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Thursday, January 5, 2012
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ADB to provide $300m for energy infrastructure

Bangladesh yesterday signed a $300 million energy infrastructure loan agreement with the Asian Development Bank (ADB) to help the country address critical power shortage, which is undermining the economy and hindering poverty reduction efforts.

Iqbal Mahmud, secretary of Economic Relations Division (ERD), and Thevakumar Kandiah, country director of ADB, signed the deal at ERD in the capital.

The loan for the six-year Power System Efficiency Improvement Project will help meet Bangladesh's urgent need for more energy-efficient generating plants and greater use of renewable power sources, said the Manila-based ADB in a statement.

According to Power Development Board sources, aging thermal plants, inadequate natural gas supplies and lack of diverse power sources left the country with a gap of estimated over 1,200 megawatts in 2011 between electricity supply and demand.

Still only 50 percent of people in Bangladesh have access to electricity, PDB sources added.

ADB said frequent power shortage and unreliable supply have perpetuated underdevelopment of nearly half the population living below the extreme poverty line of $1.25 a day.

“Energy shortage is the most critical infrastructure constraint on Bangladesh's economic growth,” said Kandiah.

“Greater access to clean, reliable power will bring multiple benefits such as increased economic activity and new opportunities in agriculture, manufacturing and other businesses which will benefit the poor, including women,” he added.

The project will fund the replacement of five aging generation units at Ashuganj power station with a new energy-efficient combined cycle power plant using natural gas as the fuel source.

It will also finance a 5MW solar photovoltaic generating system that will connect with the national grid and a hybrid wind, solar and diesel system on the island of Hatiya.

Streetlights will be installed or retrofitted with solar and light emitting diode technology in the cities of Barisal, Chittagong, Dhaka, Khulna, Rajshahi and Sylhet.

The Islamic Development Bank will co-finance with $200m for the project with Bangladesh extending over $81m for the total cost of $581.2m, said the statement.

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