FE Report
The World Bank Board approved Friday US$ 600 million in concessional financing to improve the quality of electricity supply in the rural areas in the eastern part of Bangladesh, said a press release.
The money will be spent under a project named 'Rural Electricity Transmission and Distribution Project' which aims at reducing system losses and enhancing capacity in the electricity network in rural Bangladesh.
The project will reduce technical losses in the rural grid electricity system and help to ensure that a greater percentage of electricity generated is reached to rural consumers.
It will contribute to improve quality and reliability of power supply to 25 million people in rural areas of the country. The loss reductions, targeted under the project, will save enough energy to meet the electricity needs of a million people.
"Access to electricity is positively correlated with increase in growth, education and prosperity. We have also seen that access to electricity increases income opportunities, particularly for women. It increases women's mobility and participation in decision-making process," World Bank Country Director for Bangladesh and Nepal Johannes Zutt said.
He said: "By improving efficiency of the system so that more electricity can be reached in the rural areas, the project will contribute to reduce poverty and create employment and economic opportunities for millions of rural people."
Only 42 per cent of the rural population currently has access to electricity in Bangladesh. The project will support new lines and substations as well as upgrade the existing ones in the rural areas of Dhaka, Chittagong and Sylhet divisions.
The investments made through the project to reduce system losses will simultaneously augment the capacity of the network to carry more electricity when the power generation constraints are addressed. This will allow the system to connect new rural households to electricity grid in the future, the press release said.
The rural electrification programme of Bangladesh is recognised globally as one of the most successful programmes in the world. However, the distribution and transmission systems have not kept pace with rapid expansion in the programme in recent years. This project will provide support for institutional strengthening of the rural electricity service delivery, it said.
"Board approval of the project is a testament to the World Bank's continued commitment to the rural electrification programme of Bangladesh," said Zubair Sadeque, World Bank Team Leader for the project.
"The project will support the reform action plan for the rural grid electrification programme that was developed by the government after extensive consultation with all the stakeholders concerned to ensure that the programme continues to serve millions of rural people in a cost effective and efficient manner," he added.
The credits from the International Development Association (IDA), the World Bank's concessionary arm, have 40 years to maturity with a 10-year grace period which carries a service charge of 0.75 per cent.
