Govt, ADB to sign $185m loan deal next week

FE Team | Published: February 27, 2013 00:00:00 | Updated: February 01, 2018 00:00:00

FHM Humayan Kabir The government and the Asian Development Bank (ADB) will sign a $185 million loan deal, under a $1.4 billion multi-donor power sector development financing, next week. "The ADB and three other donors have formed a $1.40 billion loan package. Of it, ADB's $185 million (first tranche) will be confirmed next week," a joint secretary at the Economic Relations Division (ERD) told the FE. The ADB has already announced that it will contribute $700 million to the $1.40 billion package to upgrade Bangladesh's electricity supply. The rest of the ADB's committed $700 million loan will be disbursed in two tranches in the next two years, he also said. Jeddah-based Islamic Development Bank will provide $380 million, European Investment Bank (EIB) $198 million, and French donor agency AFD $100 million under the power sector project. A framework financing agreement has already been signed with the four donors in December last, the ERD official said. Under the five-year $1.6 billion programme, the government will also contribute $220 million for the country's power sector development. ADB will administer the fund, to be disbursed in three tranches over the next three years, he added. Under the Power System Expansion and Efficiency Improvement Programme, the government will boost power generation, expand transmission and distribution lines, and upgrade some plants to enhance their capacity over the next five years starting from the 2012-13 fiscal year, a Power Division official said. He said it is the largest investment programme the government will be implementing with support from the donors for developing the country's power sector. "For the first time in Bangladesh the four donors are expected to finance the massive power development programme in collaboration with the government," the official said. In the first phase of the programme, the Bangladesh Power Development Board (BPDB) will upgrade the generation capacity of the Khulna 150 MW power plant, the Shahjibazar 150 MW plant, the Baghabari 100 MW plant, and the Sylhet 150 MW power plant, he added. The power developer will also build solar-based irrigation systems in rural areas to boost the country's agricultural production. In the second phase of the programme, the state-owned power transmission company and distributors will expand electricity lines to upgrade their supply system. In the third phase, the government-owned power generation companies will set up some power generation plants for increasing electricity supply. The country's deplorable power supply situation has severely affected national economic growth, as many newly-built industrial units, houses and other establishments have been deprived of power connections for years. The power plants in Bangladesh now generate a total of 5,500 megawatts (MW) of electricity per day against the demand for more than 6,500 MW.