April 26, 2002
The OPEC Fund for International Development today signed a US$8 million loan agreement with the People's Republic of Bangladesh in support of an initiative to rehabilitate and strengthen the electricity distribution network in the Greater Rajshahi area. This scheme falls within the framework of a government aim to provide the population with an affordable and reliable electricity supply.
The Greater Rajshahi region, which comprises the city of Rajshahi and the townships of Natore, Chapai-Nawabgonj and Naogaon, is situated approximately 200 km west of the capital city Dhaka. Populated by around 1.3 million people, the area yields a wide array of food and cash crops. Jute, for example, is vital for the local handicraft and textile industries. However, the electricity network in Greater Rajshahi has limited capacity and cannot meet current demands. Delivery of electrical power is often inconsistent, which in turn disrupts the running of irrigation systems, and often forces factories to work fewer shifts or resort to using generators that are expensive to run. Many households remain unconnected to the network, particularly in rural areas, a situation that keeps living standards low and hinders income-generating activities for thousands of families.
Under the current scheme, the entire electricity network in the Greater Rajshahi region will be rehabilitated and strengthened to meet present and future needs. Works include the installation of around 360-km of voltage transmission lines as well as some 200-km of distribution lines. Associated equipment and parts such as circuit breakers, conductors, testing instruments, towers and poles will also be provided. Existing transformer stations will be expanded, rehabilitated and re-equipped, and new ones constructed based upon the electricity requirements of each district. Equipment for connecting consumers to the distribution network will also be provided. Once completed, the improved system will reduce transmission losses substantially and deliver a consistent supply of electricity, thereby helping boost economic activity, create jobs and ultimately, reduce poverty.
The OPEC Fund has previously approved loans to Bangladesh totaling US$290.5 million. These loans provided balance of payments support, helped finance commodity imports programs, and supported projects in the transportation, energy, education and health sectors. Bangladesh has also benefited from a number of Fund grants supporting regional programs in the areas of health and agriculture, emergency aid for cyclone and flood victims, as well as research grants.
Today's agreement was signed in Vienna by Ms. Nargis Shamsun Nahar, Economic Counselor of the People's Republic of Bangladesh to Germany, and by H.E. Dr. Y. Seyyid Abdulai, Director-General of the OPEC Fund.
Project: Greater Rajshahi Electricity
OPEC Fund loan: US$8 million
Lending terms: Interest rate of 1% per annum, with an annual service charge of 1% on amounts withdrawn and outstanding; maturity of 20 years, including a grace period of 5 years.
Borrower: People's Republic of Bangladesh
Executing agency: Power Development Board, under the Ministry of Energy and Mineral Resources
Implementation period: 2½ years
Appraising agency: Kuwait Fund for Arab Economic Development (Kuwait Fund)
Loan administrator: Kuwait Fund
Cofinanciers: Kuwait Fund, Governments of India and Bangladesh
Total cost: US$43.75 million
Project description: The project will comprise the following:
- Supply and installation of distribution and transmission lines including associated ancillary equipment and works;
- provision and installation of distribution transformers;
- rehabilitation of existing transformer stations and provision of spare parts and meters;
- supply and installation of equipment for connecting consumers to network;
- personnel training; and
- consultancy services.