How Summit Group’s Singapore Strategy Reduces Energy Costs in Bangladesh 

In 2016, Summit Group, Bangladesh’s largest infrastructure conglomerate, made a decision that would transform its business approach and benefit energy consumers in Bangladesh. The company established Summit Power International (SPI) in Singapore, creating a corporate structure that could tap into favorable international financing options and strengthen corporate governance.

This move was the result of a partnership between Summit Group’s founder Muhammed Aziz Khan and the International Finance Corporation (IFC), which invested in SPI in 2016. The IFC, a member of the World Bank Group dedicated to private sector investment in developing nations, saw potential in helping Summit create a platform that could attract global investment to Bangladesh’s energy sector.

“One of the most important things that defines us is the fact that we are a Singapore company, based out of Singapore and owning assets in Bangladesh,” says Ayesha Khan, managing director and chief executive officer at SPI. “The IFC structure comes from a point of view of a lot of financial maturity and a lot of financially complicated structuring, which IFC is very able to do and very well aware of and has done all over the world.”

Does Singapore Incorporation Benefit Bangladesh?

The primary motivation for establishing SPI in Singapore centered on accessing better financing terms, ultimately resulting in lower-cost energy production. As a company incorporated in a country with a AAA credit rating and mature financial markets, SPI has been able to secure long-term debt financing at significantly lower interest rates than what would be available in Bangladesh.

“What Bangladesh has is a lot of opportunities and a lot of growth. But what it lacks is governance and what it lacks is a mature financial market, both of which are very much necessary to do long-term infrastructure projects, which is what we want to do for Bangladesh,” says Ayesha Khan.

The interest rate differential is stark: loans in Bangladesh typically carry interest rates around 14%, whereas Singapore-based companies can access international financing at much lower rates. This disparity directly impacts the cost of producing electricity.

This Singapore-based approach has allowed Summit to significantly reduce its weighted average cost of capital (WACC). Wu Yan Bin, chief financial officer at SPI, explains that Summit’s position in Singapore is essential for providing low-cost energy solutions to Bangladesh.

“If the cost of debt is 14%, the weighted average cost of capital (WACC) could increase to as high as 18–19%, as the cost of equity is also likely to rise due to the increased financial risk to equity holders as a result of higher interest burden on the project. ,” says Yan Bin. “Cost of equity may need to be around the mid-twenties for it to be attractive to any investor. If your equity IRR is in the mid-twenties, it’s simple economics, your tariff needs to be high.”

By contrast, accessing U.S. dollar financing at lower rates has enabled Summit to keep electricity costs down for Bangladesh’s consumers. This approach yields a competitive advantage within the energy market in Bangladesh, where Summit has become the largest independent power producer, operating 14 power plants with more than 2,000 MW  generating capacity. 

Attracting Foreign Investment Partners

The Singapore headquarters has served as a catalyst for drawing significant foreign investment into Summit’s operations. In 2019, Japan’s JERA Co. acquired a 22% stake in SPI. 

Beyond JERA, Summit has formed partnerships with other international companies such as General Electric (GE) and Mitsubishi Corporation. GE not only provided technology for Summit’s power plants but also took a 20% equity stake in the Summit Meghnaghat II power plant project.

Providing Low-Cost Electricity

The ultimate goal of Summit Group’s Singapore structure is delivering electricity at more affordable rates to Bangladesh. According to Ayesha Khan, this focus on reducing costs has positioned Summit as a price leader in the market.

“If you go through each of our power projects, the tariffs are at the lowest if you compare it at that time with all the other projects being awarded or submitted at that time,” she says. “At any point in time, if you compare our projects, it was always at the lowest cost and the most competitive rate that we submitted those projects and signed those projects.”

Summit’s founder Muhammed Aziz Khan emphasizes that providing affordable electricity remains central to Bangladesh’s development.
“It was very important for Bangladesh to be able to employ its growing population — currently at around 180 million,” he says. “And employment could only come through industrialization. We had to move from an agrarian society to an industrial society and electricity is a fundamental requirement for that.” 

The Benefits of Global Financial Access

Yan Bin notes that Summit has built relationships with “renowned institutional investors and financiers such as Clifford Capital Pte. Ltd, Sumitomo Mitsui Banking Corporation (SMBC), Infrastructure Development Company Limited (IDCOL), Islamic Corporation for the Development of the Private Sector (ICD), and the OPEC Fund for International Development (OFID)” 

These partnerships provide not only financing but also financial discipline through rigorous oversight. The participation of international financial institutions adds layers of accountability to Summit’s operations. 

“To be able to pay an invoice to a contractor, the lender’s technical advisor has to certify that the relevant milestones have been met before lenders are even willing to disburse funds to pay those contractors,” explains Yan Bin.

For Bangladesh, the tangible result has been Summit’s contribution to the electrification of the country. Muhammed Aziz Khan says that when  Summit Group built its first power plant in 1997, only 20% of Bangladesh’s population had access to electricity. Today, that figure stands close to 100%. 

“I am so humbled and so happy that Summit was part of that. It is the greatest satisfaction,” he says. 

Summit Group’s access to international financing has not only helped it deliver electricity at competitive rates but has also positioned the company to explore new opportunities in renewable energy, including imports of clean energy from neighboring countries. This financial foundation will be crucial as Summit pursues its goal of achieving 40% clean energy sources by 2040, aligning with Bangladesh’s national energy transition objectives.

Through its innovative corporate structure and international partnerships, Summit Group has demonstrated how cross-border cooperation in financing and governance can yield tangible benefits for developing economies seeking affordable and reliable energy sources.