The government has started negotiation with the AIIB for US$ 165 million worth of pledged loan from China-led development bank -- the first loan for the country from the international lender, officials said.
"The first negotiation meeting with the Asian Infrastructure Investment Bank (AIIB) was held on June 02 last," Senior Assistant Chief of wing 8 of the Economic Relations Division Masuma Akter told the FE Friday. But she declined to disclose the terms and conditions of the loan.
"We have started discussion on loan and project agreements of "Distribution System Upgradation and Expansion" after approval of the loan by the board of directors of newly established AIIB," a high official of the ERD said.
When contacted, Additional Secretary and Chief of the wing 8 Mohammad Asif-uz-Zaman declined to talk about the issue.
A high-powered committee on the loan has been constituted on behalf of the government of Bangladesh. The committee sat with the AIIB on loan and project agreements on Thursday last.
Under the AIIB's financial support, the Rural Electrification Board (REB) has taken up a Tk 12.32 billion 'Adding 2.5 million new consumers through improving the rural electrification project'. The AIIB will provide Tk 7.72 billion ($ 98.27 million) out of the total Tk 12.32-billion cost.
Besides, Dhaka Electric Supply Company Ltd (DESCO) has undertaken two separate projects for upgrading the power distribution system in the capital city.
The electricity distribution company will convert the overhead power lines to underground lines by borrowing nearly $ 45.68 million (Tk 3.59 billion) from the new multilateral lender. The total cost of this project is Tk 5.70 billion.
Besides, it will upgrade the existing distribution system at Uttara and Bashundhara with about $ 20.14 million (Tk 1.58 billion). The total cost of this project is Tk 2.51 billion.
"The loan will be provided from the Ordinary Capital Resources (OCR) of the AIIB," sources concerned said.
"We have to assess the economic and financial returns from the AIIB loan as it is costlier than the loans from other multilateral lenders like the WB and the ADB," an official of the Planning Commission said.
The loan-repayment period will also be shorter than that of other loans from the multilateral lenders like the WB and the ADB, he said.
A senior official of the ministry of finance said they had requested the AIIB to offer a 25-year repayment period including 5 years' grace period for the proposed loan.
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