Project on the Brink
*Tk 70 Billion Mirsarai Mega Project Faces Collapse Amid Funding Freeze
* Despite failing to commence operations, the project is already burdened with mounting
interest costs
* Bank financing has stalled, leaving 275 containers of imported machinery stranded at
Chattogram Port
* Port demurrage charges on machinery worth Tk 9.5 billion
* Currency depreciation has pushed total project costs up by almost Tk10 billion
* Entrepreneurs warn: "If domestic investors stumble, why would foreign investors come?"
Special Correspondent : Bangladesh's first environmentally friendly Green Steel project has been thrown into deep uncertainty after becoming entangled in what its sponsors describe as adverse decisions taken during the interim government's tenure.Officials involved in the project warn that Bashundhara Multi Steel Industries Ltd (BMSIL)—one of the country's largest single-unit steel manufacturing ventures—is edging towards what they describe as the "death of a dream" as commercial banks have slowed the disbursement of approved loans.
The Tk 71.18 billion project, located inside the Mirsarai Special Economic Zone, was originally
scheduled to begin commercial production in June this year. However, with financing virtually
frozen, project officials now concede that completing the plant within the planned timeframe
has become increasingly unlikely.
Industry insiders caution that unless urgent steps are taken to accelerate loan disbursement
and release imported machinery currently held at Chattogram Port, one of Bangladesh's most
ambitious industrial investments could face prolonged delays with significant economic
consequences.
Half the Project Completed, But Progress Has Stalled
The BMSIL plant is being constructed on approximately 70 acres of land inside the Mirsarai
Special Economic Zone with an annual production capacity of 1.25 million tonnes.
Around half of the construction work has already been completed. However, the remaining
work has effectively stalled because of financial constraints.
The facility is designed around Danieli MiDa QLP Mini Mill technology from Italy, enabling the
production of steel at significantly lower operating costs than conventional mills.
The project is also expected to become Bangladesh's first producer of rebar coils and wire rods,
products that are currently imported in substantial quantities.
According to project officials, the advanced production technology would reduce
manufacturing costs by approximately Tk3,000 per ton, making locally produced steel more
competitive while reducing dependence on imports.
Significant Economic Benefits Now at Risk
Once operational, the project is expected to create around 7,000 direct jobs while saving the
country billions of taka in foreign exchange through import substitution.
However, these anticipated economic benefits are now under serious threat.
Officials warn that continued delays could not only derail employment generation but also
prevent Bangladesh from reducing its dependence on imported steel products.
Project sponsors argue that the implications extend well beyond a single investment.
"If domestic entrepreneurs are prevented from implementing major industrial projects, it
inevitably sends a discouraging signal to foreign investors as well," one project official said.
Crisis Began with Ex. Central Bank Governor
Project officials maintain that the present crisis originated from decisions taken by the
Bangladesh Bank under former Governor Dr Ahsan H Mansur.
According to them, Former Governor refused to recognize Safwan Bashundhara Global (SBG) as
a separate corporate group despite maintained separate CIB database and the submission of
legal documentation, updated ownership structures and board resolutions demonstrating that
it operates independently from the Bashundhara Group. He imposed his stubborn decision to
the lead bank of syndication finance which has pushed the project into a dire strait.
They argue that this position was inconsistent with existing corporate laws and official company
records.Officials further claim that updated records maintained by the Credit Information Bureau
(CIB)also identify SBG as a separate business entity with no financial liabilities linked to other
companies within the Bashundhara Group.
Despite being an independent corporate group, all financial activities became stagnated during
interim government’s tenure resulting delays in syndicated loan disbursement and deepening
the project's financial difficulties.
Funding Bottlenecks Push Project Towards Financial DistressThe most immediate obstacle f
acing the project is the prolonged delay in the disbursement of syndicated bank financing.
A consortium of eight commercial banks, led by Agrani Bank, approved a syndicated loan of
Tk23.50 billion for the project.
However, only Tk5.76 billion—equivalent to just 24.51 per centof the approved facility—has so
far been released.The remaining Tk17.74 billion is yet to be disbursed, though the Bangladesh
Bank after nationalelection instructed to consider Safwan Bashundhara Global as separate
single borrower. This delay leaving the company unable to pay customs duties,
clear imported capital machinery or maintain the project's construction schedule.
Project officials say the funding impasse has effectively paralyzed construction activities.
275 Containers of Imported Machinery Remain Stuck at Chattogram Port
The financing delays have triggered another costly consequence.
Around 250 containers carrying imported capital machinery remain stranded at Chattogram
Port, preventing the installation of critical equipment and delaying project implementation by
an estimated 18 months. Meanwhile 12 months elapsed but the loan has not been disbursed.
According to project officials, the consignments valued at approximately Tk. 5.34 billion has not
been released yet.
As a result, machinery worth around Tk. 5.34 billion has accumulated port demurrage charges
approaching Tk. 9.5 billion, with penalties continuing to rise on a daily basis.
Executives warn that the prolonged detention of imported equipment is substantially inflating
the project's overall cost while jeopardizing its installation.
Currency Depreciation Adds Nearly Tk. 29.58 Billion to Project Cost
The project's financial burden has been compounded by the sharp depreciation of the
Bangladeshi taka against major foreign currencies.
