4 years ago

BD gets $1.0b China loan to improve power grid

Flags of Bangladesh and China are seen cross-pinned in this photo symbolising friendship between the two nations — Collected
Flags of Bangladesh and China are seen cross-pinned in this photo symbolising friendship between the two nations — Collected

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Bangladesh has got confirmation of another US$970 million loan from China to be used for strengthening its electricity grid.

This loan will be provided to the state-run Power grid Company of Bangladesh Ltd or PGCB for its 'Power grid network strengthening project.'

The total project cost is estimated at$1.4 billion and it is scheduled to end by 2024.

During the visit of Prime Minister Sheikh Hasina to China in July, 2019, a primary deal was inked between the two countries under which the Chinese government agreed to back the PGCB project.

Out of the total loan amount, $690 million will be provided under preferential buyers' credit and $280 million under the government concessional loan.

A consortium of the Chinese companies, including CCC Engineering Ltd, Jiangsu ETERN Co Ltd and Fujian Electric Power Company are the contractors of the project, said the loan agreement, a copy of which has been obtained by the FE.

This project is among the 17 priority projects for which the government has been in negotiation with China.

According to the agreement, the rate of interest applicable to the buyers' credit is 3.0 per cent annually.

The rate applicable to the management fee shall be 0.25 per cent and the commitment fee shall be 0.25 per cent, the agreement said.

The maturity period for the loan will be 240 months, among which the grace period will be 60 months and the repayment period will be 180 months, said the agreement.

Project director SukantoLal Nag told the FE that the implementation of the project will bring a qualitative change in the power transmission system of the country.

In total, 41 new substations will be constructed and over 1,000km of new transmission line will be set up in different parts of the country, he said.

"The target of the project is to build necessary infrastructure for reliable transmission of power as despite having sufficient power generation capacity, power transmission is often disrupted due to the weakness in the transmission system," said an official.

Finance Ministry officials said that the government has recently sent a list of 26 projects to the Chinese government.

Out of the total, 17 are listed as the priority projects, for which Bangladesh sought $11.5 billion from China.

The list of priority projects has been prepared in line with the decision taken at the first meeting of the Bangladesh-China Investment Cooperation Working Group held last year.

Three projects belonging to the power division are included in the priority list--Power grid strengthening project worth $970 million, replacement of overloaded transformers for providing reliable electricity at a cost of $230.59 million and system loss reduction project worth $467.95 million.

During the visit of Chinese President Xi Jinping to Dhaka in 2016, China had pledged a credit line of over $25 billion for different infrastructure projects under its Belt and Road initiative.

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