The government yesterday signed a Tk 340 crore ($44 million) loan contract with Islamic Development Bank to install the second submarine cable for the country.
“We had been trying to get the loan for the last couple of years and finally the contract was signed,” said Monwar Hossain, managing director of Bangladesh Submarine Cable Company Ltd (BSCCL).
The installation may complete by 2016, while Bangladesh entered a consortium in March this year.
The new cable -- SEA-ME-WE 5 -- that is likely to connect 15 leading operators in the Asia-Pacific and Europe will increase the country's internet bandwidth by sevenfold from 200 Gbps now.
Hossain said BSCCL has already paid $19.2 million to the consortium from its own fund.
Bangladesh will have to spend a total of $72.5 million for the new cable. Of the amount, $40 million is for the core cable and the rest $32.5 million is for the branch cable which will connect the country with the main deep-sea cable, he said.
The IDB will provide $44 million, while BSCCL will spend $70 million from its own fund.
The rate of interest for the loans will be LIBOR+1.35 percent and the loans will have to be repaid in 13 years. LIBOR is the rate at what banks charge each other for short-term loans in the London interbank market. It also serves as a global benchmark for short-term interest rates. The LIBOR will be followed as the loans will be given in foreign currency.
“As Myanmar has become a member of the consortium we are paying $10 million less for the branch cable,” Hossain said.
So far 12 countries have confirmed their membership with the consortium, while three other entities may join later, which will reduce the cost of Bangladesh for the core cable, he said.
The final contract of the consortium will be signed next month, he said.
For internet connectivity, the country depends largely on the lone undersea cable SEA-ME-WE-4, which was installed eight years ago. Separately, six more private international terrestrial cables are connected to global cables through Indian links.
The second cable will serve as a backup for the previous undersea cable as well. The single backbone fibre optic network will link Southeast Asia, Middle East, East Africa and Europe.
The cable's landing station will be at Kuakata in the southern district of Patuakhali. The first undersea cable's landing was in Cox's Bazar.