DHAKA, November 14, 2011 – The Government of Bangladesh today signed a US$ 172 million financing agreement with the World Bank for the ongoing “Rural Electrification and Renewable Energy Development Project (RERED)” project. This additional financing will support the installation of 630,000 solar home systems in rural Bangladesh by 2012.
Only about one-third of rural households in Bangladesh have access to electricity with about 16 million households yet to be electrified. The project has so far supported more than 600,000 solar home systems surpassing its initial target of 50,000 systems. Currently, 40,000 rural families install solar home system every month on an average. Together with support from the World Bank and other development partners, more than a million systems have been installed in rural Bangladesh. Solar homes systems are most suitable for remote and dispersed communities where the grid connection is difficult or expensive to reach.
“More than a million homes and shops in remote areas have installed low cost and reliable solar home systems with support from the World Bank and other development partners,” said Ellen Goldstein, World Bank Country Director for Bangladesh. “Access to electricity is transforming lives for millions in Bangladeshis and boosting the rural economy by providing more opportunities for village enterprises.”
The World Bank has been supporting the Government of Bangladesh to implement a market-based off-grid electrification program since 2002. The government owned financial institution, Infrastructure Development Company Ltd (IDCOL), has been implementing the solar home system component of the RERED project.
Under the program, partner organizations, mostly non government organizations procure and install the systems in rural households as per the standards set by IDCOL. Consumers enter into a micro-finance agreement with their respective partner organizations following which the systems are installed.
“The Renewable Energy Policy (2008) of the Government aims to meet 5% of total power demand from renewable energy sources by 2015 and 10% by 2020,” said Mr. Arastoo Khan, Additional Secretary, Economic Relations Division, Government of Bangladesh. “The additional financing will support the Government’s efforts to increase access to renewable electricity in rural areas of Bangladesh”
Mr. Arastoo Khan, Additional Secretary, Economic Relations Division, and Ms. Ellen Goldstein, World Bank Country Director for Bangladesh, signed the financing agreement on behalf of the Government of Bangladesh and the World Bank, respectively, at the Economic Relations Division.
The credit from the International Development Association (IDA), the World Bank’s concessional arm, has a maturity of 40 years, including a 10-year grace period; and carries a service charge of 0.75 percent.