Dhaka, Bangladesh (BBN)-The World Bank has provided $177 million to increase low-cost electricity supply in Bangladesh.
To materialise the aim, the Bangladesh government on Sunday signed a $177 million financing agreement with the International Development Association (IDA) to complete the ongoing construction of a 335 megawatt combined cycle power plant at Siddhirganj, near Dhaka.
IDA is the World Bank’s concessional arm that helps the world’s poorest countries.
The power plant will account for 6 per cent of the total electricity delivered to the national grid.
The additional financing to the Siddhirganj Power Project will help increase clean, reliable and low-cost electricity supply in Bangladesh. In 2008, the World Bank provided $350 million to construct a 300 megawatt gas turbine power plant in Siddhirganj.
In the face of increasing power demand and gas shortages, the government decided to convert the peaking power plant to an energy-efficient 335 megawatt combined cycle power plant.
The additional financing will fill the financing gap for constructing the power plant.
“This additional financing will add much-needed new power generation capacity for Bangladesh. This financing will contribute to the World Bank’s current support to the energy sector, raising it to over $1.5 billion,” said Iffath Sharif, Acting World Bank Country Director for Bangladesh.
The combined cycle technology allows the plant to produce higher energy with lower gas consumption.
This cleaner technology reduces carbon emission.
The plant will start commercial operation in 2016.
“In the last few years, the country has increased its power generation capacity significantly. But, at the same time, the demand for electricity has gone up,” said Kazi Shofiqul Azam, Additional Secretary, Economic Relations Division, government of Bangladesh.
“The Project will increase uninterrupted and low-cost power supply during the peak demand period, and thus help spur economic activities and reduce the cost of doing business in Bangladesh.”
In addition to financing the construction of the power plant, the project will also help strengthen the institutional capacity of the three implementing agencies: Gas Transmission Company Limited (GTCL), Electricity Generation Company of Bangladesh (EGCB), and Power Grid Company of Bangladesh (PGCB).
The agreement was signed by Kazi Shofiqul Azam and Iffath Sharif, on behalf of the Government of Bangladesh and the World Bank respectively at the Economic Relations Division.
The credit from IDA has a 38 year term, including a 6 year grace period, and a service charge of 0.75 per cent.