The Asian Development Bank will provide $10 million loan facility for the much-needed investment in private-sector infrastructure projects in Bangladesh, including in renewable energy.
The ADB will provide a $100 million credit line to the state-owned Infrastructure Development Company Ltd for investment in projects in power generation, water and sanitation, transportation, and information technology. The IDCOL currently has eight energy projects in its pipeline with a total investment amount of around $235 million.
The ADB will provide a further $10 million to the IDCOL to expand its successful programme to finance off-grid solar
home systems for households and small businesses in remote rural areas. The IDCOL hits its target of 2 million installations in 2013 and is now seeking to finance 2 million more by 2015.
‘The $110 million in financing builds on
similar previous ADB financing to the IDCOL of $165 million approved in October 2008 which has been fully committed,’ said the ADB.
The support is in line with Bangladesh’s sixth five-year plan (2011-2015) which stresses the need to triple investment in infrastructure development from 2 per cent to 6 per cent of GDP with substantial private sector participation through public-private partnership.
‘Low investment in infrastructure is holding back development and economic growth in Bangladesh. Getting more power stations, roads, and water networks built would help those in rural areas in particular and could draw in more foreign direct investment,’ said Peter Marro, principal financial sector specialist in the ADB’s South Asia department.
The government has been the main source of infrastructure spending in Bangladesh, but cannot alone provide the finance needed. Private investors, meanwhile, struggle to get the long-term financing they need from underdeveloped capital markets or from banks that are hesitant to provide funds with long tenors because of potential asset-liability mismatches.
As a result, the country suffers from a chronic infrastructure shortfall. Electricity shortages cause an annual estimated loss of 2 per cent of gross
domestic product. Poor transport and communications networks also hold back the economy,
while poor sanitation and water systems undermine health.
-With New Age input
