ADB approves $167m for energy infrastructure
The Asian Development Bank yesterday said it would lend $167 million to Bangladesh to improve production efficiency at the Titas gas field and expand transmission infrastructure.
The Asian Infrastructure Investment Bank or AIIB is expected to lend an additional $60 million, which will be managed by the ADB. It will be the second project to be co-financed by the ADB and the AIIB.
The project will install seven wellhead gas compressors to increase pumping pressure and ensure steady extraction at Titas gas field, Bangladesh's largest gas field, Manila-based ADB said in a statement yesterday. The project will also boost gas transmission by building 181 kilometres of transmission pipeline from Chittagong to Bakhrabad, southeast of Dhaka.
The $453 million project is expected to be completed in 2021. It will substitute the use of other fossil fuels, thereby reducing over 700,000 tonnes of carbon dioxide emission a year over the ensuing 10 years. The Bangladesh government will provide $226 million for the project.
“The project will help the government address the country's energy crisis by making available additional clean energy, particularly imported natural gas, through the transmission network,” said Hongwei Zhang, finance specialist for energy at ADB's South Asia Department.
“By addressing gas supply constraints and transmission bottlenecks, the project will increase the energy sector's contribution to sustainable economic growth in Bangladesh.”
Bangladesh's economy is growing fast. But domestic natural gas supplies cannot keep pace with soaring demand for energy, resulting in a rising dependence on oil and diesel-based power generation. With gas reserves depleting, the government is trying to meet the supply shortage by importing liquefied natural gas.
Natural gas is Bangladesh's main energy source and a major driver of economic growth, providing about 75 percent of total primary energy consumed. More than half of the natural gas produced is used to generate electricity.
However, a widening gap between demand and supply has highlighted the urgent need to accelerate gas exploration and production, and to expand transmission infrastructure.
The ADB has provided Bangladesh with $17.2 billion in loans and $244.6 million for technical assistance projects since 1973.
In recent years, the bank's efforts in Bangladesh have focused on energy security, transport services and connectivity, education and skills development, water resources management, urban infrastructure and finance.