Washington, DC (BBN)- The World Bank on Wednesday approved a US$130 million credit to Bangladesh to increase access to electricity through installation of affordable Solar Home Systems in rural areas.

The credit from the International Development Association (IDA), the World Bank’s concessionary arm, has 40 years to maturity with a 10-year grace period; it carries a service charge of 0.75 percent, a World Bank press statement said.

This credit is additional financing for the Rural Electrification and Renewable Energy Development Credit, a project that since 2003 has connected 600,000 consumers to the electricity grid, constructed about 5270 miles (8,500 kilometers) of new distribution, and provided 320,000 consumers with Solar Home Systems, according to the statement.

Despite advances, access to electricity in Bangladesh remains low, currently around 40 percent. Power shortages and load shedding are severe, especially in rural areas, which hurt economic growth and industrial development.

Besides, population growth, increased industrialization, additional connections, and rise in the use of modern, electrical appliances have boosted demand for electricity, currently growing at a rate of over 500 megawatt (MW) a year.

The project will support an ongoing renovation of the electricity distribution network as well as provide financing for renewable energy projects such as biomass and biogas power plants, solar water pump for irrigation, and solar mini grids, the World Bank added.

BBN/SS/SI/AD-06August09-2:52 am (BST)