The Asian Development Bank (ADB) is providing a US$700m loan to dramatically boost Bangladesh’s power supply system, which will reduce outages and shortages that are crippling the economy and causing severe hardship across the country.
Investment over the last 15 years has substantially improved Bangladesh’s power supply network, but more than half the population still has no access to electricity. Outages are frequent, especially in peak periods. Demand is rising, and is already nearly double the current generating capacity. The cost of supply interruptions to the economy is estimated at around 0.5% of annual gross domestic product.
The program will boost the efficiency of several generating facilities to increase capacity by up to 700 MW. The first $185-million tranche loan will be used to convert a gas-fired power plant in Khulna, the third largest city in the country, into a more efficient, cleaner-burning combined cycle plant.
The program will also fund hundreds of km of new transmission and distribution lines and improve supply equipment. 450,000 households will receive new power connections through the multitranche facility’s financing of an expansion and upgrade of generation, transmission and distribution facilities. Carbon emissions will also be reduced by almost 2.5 Mt/year.
The investments are part of a broader government plan to reform and strengthen the power sector, tapping private sector financing. The goal is to raise generating capacity to more than 12,500 MW and the rate of electrification to 68% by 2025.