Play store
The Bangladesh government has approved $3.3 billion in non-concessional foreign loans to modernise the country’s power distribution network and finance fuel oil and LNG imports.
The approval was given at a meeting of the Standing Committee on Non-Concessional Loans, chaired by Finance Minister Amir Khosru Mahmud Chowdhury, at the Bangladesh Secretariat on Wednesday.
Of the total amount, $200 million will come from the Asian Development Bank (ADB) for the Power Distribution Network Enhancement Project, implemented by the Bangladesh Rural Electrification Board.
The 25-year ADB loan will have a five-year grace period, with interest set at the Secured Overnight Financing Rate (SOFR) plus 0.50%.
The project aims to improve power supply reliability and climate resilience in 13 rural electricity cooperative areas around Dhaka.
It will involve expanding substations, installing underground and overhead lines, and introducing digital monitoring and fault-locator systems.
The remaining $3.1 billion will be borrowed from the Jeddah-based International Islamic Trade Finance Corporation (ITFC) for energy imports.
Of this, $2.5 billion will finance fuel oil imports by Bangladesh Petroleum Corporation, while $600 million will be used by Petrobangla to import LNG.
The six-month ITFC loan carries interest at six-month Term SOFR plus 1.70%.
The government said the borrowing was necessary to maintain uninterrupted fuel supplies and strengthen energy security.
The loans are classified as non-concessional because they carry relatively tougher financial terms.
