Chinese buyers credit to strengthen power system, power grid networks
JAGARAN CHAKMA
China is ready to provide preferential buyers credit at high interest rates for strengthening Bangladeshs power system and power grid networks.
According to sources in the finance ministry, Chinas Exim Bank has written to the finance ministry to send a loan application for two power grid projects, amounting to USD 1,712.08 million, at an interest rate of 3 per cent.
It requested the finance ministry to send a loan application seeking the updated agreement for the expansion and strengthening of the power system network in the area under the Dhaka Power Distribution Company Limited (DPDC) and a power grid network strengthening project under the Power Grid Company of Bangladesh Limited (PGCB).
China is interested to provide USD 1,021.77 million for the expansion and strengthening of the power system network in the DPDC area and USD 690.30 million for the power grid network strengthening project under the PGCB.
Sources at the Economic Relations Division (ERD) said the Chinese Exim Bank agreed to provide funds for these projects at a meeting held in Beijing on August 11. China also agreed to provide funding for different projects.
As regards the high interest rate, the officials admitted that there was no option for financing the projects. Hence, for this reason, the government has taken the preferential buyers credit.
The letter said as agreed upon by both sides, the financing structure for the two power grid projects would be 15 per cent from the Bangladesh government and 85 per cent from the Exim Bank of China.
It also said the annual quota for the preferential buyers facility is proposed with an interest rate at 3 per cent (with insurance from China Export and Credit Insurance Corporation) instead of Exim Bank of China.
Meanwhile, the Executive Committee of the National Economic Council (ECNEC) approved the power grid network strengthening project, with an estimated outlay of Tk 13,703.31 crore, with the aim to ensure uninterrupted power supply system across the country.
The PGCB will implement the power grid network strengthening project under itself by June 2021.
Of the total project cost of Tk 13,703.31 crore, the government will provide Tk 3,729.25 crore, while Tk 266.44 crore will come from the organisations own funds. China will provide Tk 9,707.62 crore on a G-to-G basis as project assistance.
Since the government has chalked out plans to raise the power generation capacity to 24,000 MW by 2021 and 40,000 MW by 2030, there is a need to enhance the transmission and distribution lines, considering the growing demand.
Under the project, some 100km of a new 400KV transmission line will be constructed as also 330.20km of a new 230KV transmission line and 334.50km of a new 132KV transmission line; some 225km of the existing 132kV transmission line will be renovated; a new 400/132/33KV substation will be constructed, as also 12 new 230/132KV power substations and 28 new 132/33KV power substations; five existing 132/33 KV substations will be renovated; and seven new specialised engineering establishments will be installed.
