New Delhi: The Asian Development Bank on Tuesday said it will provide $100 million loan for a cross-border electricity initiative between India and Bangladesh, which is expected to provide impetus for increased power trading in the South Asian region.
The Manila -headquartered bank’s board has approved loan for the Bangladesh-India Electrical Grid Interconnection Project, which is scheduled for completion by December 2012, ADB said in a statement.
“The funds will be used to build a 40 kilometer 400 kv transmission line, along with a high voltage direct current substation and connecting loop, linking the western electrical grid of Bangladesh with India’s eastern grid,” it said.
The project is expected to result in flow of at least an additional 500 megawatt of power to Bangladesh by 2012. It would be beneficial for the country where less than half of its 15.6 crore people have access to power.
“Connecting the two grids will demonstrate the substantial economic benefits that come from enhanced regional cooperation and help to address energy gaps across the region,” ADB director general (South Asia department) Sultan Hafeez Rahman said.
ADB’s loan, from the Asian Development Fund, will take care of around 63% of the total costs project of $156.8 million.
The loan has a 32-year term, including a grace period of eight years, with interest charged at 1% annually during the grace period and 1.5% per annum for the rest of the term.
“The balance of the investment of $58.6 million will be funded by government of Bangladesh, while interconnection facilities on the Indian side will be financed, developed and operated by India,” ADB said.