$515m WB loan for power transmission, insurance sector dev

FT ONLINE

The World Bank (WB) will provide $515 million as loan in a bid to expand Bangladesh’s electricity transmission network and improve insurance coverage.

To this effect, two agreements were signed in the city on Tuesday. Economic Relations Division (ERD) Additional Secretary Mahmuda Begum and World Bank Country Director in Bangladesh Mr Qimiao Fan signed two separate deals.

The Washington-based lender will provide $450 million for Enhancement and Strengthening of Power Transmission Network in Eastern Region Project and the rest $65 million for the Bangladesh’s insurance sector development project.

Under the Power transmission network project, the PGCB will improve reliable electricity supply and reduce load shedding in the eastern regions, covering greater Cumilla and Noakhali and part of greater Chittagong.

About 275,000 households and 16,000 agricultural consumers will get new electricity connection.

“In recent years, the government has significantly increased power generation. But, only investment in power generation is not sufficient, unless it is supported by improved transmission and distribution system,” said Mr Qimiao Fan.

“By supplying uninterrupted power to Mirsharai Economic Zone, port, airport or other key economic facilities, the project will help unlock private sector growth.”

The $65 million loan for the Insurance Sector Development Project (ISDP) will help strengthen the regulatory and supervisory capacity of the Insurance Development and Regulatory Authority (IDRA), and the country’s two state-owned insurance corporations—Shadharan Bima Corporation and Jiban Bima Corporation—through modernising their systems and business practices.

It will also help enhance the capacity of the Bangladesh Insurance Academy to become a reliable resource for training and research, and thereby address the severe lack of insurance professionals.

The $515 million credits are from the International Development Association (IDA), the WB’s concessional lending arm.

The Power Transmission Project will receive a scale-up facility credit from IDA, which has a 35-year maturity including a four-year grace period.

ISDP will receive interest-free IDA credit, which is repayable in 38 years, including a 6-year grace period, and carry a service charge of 0.75 per cent.