Govt to take $44m loan from IDB for second submarine cable links
The government is set to take $44 million loans from the Islamic Development Bank under slightly harder terms to connect the nation to a second submarine cable.
The development comes after the cabinet committee on economic affairs yesterday approved the proposal from the Post and Telecommunication Division.
Once connected to the second submarine cable, SEA-ME-WE-5, the country's internet bandwidth will increase sevenfold from the existing 200 Gbps.
SEA-ME-WE-5 is a consortium of 17 nations, where Bangladesh's share will be $72.5 million.
Of the amount, Bangladesh will pay $44 million by taking the loan from IDB, payable in ten years after a three-year grace period. The rate of interest on the loan would come to 4.15 percent.
The break-up of the interest is: the rate of interest for the loan will be six-month LIBOR+1.35 percent, which may amount to approximately 1.67 percent. LIBOR (London Inter-Bank Offer Rate) is the global benchmark for short-term loan.
On top of that, there will be a service charge of 2.8 percent.
The loan from IDB is slightly more expensive than the ones the country normally takes from the World Bank and Asian Development Bank. The rate of interest on those loans are typically 1 percent or below and they are repayable in more than 30 years.
Officials of Bangladesh Submarine Cable Company Ltd, the responsible body for installing the second submarine connection, said the investment they are undertaking with the loan will benefit the country much in future.
The installation is likely to be complete by 2016, they said. Its landing station in Bangladesh will be at Kuakata of Patuakhali district.
A joint venture of two companies -- Alcatel Lucent of France and NEC of Japan -- will build the second submarine cable line for the consortium, to whom BSCCL has already paid $19.2 million from its own fund.
The Post and Telecommunication Division in its proposal said the reasons for getting a second submarine connection were: to provide back-up for ICT-related services like call centre and data entry; to have an alternative if the SEA-ME-WE-4 submarine cable acts up; and greater internet penetration.
The second submarine cable will be of the latest 100G technology, said the proposal.
The countries participating in the submarine consortium are: Singapore, Thailand, Myanmar, Sri Lanka, India, Pakistan, Kenya, Oman, Saudi Arabia, Turkey, Egypt, France and other West European countries.
Also at yesterday's meeting, the committee approved Bangladesh Biman Airlines' proposal to get insurance from the international markets on competitive rates.
The committee also approved another proposal of the water resources ministry, in which the army will do the work of arresting erosion of the Meghna river in Laxmipur district at the negotiated price of Tk 179 crore.
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