Dhaka, Bangladesh (BBN) - The government will sign a loan agreement of $300 million with the Asian Development Bank (ADB) on Wednesday to addressing critical power shortages.
Economic Relations Division (ERD) Secretary Iqbal Mahmud and Country Director of the ADB Thevakumar Kandiah will sign the agreement on behalf of their respective sides at ERD at Shere-e-Bangla Nagar in the capital Dhaka.
The ADB Board of Directors approved the loan in August, 2011 for the Power System Efficiency Improvement Project, which will help meet Bangladesh's urgent need for more energy-efficient generating plants and greater use of renewable power sources.
Aging thermal plants, inadequate natural gas supplies and lack of diverse power sources have left the country with a large gap between electricity supply and demand, estimated at over 1,200 megawatts (MW) for 2011 an ADB press statement said on Monday.
The loan, sourced from ADB's ordinary capital resources, has a 25-year term with a grace period of 5 years and interest determined in accordance with ADB's LIBOR-based lending facility.
The Islamic Development Bank is providing co-financing of $200 million, with the Government of Bangladesh extending over $81 million for a total project cost of almost $581.2 million.
The executing agencies include the Ashuganj Power Station Company, the Bangladesh Power Development Board and the Power Division of the Ministry of Power, Energy and Mineral Resources. The project is due for completion by end June 2017.
BBN/SSR/AD-03Jan12-1:18 am (BST)