The World Bank has approved an additional $177 million fund, aiming to increase reliable and low-cost electricity supply in Bangladesh.
The additional financing will help the construction of a 335-megawatt combined cycle power plant at Siddhirganj, near Dhaka, the Washington-based lender said in a statement friday.
The credit will come from the International Development Association, the World Bank’s concessional lending arm. The terms are based on 38-year maturity with a six-year grace period and a service charge of 0.75 percent.
The combined cycle technology allows the plant to produce higher energy with lower gas consumption and it reduces carbon emissions while ensuring higher thermal efficiency.
The plant will deliver at least 2.49 billion kWh of power annually, which accounts for 6 percent of the total electricity delivered to the national grid.
“Despite increased power generation capacity, Bangladesh still faces significant outages during the peak demand hours,” said Martin Rama, acting country director of World Bank for Bangladesh. “Inadequate power supply is affecting families, undermining competitiveness and hindering growth. This additional financing will add new power generation capacity for Bangladesh and increase efficient use of its scarce domestic gas supplies.”
In 2008, the World Bank provided $350 million to construct a 300-megawatt gas turbine power plant in Siddhirganj.
In the face of increasing power demand and gas shortages, the government decided to convert the peaking power plant to an energy-efficient 335-megawatt combined cycle power plant.
The additional financing will fill the financing gap for the construction of the power plant, which is expected to start commercial operation in 2016, according to the statement.
Power outages resulted in an output loss of nearly 3 percent of GDP in 2013,” said Md Iqbal, World Bank’s task team leader for Siddhirganj Power Project, citing the World Bank Enterprise Survey.
“About 65 percent of Bangladeshi firms invest in back-up generation, adding costs to doing business. Moreover, the demand for energy is projected to rise nearly fivefold by 2030.”