WB tags $100m power sector loan to strengthening ERC
Friday, 21 September 2007
FE Report
The World Bank (WB) has asked the government to strengthen its Energy Regulatory Commission (ERC) and set up a full-fledged power distribution company in the country's southern zone if it wants to receive a $100 million power sector budgetary support credit, official sources said.
According to the sources, the global lender further suggested conducting a strategic study on financial condition of the Rural Electrification Board (REB), which is reportedly suffering from financial mismanagement.
The sources said the WB has also asked the government to speed up the process of introduction of pre-paid metering system in the southern zone for checking systems loss in power, particularly in the industrial areas there.
The suggestions came from the World Bank mission at a warp-up meeting Wednesday with the government in Dhaka on the proposed budgetary support, sources in the power division said.
The mission had meetings with concerned government ministries and agencies during September 10-18 period to review the ongoing power sector reforms and prepare the next course of actions for releasing the $100 million transitional budget support credit - power sector development policy loan, the sources added.
A power division official said: "The $100 million credit will be utilised to carry out reforms in the power sector and to pay the outstanding arrear bills to international power producers and gas companies."
Following a formal appeal made by the government in late July, the Washington-based lender informed the Economic Relations Division (ERD) that it would start the process to release the budgetary support credit from early September, sources in the finance ministry said.
Since there is a possibility of substantial budget deficit in the current fiscal, the interim government, in its efforts to rebuild the flood-affected economy, has made initiatives to attract foreign aid for minimising the deficit financing.
In the Tk 871.37 billion national budget for the fiscal 2007-08, the overall budget deficit is estimated to be Tk 298.36 billion, which is 5.6 per cent of the gross domestic product (GDP). The budgetary deficit was 3.3 per cent of the GDP in last fiscal 2006-07.
"If the negotiation is completed by March 2008, the World Bank is likely to disburse the $100 million credit by June next year and the amount will be directly added to the national budget," one senior ministry official said.
Earlier, the World Bank had supported Bangladesh's national budget from the year of 2003 to 2007 providing $900 million, in aggregate, in the form of development support credit (DSC).
The World Bank (WB) has asked the government to strengthen its Energy Regulatory Commission (ERC) and set up a full-fledged power distribution company in the country's southern zone if it wants to receive a $100 million power sector budgetary support credit, official sources said.
According to the sources, the global lender further suggested conducting a strategic study on financial condition of the Rural Electrification Board (REB), which is reportedly suffering from financial mismanagement.
The sources said the WB has also asked the government to speed up the process of introduction of pre-paid metering system in the southern zone for checking systems loss in power, particularly in the industrial areas there.
The suggestions came from the World Bank mission at a warp-up meeting Wednesday with the government in Dhaka on the proposed budgetary support, sources in the power division said.
The mission had meetings with concerned government ministries and agencies during September 10-18 period to review the ongoing power sector reforms and prepare the next course of actions for releasing the $100 million transitional budget support credit - power sector development policy loan, the sources added.
A power division official said: "The $100 million credit will be utilised to carry out reforms in the power sector and to pay the outstanding arrear bills to international power producers and gas companies."
Following a formal appeal made by the government in late July, the Washington-based lender informed the Economic Relations Division (ERD) that it would start the process to release the budgetary support credit from early September, sources in the finance ministry said.
Since there is a possibility of substantial budget deficit in the current fiscal, the interim government, in its efforts to rebuild the flood-affected economy, has made initiatives to attract foreign aid for minimising the deficit financing.
In the Tk 871.37 billion national budget for the fiscal 2007-08, the overall budget deficit is estimated to be Tk 298.36 billion, which is 5.6 per cent of the gross domestic product (GDP). The budgetary deficit was 3.3 per cent of the GDP in last fiscal 2006-07.
"If the negotiation is completed by March 2008, the World Bank is likely to disburse the $100 million credit by June next year and the amount will be directly added to the national budget," one senior ministry official said.
Earlier, the World Bank had supported Bangladesh's national budget from the year of 2003 to 2007 providing $900 million, in aggregate, in the form of development support credit (DSC).