Washington, DC (BBN) – The World Bank (WB) has approved a US$350 million loan for Bangladesh to increase reliable energy during peak demand times in a country where poor supply is estimated to cost around 2 per cent in gross domestic product (GDP) growth each year.

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

The Siddhirganj Peaking Power Project will finance the construction of a 300 megawatt, gas turbine power plant at Siddhirganj, an existing power generation site to the southeast of Dhaka.

It will also finance a 60 km natural gas pipeline from Bakhrabad to Siddhirganj that will improve the reliability of gas supply to the Siddhirganj power plant, and an 11 km electricity transmission line so that power from the plant can be distributed to consumers.

While Bangladesh has posted economic growth averaging over 6 per cent the past five years, inadequate infrastructure —especially unreliable power supply — remains a significant constraint on growth. Manufacturers, surveyed in the WB’s most recent Investment Climate Assessment, estimate that power shortages cost them around 12 percent in lost sales on an annual basis.

The project will also help strengthen the institutional capacity of three implementing agencies: Gas Transmission Company Limited (GTCL), Electricity Generation Company of Bangladesh (EGCB), and Power Grid Company of Bangladesh (PGCB).

BBN/SI/SSR/AD-01November08-11:51 AM (BST)