ensuring uninterrupted power generation is critical, the decision also underscores the need for comprehensive banking sector reforms to address the structural issues that allow large defaulters to maintain control over critical infrastructure.