$600m WB loan for rural power supply

UNB, Dhaka :
The World Bank Board on Thursday approved $ 600 million in concessional financing to improve the quality of electricity supply in the eastern part of Bangladesh benefiting some 25 million rural people of the country.
The World Bank-supported ‘Rural Electricity Transmission and Distribution Project’ aims to reduce system losses and enhance capacity in the electricity network in rural Bangladesh, said a press release.
The project will reduce technical losses in the rural grid electricity system and will help to ensure that a greater percentage of electricity generated reaches the rural consumers.
It will contribute to improve quality and reliability of power supply to 25 million people in rural Bangladesh. The loss reductions targeted under
the project will save enough energy to meet the electricity needs of a million people.
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 and carries a service charge of 0.75 percent.
“Access to electricity is positively correlated with increase in growth, education and prosperity. We have also seen that access to electricity increases income opportunities, particularly for women. It increases women’s mobility and participation in decision- making process,” said Johannes Zutt, World Bank Country Director for Bangladesh and Nepal.
“By improving efficiency of the system so that more electricity can be reached in the rural areas, the project will contribute to reduce poverty and create employment and economic opportunities for millions of rural people,” he added.
The release said that only 42 percent of the rural population currently has access to electricity in Bangladesh. The project will support new lines and substations as well as upgrade existing lines in the rural areas of Dhaka, Chittagong and Sylhet divisions.
The investments made through the project to reduce system losses will simultaneously augment the capacity of the network to carry more electricity when the power generation constrains are addressed. This will allow the system to connect new rural households to electricity grid in the future.
The rural electrification program of Bangladesh is recognized globally as one of the most successful programs in the world. However, the distribution and transmission system have not kept pace with rapid expansion in the program in recent years. This project will provide support for institutional strengthening of the rural electricity service delivery.