The World Bank (WB) would provide US$55 million additional funds to expand Bangladesh's renewable energy in rural areas as the global lender approved the loan today (Wednesday).
The loan will be additional financing from the current US$233 million WB loan for the renewable project in the country.
The WB Board in Washington approved the $55 million concessional loan, to expand use of clean renewable energy in rural areas of the country where grid electricity cannot reach easily, the WB Dhaka office said.
These interventions will also help the country reduce carbon emissions.
This additional $55 million loan will be used to the Second Rural Electrification and Renewable Energy Development (RERED II) Project to be ended in December 2018.
Under the project, some 1,000 solar irrigation pumps, 30 solar mini-grids, and about 4.0 million improved cook-stoves in rural areas will be installed.
It will enable about 10 million people living in villages, shoals, and islands to access electricity and use energy efficient cook-stoves.
Since 2002, the Washington-based lender has been helping the government expand renewable energy programs. In the first phase of the RERED-I, the Washington-based lender provided some $199 million fund for expanding the renewable energy.
In the energy sector, the World Bank has ongoing support of over $1.6 billion in Bangladesh covering generation, transmission, distribution, and renewable energy.
"We are proud to be helping Bangladesh increase access to clean electricity through solar power. Today, the country has the one of the world's largest domestic solar power programmes, covering 14 per cent of the population," said Qimiao Fan, World Bank Country Director for Bangladesh, Bhutan, and Nepal.
"Building on its success in using solar energy to provide electricity in rural areas, this financing will also scale up other clean renewable energy options."
The project has already built 10 solar mini-grids in remote areas, including islands and shoals to provide grid quality electricity. This additional financing will help construct another 30 solar mini-grids. These will provide about 28,000 connections to households and businesses, including small and medium-sized enterprises.
The financing will also help increase use of solar irrigation pumps, a low-cost technology that is well suited to the country's flat terrain and abundant sunshine. This switch from diesel pumps will decrease greenhouse gas emissions and save foreign exchange by reducing the government's subsidy on diesel imports.
The credit from the World Bank's International Development Association, which provides grants or zero-interest loans, has a 38-year term, including a six-year grace period, and a service charge of 0.75 per cent.