The World Bank approved a $350 million loan for Bangladesh to build more power plants to meet peak demands, the bank said on Saturday. Poor electricity supply costs Bangladesh nearly 2 percent in gross domestic product (GDP) growth each year, the bank said.
With the financial assistance, a 300 megawatt (MW) power plant will be built at Siddhirganj, 20 km (13 miles) south-east of Dhaka, to meet demand during peak periods. A gas turbine power plant will also be built at Siddhirganj, along with a 60-km natural gas pipeline from Bakhrabad to Siddhirganj to improve the reliability of gas supply and an 11-km transmission line to serve more consumers.
"While Bangladesh has posted economic growth averaging over 6 percent the past five years, inadequate infrastructure especially unreliable power supply remains a significant constraint on growth," the bank said in a statement. Manufacturers surveyed in the World Bank's most recent Investment Climate Assessment estimate that power shortages cost them around 12 percent in lost sales on an annual basis. "Bangladesh is now in the midst of a serious power crisis," said Xian Zhu, World Bank Country Director for Bangladesh.
"Power generation has failed to keep pace with demand, and, in the last two years, increasing shortages of natural gas, the primary fuel used in power generation, have added to the sector's woes." The project will also help strengthen the capacity of state-run Gas Transmission Company Limited, Electricity Generation Company of Bangladesh, and Power Grid Company of Bangladesh.
The Siddhirganj power plant is expected to begin operation in 2011. The credit has 40 years to maturity with a 10-year grace period and it carries a service charge of 0.75 percent. While overall capacity in the country amounts to 5,300 MW, only about 4,400 MW of that can be used. Since peak demand consistently exceeds 5,000 MW, there are pervasive power cuts and surges.
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