AIIB approves $200m loan to improve electricity access in Bangladesh

3 March 2020 (Last Updated March 3rd, 2020 14:40)

The Asian Infrastructure Investment Bank (AIIB) has agreed to finance the Dhaka and Western Zone transmission grid expansion project in Bangladesh.

AIIB approves $200m loan to improve electricity access in Bangladesh
The proposed project will see the construction of 408km of transmission lines. Credit: Fré Sonneveld.

The Asian Infrastructure Investment Bank (AIIB) has agreed to finance the Dhaka and Western Zone transmission grid expansion project in Bangladesh.

The proposed project will see the construction of 408km of transmission lines, substations and bay extensions.

Once completed, the project is expected to lower the number of annual power outages from 60 to 15 and reduce transmission loss from 2.7% to 2.5% by 2025.

In addition, the project is expected to add 7,440 megavolt-ampere (MVA) of power transmission capacity and decrease average annual carbon dioxide emissions by 455,785t.

AIIB vice-president and chief investment officer DJ Pandian said: “AIIB’s investment gives much-needed financing to provide affordable, reliable and modern energy, especially in areas where people lack basic infrastructure.

“The project will also help the power sector tackle climate change impacts, making the grid more climate-resilient.”

Implemented by Power Grid Company of Bangladesh (PGCB), the project will improve power transmission efficiency and reliability in the country’s capital and western region.

Furthermore, it will boost PGCB’s institutional capacity.

In order to meet the increasing power demand in the country, the government has executed a number of programmes. However, around 22% of Bangladesh’s population does not have access to electricity.

The $750m project will be co-financed with $300m coming from the Asian Development Bank (ADB), $0.075m from People’s Republic of China Poverty Reduction and Regional Cooperation Fund and $249.25m by the Bangladesh government.

Bangladesh has set a goal to provide electricity to all people by next year and uninterrupted electricity to industries by this year.

This project is expected to help the government achieve its target.

Last March, AIIB approved a $120m loan to support a power transmission system expansion and upgrade project in the Chittagong region of Bangladesh.