The World Bank (WB) will supply over half a billion US dollar to the Rural Electrification Board (REB) to upgrade distribution systems in two divisions.
It has recently done negotiations with the Economic Relations Division (ERD) for a $515-million loan disbursement for the REB, official said on Saturday.
The loan will be provided from the Scale-up Facility (SUF) fund of the WB, a costly window of the lender, government officials said.
"We've completed negotiations with the REB in late last month. Now, a deal will be signed for the confirmation of the loan," a senior ERD official told the FE.
Distribution systems would be upgraded through strengthening the electricity network and setting up substations adopting climate resilience in Dhaka and Mymensingh divisions, he said.
The rural electrification body will also work to expand the solar power energy to the remote villages, according to the official.
Since the REB's electrification system is a government service with financial and economic returns, another ERD official says, they are going to borrow the SUF loan with costly provisions.
Currently, Bangladesh borrows from the WB's concessional wing, IDA, which charges an interest rate of 2.0 per cent with 30-year maturity.
On the other hand, the SUF loan is a LIBOR-based credit which interest rate depends on the market demand. The maturity of the loan is nearly 20 years.
The ERD official said the $515-million WB loan would be the second biggest in amount to the REB.
Earlier in 2014, the Washington-based lender provided a single highest $600-million loan to the REB for doing the similar job.
An REB official said they would upgrade some 31,000-kilometre distribution lines, 157 substations and build some structures on 25 Palli Bidyut Samity (PBS) sites in the divisions in question.
The WB fund will also help enhancing the REB's regulatory capacity, he added.
"We're expecting the $515-million loan finalisation within a couple of months," the ERD official told the FE.
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