The European Investment Bank (EIB) is set to become a development partner of Bangladesh for the first time, providing financing in the power sector and for a water treatment plant, sources in the Economic Relations Division (ERD) said. The EIB will provide a loan of EUR 82 million, which will be equivalent to a Tk. 834.14-crore loan, for the ‘Power System Expansion and Efficiency Improvement Investment Programme’ in the Rajshahi and Sylhet regions.
The project comprises conversion of four natural gas-fired open-cycle power units to a combined cycle mode of operation, adding heat recovery boilers and steam turbines. Two of the four power plants are to be financed by the bank.
The existing generation capacity of the plants is 470 MW, which will increase to 705 MW as a result of the conversions, resulting in efficiency improvements by 75 per cent and a capacity increase of 50 per cent. There will be no increase in the amount of fuel used.
The EIB has sent the draft agreement to the ERD.
Again, the EIB will provide EUR 100 million loans for the Khilkhet water treatment plant, which will be implemented under the ‘Dhaka Environmentally Sustainable Water Supply Project’, treating water drawn from the Meghna river to reduce dependence on diminishing groundwater, and will thereby improve water supply to Dhaka city.
Earlier, the EIB had provided loans to the private sector and this will be the first time that it will provide loans to the government, ERD officials said.
The Khilkhet water treatment plant project aims to improve access to water supply services in Dhaka.
The ERD has accepted the EIB’s and Agence Française de Développement’s (AFD’s) loan proposals for the project in principle. However, at the same time, the ERD has requested the EIB and AFD to make the loan proposal more concessional.
The Asian Development Bank (ADB) is also set to provide USD 185 million for the project.
The EIB, created under the Treaty of Rome in 1958, is the foremost financing arm of the European Union (EU). The EIB is owned by 28 countries in the EU. It borrows money on the capital markets and lends it at a low interest rate to help improve infrastructure, energy supply or environmental standards, both within and outside the EU, and in developing countries.
-With The Independent input