ADB to lend $110m for infrastructure

The Asian Development Bank has agreed to lend Bangladesh $110 million to support private sector infrastructure projects and in renewable energy.
Mohammad Mejbahuddin, secretary of the Economic Relations Division (ERD), and Oleg Tonkonojenkov, deputy country director of ADB's Bangladesh resident mission, signed a deal at the ERD in the capital
yesterday.
The loans will support the Second Public-Private Infrastructure Development Facility established under the state-owned Infrastructure Development Company Ltd (Idcol), ADB said in a statement.

The World Bank and the Japan International Cooperation Agency will co-finance the project with $99.5 million and $96 million respectively. Private sector investors will also contribute $50 million as equity financing and debt funding.
“Low investment in infrastructure is holding back development and economic growth in Bangladesh,” said Tonkonojenkov.
“Getting more power stations, roads, and water networks built would accelerate development and could draw in more foreign direct investments,” he said after signing the deal.
The assistance will help Idcol invest more in projects in power generation, water and sanitation, transportation and information technology.
Idcol currently has eight energy projects with a total investment of around $235 million in the pipeline. These will also support Idcol to expand its successful programme to finance off-grid solar home systems for households and small businesses in remote rural areas.
Idcol hit its target of installing two million solar home systems in 2013 and is now seeking to finance two million more by 2015.
ADB said the government has been the main source of infrastructure spending in Bangladesh, but cannot alone provide the required fund.
Private investors also struggle to get the long-term financing they need from underdeveloped capital markets or from banks that hesitate to provide funds with long tenures because of potential asset-liability mismatches.
As a result, the lender said the country suffers from a chronic infrastructure shortfall. Electricity shortages cause an annual estimated loss of 2 percent of gross domestic product.
Poor transport and communications networks also hold back the economy, while poor sanitation and water systems undermine public health.