The government is finally going to borrow US$450 million worth of a costly loan from the World Bank (WB)'s hard-term fund for upgrading the power transmission system as it signed a deal on Tuesday in Dhaka to this effect.
Besides, it also signed another deal on US$65 million worth of loans from the WB's concessional window International Development Association (IDA) to improve Bangladesh's insurance sector capacity.
The WB would provide $450 million for the Enhancement and Strengthening of Power Transmission Network in Eastern Region Project from its costly Scale-up Facility Fund (SUF).
Economic Relations Division (ERD) Additional Secretary Mahmuda Begum and World Bank Country Director in Bangladesh Mr Qimiao signed the two separate deals.
The SUF loan bears an interest rate of nearly 4.0 per cent and a 35-year maturity time including a four-year grace period.
Under the power transmission network project, the Power Grid Company of Bangladesh Ltd (PGCB) will improve reliable electricity supply and reduce loadshedding in the eastern region, covering greater Cumilla and Noakhali and part of greater Chattogram.
About 275,000 households and 16,000 farm consumers will get new electricity connections under the project.
"In recent years, the government significantly increased power generation. But, only investing in power generation is not sufficient, unless that is supported by improvement in transmission and distribution," said Mr Qimiao Fan after signing the loan agreement with the ERD in Dhaka on Tuesday.
"By supplying uninterrupted power to Mirsharai Economic Zone, port, airport or other key economic facilities, the project will help unlock private sector growth," he added.
The $65 million loan for the Insurance Sector Development Project (ISDP) will help strengthen the regulatory and supervisory capacity of the Insurance Development and Regulatory Authority (IDRA) and the country's two state-owned insurance corporations -- Shadharan Bima Corporation and Jiban Bima Corporation -- through modernising their systems and business practices.
It will also help enhance the capacity of the Bangladesh Insurance Academy as a reliable resource for training and research, and thereby address the severe lack of insurance professionals.
The ISDP will receive interest-free IDA credit, which is repayable in 38 years, including a six-year grace period. It carries a service charge of 0.75 per cent.
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