Initially estimated at Tk. 41.60 billion, the total investment requirement has now increased to
approximately Tk. 71.18 billion, primarily because of exchange-rate movements.
When the syndicated loan was originally approved, the US dollar traded at around Tk 86. It now
stands at approximately Tk 123, increasing the project's financing requirement by nearly Tk
9.86 billion.
Project officials describe the exchange-rate shock as one of the most significant financial
challenges encountered its implementation during previous regime due to corruption and
economic mismanagement.
Rising Interest Rates Intensify Pressure
The increase in borrowing costs has further complicated the project's financial position.
During the past 18 months, lending rates have risen from around 9 percent to approximately
15.55 percent.
Despite not yet entering commercial production, the company is already required to service
interest obligations, significantly increasing financial pressure before generating any operating
revenue.
Officials also cite the lingering effects of the Covid-19 pandemic, supply-chain disruptions
stemming from the war in Ukraine and sustained currency depreciation as factors that have
collectively undermined project economics.
They warn that continued delays will further escalate construction costs, making debt
repayment increasingly difficult and exposing both the project sponsors and participating banks
to heightened financial risks.
Project Sponsor Distances Venture from Bashundhara Group
Company officials insist that Bashundhara Multi Steel Industries Ltd should not be viewed as
part of the Bashundhara Group. They state that the project has been undertaken by entrepreneur
Safwan under Safwan Bashundhara Global (SBG), which they describe as an
entirely separate corporate entity since 2017.
Neither the liabilities nor the financial obligations of the project are linked to the Bashundhara
Group as per CIB report maintained by Bangladesh Bank. "We have consistently provided
all necessary legal documentation demonstrating that SBG operates independently," a
company official said. "However, the failure to recognise that distinction has significantly
complicated financing arrangements and delayed project implementation."
Utility Challenges Add to Mounting Costs
In addition to financing constraints, the project has faced significant challenges in securing
essential utility connections. Although Karnaphuli Gas Distribution Company approved the supply of 3 million standard cubic feet of natural gas per day (3 MMSCFD), and the Bangladesh Economic Zones Authority (BEZA) and the Bangladesh Rural Electrification Board (BREB) approved water and electricity connections, project officials say they were required to incur substantial additional costs to establish the necessary infrastructure.
The company has invested Tk. 326.5 million from its own funds to construct electricity
transmission facilities, while securing an additional Tk. 1.42 billion in bank financing for related
infrastructure.A further Tk2.52 billion has already been spent on gas transmission facilities.
Officials also noted that a planned jetty near the Sandwip Channel, intended to facilitate the
transportation of raw materials and finished products, has yet to be constructed.
'Every Delay Makes the Project More Expensive'
Sahed Jahid, Chief Operating Officer of Safwan Bashundhara Global (SBG), said the company
had embarked on the venture with the ambition of introducing Bangladesh's first production of
rebar coils and wire rods using advanced, environmentally sustainable technology.
"The project was designed to produce high-quality steel at a lower cost than conventional
manufacturing methods while significantly reducing carbon emissions," he said.
"It will also create employment opportunities for engineering graduates and skilled
professionals, contributing to the country's industrial development."
Mr Jahid acknowledged that the project's estimated cost had increased from Tk 41.60 billion to Tk 71.18 billion, largely because of currency depreciation which has increased the cost for imported equipment and materials.He added that nearly half of the construction work had already been completed before financing constraints brought progress to a standstill. "We have invested thousands of crores of taka and are now facing an extremely uncertain future," he said. "Every additional delay increases project costs, weakens financial viability and places greater pressure on both investors and lenders."
He further warned that prolonged delays could lead to breaches of contractual obligations with
international suppliers, potentially damaging Bangladesh's reputation as a destination for
foreign investment. Wider Implications for Bangladesh's Investment Climate
Industry observers believe the project's difficulties extend far beyond a single corporate
investment. Once operational,
BMSIL is expected to reduce Bangladesh's dependence on imported steel
products, generate substantial foreign exchange savings and strengthen the country's industrial
supply chain.Project sponsors argue that the treatment of large domestic investments will inevitably
influence the confidence of international investors considering Bangladesh as a manufacturing
destination.
"If local entrepreneurs struggle to implement nationally significant industrial projects, foreign
investors are unlikely to perceive Bangladesh as an attractive investment destination," one
official said.
Analysts estimate that, if supply-chain constraints, port congestion and raw material volatility
are addressed, Bangladesh's steel industry could achieve a compound annual growth rate
(CAGR) of between 11 and 15 per cent during the second half of the decade.
In that context, projects such as Bashundhara Multi Steel Industries Ltd could play a pivotal role
in replacing imports, conserving foreign exchange and supporting Bangladesh's long-term
industrial transformation.
A Race Against Time
For now, however, the future of Bangladesh's first Green Steel project hangs in the balance.
Unless financing resumes, imported machinery is released without further delay and
implementation bottlenecks are resolved, one of the country's most ambitious industrial
investments risks becoming a costly symbol of unrealized potential rather than a milestone in
Bangladesh's manufacturing evolution.
