The World Bank approved $560 million for two projects in Bangladesh to improve reliable power supply and help micro enterprises become environmentally sustainable.
“The World Bank is helping Bangladesh overcome barriers to higher growth. Unreliable power supply and environmentally-unstainable enterprises hinder a county’s competitiveness and poverty reduction efforts,” said Zahid Hussain, World Bank Acting Country Director for Bangladesh.
“By improving electricity transmission and helping in micro-enterprises adopt environment-friendly technologies, these projects will help Bangladesh achieve sustainable growth and advance towards upper middle-income country vision.”
The $450 million Enhancement and Strengthening of Power Transmission Network in Eastern Region Project (ESPTNERP) will expand the electricity transmission network in the eastern region, covering the greater Comilla and Noakhali, and part of the greater Chittagong. It will provide new electricity connections to 275,000 households and 16,000 agricultural consumers and reduce power interruptions.
The project will expand the existing grid network by building 13 new substations and rehabilitating an existing one. It will also construct 290 kilometer new, and rehabilitate, 157 kilometer existing transmission lines.
“In the last decade, Bangladesh has increased power generation capacity by more than three-fold to 15.8 GW. But, it still has one of the world’s lowest electricity consumption rate per person. To meet the growing demand, the government plans to increase power generation to 24 GW by 2021,” said Mohammad Anis, World Bank Task Team Leader. “But, only investing in generation without upgrading transmission and distribution systems will not meet the demand. The project will enhance transmission capacity, ensure efficient evacuation of power, and improve grid operations.”
The $110 million Sustainable Enterprise Project, also approved today, will help 20,000 microenterprises adopt environmentally-friendly practices. It covers manufacturing and agribusiness sectors, including leather, mini textiles, light engineering, plastic, food processing, metal products, livestock, horticulture, aquaculture, and poultry.
“Half the country’s population depend on microenterprises for livelihoods. But, the microenterprises cumulatively affect the environment and face climate change risks,” said Nadia Sharmin, World Bank Task Team Leader. “By creating opportunities for them to avail finance and technologies for environmentally sustainable practices, the project will promote a cleaner and climate-resilient economy.”
The project will incentivize microenterprise clusters to use cleaner technologies and joint amenities such as shared recycling or storage facilities. It will provide loans to microenterprises for innovative, environmental-friendly technologies and practices. About 30 percent of the firms that will benefit are owned by female entrepreneurs.
The credits are from the International Development Association (IDA), the World Bank’s concessional lending arm. The ESPTNERP will receive a scale-up facility credit from IDA, which has a 35-years maturity including a four-year grace period. SEL will receive interest-free IDA credit, which is repayable in 38 years, including a 6-year grace period, and carry a service charge of 0.75 percent.
The World Bank was among the first development partners to support Bangladesh following its independence. Since then the World Bank has committed nearly $28 billion grants and interest-free credits to Bangladesh. In recent years, Bangladesh has been the largest recipient of the World Bank’s interest-free credits.