$500 Million ADB Loan to Develop State-of-the-Art Power Plant in Bangladesh

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MANILA, The Asian Development Bank's (ADB) Board of Directors has approved a $500 million loan to develop a state-of-the-art 800 megawatt (MW) power plant in Khulna, Bangladesh, along with associated connections to natural gas and power transmission facilities.

In the face of rising demand for energy in a growing economy, the Rupsha power plant will be the first of its kind in Bangladesh, vastly increasing the availability of efficient and cleaner energy, said ADB Energy Specialist Mr. Aziz Yusupov. By providing additional electricity supply to about 300,000 consumers, the plant will stimulate business expansion and create new job opportunities.

Bangladesh faces a major challenge in providing modern and affordable energy, while suffering from recurring generating capacity shortages in the power sector. In financial year 2017, peak demand was estimated at 10,400 MW while available generation capacity was just 9,479 MW. Net peak demand is expected to exceed 13,300 MW by 2020 and 19,900 MW by 2025, while existing generation facilities will gradually retire and need replacement.

Recognizing the need to sustain Bangladesh's economic momentum, the government has prepared an investment plan to increase power generation capacity and improve the transmission and distribution network, with the aim of achieving universal access to grid-connected electricity by 2021.

The ADB-financed project design will ensure that the Rupsha plant uses the latest combined cycle technology, which offers the highest efficiency to convert gas to electricity. It will also use the most advanced water treatment processes to purify and recycle liquid waste at the end of the industrial process, leaving zero discharge.

To supply gas to the Rupsha power plant, the project will construct gas distribution pipelines of 12 kilometers (km). The project will also finance construction of a 230-kilovolt switchyard at the power plant and 29 km of high capacity transmission lines to transfer generated electricity from Rupsha to the grid.

To ensure adequate institutional capacity, the project will conduct overall institutional strengthening of the executing agency, the North-West Power Generation Company Limited, including business processes upgrade and training for implementation and operation of the system, maintenance, monitoring, and environment and social safeguards.

The total cost of the project is $1.14 billion, with the Islamic Development Bank contributing $300 million in cofinancing and the government contributing $338.5 million on top of ADB's support. The project is due to be completed by the end of June 2022.

Grant financing of $1.5 million will also be provided from ADB's Japan Fund for Poverty Reduction, funded by the Government of Japan, to improve living standards in nearby communities. Focusing on vulnerable households and women, activities will include increasing awareness on safe and efficient use of electricity, training on livelihood and job opportunities, and providing school laboratory facilities.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members�48 from the region. In 2017, ADB operations totaled $32.2 billion, including $11.9 billion in cofinancing.

Source: Asian Development Bank