The government signed a $185 million loan agreement with the World Bank to add about 310MW renewable energy generation capacity, which will contribute to reliable, affordable electricity and also cleaner air. Secretary of the Economic Relations Division (ERD) Monowar Ahmed and acting country director of World Bank for Bangladesh and Bhutan, Dandan Chen on Thursday signed the agreement on behalf of their respective sides at National Economic Council conference room at Sher-e-Bangla Nagar in the capital, says a press release.
The $185 million credit titled, ‘Scaling up Renewable Energy Project,’ 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 Scaling-up Renewable Energy Project will focus on utility scale solar photovoltaic (PV) and rooftop PV to expand new markets in renewable energy generation it the country.
Under the project, Electricity Generation Company of Bangladesh (EGCB) would construct the country’s first large-scale 50MW grid-tied solar PV generation plant in Feni. The project will also support the Infrastructure Development Corporation Limited (IDCOL) to manage a Renewable Energy Financing Facility for both rooftop and utility scale solar PV. It will also help Sustainable and Renewable Energy Development Authority to identify sites for large-scale projects and promote new net metering policy for rooftop PV.
The ERD secretary said that the project will be important for Bangladesh to tap into its potential for renewable energy generation. Further, it will help reduce a substantive amount of CO2 emissions per year, which is in line with the country’s nationally determined contribution to the Paris climate agreement, he added. “Since the last decade, the World Bank has helped Bangladesh increase access to electricity in rural areas through renewable energy. Bangladesh has one of the world’s largest domestic solar power program that serves about one-tenth of the country’s population,” said Dandan Chen, Acting Country Director for Bangladesh and Bhutan.
The project will help unlocking private investment aiming to raise up to $212 million in financing from the private sector, commercial banks, and other sources. The credit from the World Bank’s International Development Association (IDA), has a 30-year term, including a five-year grace period, and an interest rate of 1.25 percent with a service charge of 0.75 percent. The SCF loan has a maturity of 40 years, including a grace period of 10 years with a service charge of 0.1 percent.