MNA Business Desk: The World Bank will provide $185 million to Bangladesh to add up to 310 Megawatts (MW) in renewable energy generation capacity and mobilise private sector participation to meet the growing demand for electricity in the country.
Bangladesh will sign a loan agreement with the global lender on Thursday in Dhaka for the “Bangladesh Scaling-up Renewable Energy Project”, reports BSS.
An Economic Relations Division (ERD) official said ERD Secretary Monowar Ahmed and World Bank Acting Country Director for Bangladesh and Bhutan Dandan Chen will sign the agreement on behalf of their respective sides on Thursday at the NEC-2 Conference Room in the city’s Sher-e-Bangla Nagar.
The official informed that the $185 million credit also includes a $26.38 million loan and a $2.87 million grant from the Strategic Climate Fund (SCF) of the World Bank’s Climate Investment Funds (CIFs).
The credit from the World Bank’s International Development Association (IDA), which provides concessional financing, has a 30-year term, including a five-year grace period, and an interest rate of 1.25 per cent with a service charge of 0.75 per cent.
The SCF loan is on Scaling-up Renewable Energy Programme (SREP) Loan terms and has a maturity of 40 years, including a grace period of 10 years.
The ERD official said the Scaling-up Renewable Energy Project will increase installed capacity of renewable through piloting and expanding investments in key market segments.
It will build the first 50 MW phase of a large scale solar panel energy park in the Feni district, which will be implemented by the Electricity Generation Company of Bangladesh (EGCB).
Currently, the share of the total installed renewable energy in grid supply is only 1.5 per cent and has significant potential for scaling up. The project will help provide better access to cleaner electricity as well as air by avoiding burning fossil fuels.
It will help cut emissions by 377,000 tonnes of carbon dioxide equivalent a year.
The project will help mobilise up to $212 million from the private sector, commercial banks and other sources of financing and establish a dedicated Renewable Energy Financing Facility to provide credit to developers of both rooftop solar photo-voltaic (PV) and large-scale solar PV projects.
The project will support the Infrastructure Development Company Limited (IDCOL) with development of the Financing Facility and provide resources to the Sustainable and Renewable Energy Development Authority (SREDA) to build market capacity and develop a pipeline of renewable energy projects.
World Bank Team Leader for the Scaling-up Renewable Energy Project Jari Vayrynen said the power sector in Bangladesh has grown rapidly with maximum generation capacity increased from a little over 4,000 MW in 2009 to more than 20,000 MW in 2018.