The New Development Bank (NDB) is likely to confirm Bangladesh two loans worth US$765 million early next year to improve gas and water supply networks of Bangladesh, officials said on Saturday.
This is for the first time the country is getting the loans from the Shanghai-based multilateral lender.
Officials said the bank is likely to confirm a loan of $443 million for Titas Gas Transmission and Distribution Company Limited to improve its gas distribution network and another worth $325 million for Dhaka WASA to improve its water supply network in Dhaka and its adjacent areas.
"Several missions from NDB have already met the high officials of the implementing agencies and the Economic Relations Division (ERD) in Bangladesh," Anwar Hossain, Additional Secretary at the ERD, told the FE.
"Negotiations on the loans will be held soon … We're hopeful of getting loan confirmation by the first quarter of 2024," he added.
Another ERD official said that the NDB opened up a new window for Bangladesh to get development credit worth around $1.5 billion annually from the bank's $30 billion portfolio for the period of 2022-26, he said.
It would also facilitate the country reducing its heavy dependence on the multilateral and bilateral development partners like the World Bank, International Monetary Fund (IMF) and Asian Development Bank (ADB), he added.
Currently, the WB and ADB are the major development partners of Bangladesh, while Japan is the single largest bilateral donor.
A few years back, Beijing-based another lender - the Asian Infrastructure Investment Bank (AIIB) - also came forward with its financial assistance to Bangladesh.
"We're hopeful of getting the first $325 million loans for Dhaka WASA within the next 1-2 months. The loan will be used for enriching the water supply network in Dhaka city," said the ERD official.
He said the second loan worth $440 million, which is for improving the Titas Gas's distribution line, is expected to be confirmed by March next year, he added.
An NDB appraisal mission completed its visit to Bangladesh early last month, aimed at finalising the proposed $440 million loan, the ERD officials said.
According to Titas Gas officials, the gas distribution company needs to replace around 2,700 km of pipelines for ensuring smooth supply to its consumers.
After implementation of the project, the low-pressure situation is expected to be improved, and the leakage-related accidents will greatly reduce. Moreover, this project will reduce methane emissions by stopping gas leakage, said Titas officials.
Meanwhile, Bangladesh has also completed the initial talks with the NDB to finalise the $325 million loan for a Dhaka water supply project.
According to the ERD officials, the loan proposal is scheduled to be placed before the next board meeting of the NDB for approval. If approved, a loan deal will be signed subsequently, they said.
Both the proposed loans will be a market-based one where the NDB will charge at Secured Overnight Financing Rate (SOFR) rate and will add a certain spread.
Similar to the AIIB, the NDB offers the loan with floating interest rates ranging from SOFR+1.30 per cent to SOFR+1.65 per cent. Besides, there is a 0.25-percent front-end fee and a 0.65-percent commitment fee, ERD officials said.
The BRICS nations - Brazil, Russia, India, China, and South Africa - set up the NDB in 2014.
Bangladesh joined it as the sixth member along with the United Arab Emirates and Egypt on September 16, 2021.
© 2024 - All Rights with The Financial Express
