$165m ADB loan to boost pvt sector
Bangladesh will mobilise massive private sector funds to invest in much-needed infrastructure projects with the help of a $165 million loan being provided by the Asian Development Bank (ADB).
The donor-funded Public-Private Infrastructure Development Facility will catalyse private sector investments of up to $600 million to finance 15 to 20 projects, mostly in energy. The energy sector schemes will add at least 900 megawatts of power generation capacity, providing electricity to about 100,000 more households through the renewable energy programme.
ADB is providing $82 million to help finance large infrastructure projects worth more than $30 million each, $50 million to assist small and medium-sized energy projects with a total project cost size not more than $30 million each, and $33 million to promote renewable energy.
A $500,000 technical assistance grant will also be provided for training and support, says an ADB news release received Friday from the Asian funding agency's headquarters in Manila.
Bangladesh's public investments in the infrastructure sector have remained stagnant in recent years, accounting for only 6% to 7% of the gross domestic product. At present, only 60% of urban households and 22% of rural households have electricity connections.
“The facility will improve the infrastructure sector in Bangladesh through increased private sector participation, thereby promoting economic growth and reducing poverty,” said Peter Marro, Senior Investment Specialist at ADB's South Asia Department.
He observed that participation of private sector can potentially speed up the pace of infrastructure development, expand access, and deliver efficient services.
The Public-Private Infrastructure Development Facility is an integral part of ADB's sector strategy and complements ADB's parallel initiatives in governance, capital market development, and promotion of public-private partnerships.
It will be managed by the state-owned Infrastructure Development Co. Ltd. (IDCOL), which will provide financing of up to 40% of each project against a loan-repayment period of up to 20 years. Private investors are required to inject at least 20% equity in the projects they invest in.
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