US $600 Million to Improve Electricity Supply in Rural Bangladesh Benefitting 25 Million People

February 27, 2014

WASHINGTON, February 27, 2014 — The World Bank Board approved today US$ 600 million in concessional financing  to improve the quality of electricity supply in the rural areas in the eastern part of Bangladesh. The Rural Electricity Transmission and Distribution Project aims to reduce system losses and enhance capacity in the electricity network in rural Bangladesh.

The project will reduce technical losses in the rural grid electricity system and will help to ensure that a greater percentage of electricity generated is reached to rural consumers.  It will contribute to improve quality and reliability of power supply to 25 million people in rural Bangladesh. The loss reductions targeted under the project will save enough energy to meet the electricity needs of a million people. 

Access to electricity is positively correlated with increase in growth, education and prosperity. We have also seen that access to electricity increases income opportunities, particularly for women.  It increases women’s mobility and participation in decision- making process,” said Johannes Zutt, World Bank Country Director for Bangladesh and NepalBy improving efficiency of the system so that more electricity can be reached in the rural areas, the project will contribute to reduce poverty and create employment and economic opportunities for millions of rural people.”

Only 42% of the rural population currently has access to electricity in Bangladesh. The project will support new lines and substations as well as upgrade existing lines in the rural areas of Dhaka, Chittagong and Sylhet divisions. The investments made through the project to reduce system losses will simultaneously augment the capacity of the network to carry more electricity when the power generation constrains are addressed.  This will allow the system to connect new rural households to electricity grid in the future.

The rural electrification program of Bangladesh is recognized globally as one of the most successful programs in the world.  However, the distribution and transmission system have not kept pace with rapid expansion in the program in recent years.  This project will provide support for institutional strengthening of the rural electricity service delivery. 

“Board approval of the project is a testament to the World Bank’s continued commitment to the rural electrification program of Bangladesh," said Zubair Sadeque, World Bank Team Leader for the Rural Electricity Transmission and Distribution Project.  "The project will support the reform action plan for the rural grid electrification program that was developed by the Government after  extensive consultation with all the concerned stakeholders to ensure the program continues to serve millions of rural people in a cost effective and efficient manner.

The credits from the International Development Association (IDA), the World Bank’s concessionary arm, have 40 years to maturity with a 10-year grace period; they carry a service charge of 0.75 percent.


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