ADB lends $300m for power transmission expansion in Bangladesh

The Asian Development Bank (ADB) has approved a 271.84 million euros ($300 million equivalent) loan for a project to expand transmission lines in greater Dhaka and the western zone of Bangladesh.

Besides ADB’s loan, the Asian Infrastructure Investment Bank is considering $200 million in co-financing to finance transmission lines, substations, and an enterprise resource planning system.

The assistance also comprises a $750,000 grant from the People’s Republic of China’s Poverty Reduction and Regional Cooperation Fund (PRC Fund), the Manila-based lender said in a statement on Friday.

“As the Bangladesh economy grows and the power grid becomes more congested, upgrading and expanding the country’s transmission network is crucial to sustain growth and reduce poverty,” said ADB Principal Energy Specialist Aiming Zhou.

“The project will improve the reliability and efficiency of the electricity supply in the Greater Dhaka and western zone of Bangladesh, helping to bolster economic growth and achieve the government target of electricity for all by 2021.”

Bangladesh has yielded average annual gross domestic growth of 6.5 percent during fiscal years 2009 to 2018 and achieved lower middle-income country status in the FY2015. Despite its economic success, Bangladesh faces major challenges in maintaining growth trends and reducing poverty because of infrastructure deficiencies in the energy sector and elsewhere.

Despite considerable progress in increasing generation capacity to meet the growing demand for electricity, the sector is still characterized by recurring power supply shortages, an increasing number of interruptions, and damaging voltage fluctuations.

The Dhaka and Western Zone Transmission Grid Expansion Project builds on ADB’s previous work in Bangladesh’s power sector, including the Southwest Transmission Grid Expansion project approved in 2018 to address continuing deficiencies in the transmission system by providing more efficient, reliable power to consumers in the Greater Dhaka and western zones.

The new project will continue to fund high-level advanced conductors (high temperature low sag), that were used in the 2018 project, to allow more power transfer at lower energy losses. With assistance from the PRC Fund, the project will introduce drone technology to Bangladesh as an innovative new technology to improve operational efficiency and safety.

The project will construct 40 kilometres of transmission lines and 4,450 megavolt-ampere (MVA) of substations in greater Dhaka, as well as 368km of transmission lines, 3,070 MVA of substations, and 20 bay extensions in the western zone.

It will also establish an enterprise resource planning system, and a drone inspection centre to improve operation efficiency and enhance workspace safety in the executing agency, the Power Grid Company of Bangladesh Limited.

The government and executing agency will contribute $249.25 million equivalent toward the $750 million total cost of the project, which is due for completion at the end of June 2024.