DHAKA, April 10, 2018 – The government of Bangladesh today signed two financing agreements totaling $515 million with the World Bank to help expand electricity transmission network and improve insurance coverage.
The $450 million Enhancement and Strengthening of Power Transmission Network in Eastern Region Project will improve the reliability of electricity supply and reduce load shedding in the eastern region, covering greater Cumilla and Noakhali and part of greater Chittagong. In addition, about 275,000 households and 16,000 agricultural consumers will get new electricity connection.
The project will build 13 new substations and rehabilitate an existing one in the country’s eastern part. These will also help integrate renewable energy and new generations into the grid. The project will build one 230 kV transmission line through greater Cumilla and four short distance 132 kV lines in Cumilla and Noakhali areas.
“In recent years, Bangladesh has significantly increased power generation. That significantly increased power generation requires improvement and expansion of the transmission and distribution system to get to consumers,” said Qimiao Fan, World Bank Country Director for Bangladesh, Bhutan, and Nepal. “By supplying uninterrupted power to the Mirsharai Economic Zone, port, airport or other key economic facilities, the project will help unlock private sector and job growth.”
The $65 million Insurance Sector Development Project, also signed today, will help strengthen the regulatory and supervisory capacity of the Insurance Development and Regulatory Authority (IDRA), and the country’s two state-owned insurance corporations — Shadharan Bima Corporation and Jiban Bima Corporation — through modernizing their systems and business practices. It will also help enhance the capacity of the Bangladesh Insurance Academy to become a reliable resource for training and research, and thereby address the severe lack of insurance professionals.
“Insurance helps people, especially the poor, and businesses to protect themselves from shocks. But in Bangladesh, less than 1 percent of the population has insurance coverage. This project will help individuals, families, and businesses increase insurance coverage”, added Qimiao Fan.
"The 7th Five-Year Plan includes a vision for providing electricity to all as well as improving the insurance coverage,” said Mahmuda Begum, Additional Secretary, Economic Relations Division, Government of Bangladesh. “Both projects will contribute to creating more and better jobs, and boosting growth.”
The agreements were signed by Mahmuda Begum and Qimiao Fan on behalf of the government of Bangladesh and the World Bank, respectively, at the Economic Relations Division.
The credits are from the International Development Association (IDA), the World Bank’s concessional lending arm. The Power Transmission Project will receive a scale-up facility credit from IDA, which has a 35-year maturity including a 4-year grace period. The Insurance Sector Development Project will receive interest-free IDA credit, which is repayable in 38 years, including a 6-year grace period, and carries 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 more than $28 billion in grants and interest-free credits to the country. In recent years, Bangladesh has been among the largest recipients of the World Bank’s interest-free credits.