Manila, Philippines (BBN)- The Asian Development Bank (ADB) is extending loans totaling $266 million to facilitate Bangladesh natural gas supply in a bid to spur economic growth and cut poverty.
The ADB board of directors on Friday approved a $261 million loan from its ordinary capital resources and a further $5 million from its concessional fund for the Bangladesh Natural Gas Access Improvement Project.
“The funds will be used to build new gas transmission and distribution pipelines to meet growing demand, and to expand coverage to less developed areas in the southwest,” the ADB said, adding that the project will install compressors and metering systems to boost reliability, improve safety, and strengthen the management of gas supply and demand.
Around 200,000 new households in the southwest, along with 1,400 industrial and commercial establishments, will receive gas as a result of the expanded distribution network.
“This will boost business, generate jobs, and improve the health of vulnerable groups, such as women and the poor, who are currently exposed to harmful air pollution from burning wood and other biomass fuels indoors,” the ADB noted.
ADB’s loan, from its ordinary capital resources, has a 25-year term, including a grace period of five years, and interest determined in accordance with its LIBOR-based lending facility.
The Asian Development Fund loan has a 32-year tenor, including a grace period of 8 years, with interest set at 1 percent during the grace period and 1.5 percent for the rest of the term, according to the announcement.
The state-owned Petrobangla, Gas Transmission Company Ltd, Bangladesh Gas Fields Company Ltd, Sundarban Distribution Company Ltd, and Titas Gas Transmission and Distribution Company Ltd. are the executing agencies for the project, which is due for completion in March 2015.
BBN/SSR/SI/AD-26March10-6:35 pm (BST)