Economy
Bangladesh, ADB Ink $160M Deal to Boost Dhaka’s Power System
The Asian Development Bank (ADB) and the government of Bangladesh have officially inked a $160 million loan agreement to support the enhancement of Dhaka’s power distribution network. The loan aims to improve the efficiency of the system and boost overall energy supply. The agreement was signed by Md. Shahriar Kader Siddiky, Secretary of Economic Relations Division (ERD), representing Bangladesh, and Jiangbo Ning, Deputy Country Director at ADB, during a ceremony held at ERD in the capital.
The “Dhaka Power System Expansion and Strengthening Project” is set to implement the construction of eight substations, install more than 100 kilometers of climate and disaster-resilient underground cables, and lay 150 kilometers of overhead lines, as detailed in a press release. The initiative is expected to enhance the operations of Dhaka Electric Supply Company Limited (DESCO), aligning it with global standards, and establish a safeguards unit focusing on environmental, social, and gender issues for future infrastructure projects.
The project also emphasizes the adoption of environmentally friendly technologies, exploring alternative insulating gases for upcoming gas-insulated substations, with a feasibility study guiding the choice of insulating gases beyond sulfur hexafluoride.
Deputy Country Director Jiangbo Ning highlighted that the assistance aims to ensure a reliable, efficient, and improved quality electricity supply to residential, commercial, and industrial customers, including the new airport terminal in Dhaka. He noted that the initiative aligns with climate goals, optimizing power usage, modernizing infrastructure, and aiming to reduce approximately 14,700 tons of carbon dioxide emissions annually.
Additionally, a technical assistance grant of $750,000, funded by the Republic of Korea e-Asia Knowledge Partnership Fund through ADB, will contribute to enhancing the knowledge and capacity of Dhaka Electric Supply Company Limited and relevant government agencies. The focus will be on handling public-private partnerships, with a capacity development program and policy recommendations to strengthen PPP processing and implementation, as well as the management of future commercial financing.
ADB, founded in 1966 and owned by 68 members, is committed to fostering prosperity, inclusivity, resilience, and sustainability across Asia and the Pacific while persisting in efforts to eradicate extreme poverty.
During the eleventh month of the current fiscal year, the country’s foreign currency reserves have fallen below $19 billion for the first time. After paying off some import bills, the reserves have now stood at $18.26 billion on Sunday.
According to the International Monetary Fund (IMF), as of May 8, the total foreign currency reserves of the country were $19.82 billion.
Mohammad Mezbauul Haque, the spokesperson of Bangladesh Bank, informed that through the Asian Clearing Union (ACU), the central bank has paid off import bills totaling $1.63 billion over the past two months.
However, Bangladesh Bank maintains that after paying off the import bills, the foreign currency reserves now stand at $23.71 billion.
According to the Central Bank’s accounts, the reserves were $25.27 billion on May 8.
The Dhaka Stock Exchange (DSE) and the DSE Brokers Association (DBA) have expressed gratitude towards Prime Minister Sheikh Hasina for her directive to list government companies in the capital market, a move hailed as timely and positive.
The directive was issued during the recent meeting of the Executive Committee of the National Economic Council (Ecnec) last Thursday.
Dr. Hafiz Muhammad Hasan Babu, Chairman of DSE, described the directive as a significant step towards enhancing the dynamics of the capital market. He emphasized that besides invigorating the capital market, this move would also attract foreign investment and promote sustainable development.
Despite previous efforts, government institutions had not been listed in the stock exchange, according to a notification issued by the DSE. The Prime Minister’s directive is seen as a pivotal step towards revitalizing and expanding the economy.
Dr. Babu further remarked, “The listing of reputable companies in the capital market, as directed by the Prime Minister, will greatly benefit the country’s economy. It will also enhance investor confidence.”
Similarly, the DBA released a notification applauding the Prime Minister’s directive, terming it as positive and timely for the capital market.
Saiful Islam, President of DBA, expressed optimism about the directive’s potential to accelerate the country’s capital market and overall economy. He pledged support to relevant government departments and regulatory bodies in implementing the directive, ensuring its positive impact on the economy, including the capital market.
India has expressed interest in financing Bangladesh’s Teesta project, announced Foreign Minister Hasan Mahmud. Speaking to reporters after a meeting with Indian Foreign Secretary Vinay Mohan Kwatra, Mahmud stressed the importance of aligning the project with Bangladesh’s needs. He confirmed discussions on the Teesta issue during the meeting. Mahmud also affirmed Prime Minister Sheikh Hasina’s upcoming visit to New Delhi, indicating that the finalization of the date would depend on the formation of the new Indian government following ongoing elections.
Meanwhile, the IMF has approved a $1.15 billion staff-level loan for Bangladesh in its third tranche. Mahmud noted the ongoing elections in India and the subsequent formation of the new government as factors influencing the scheduling of PM Hasina’s visit.
When asked about the sequence of visits to India and China, Mahmud suggested Delhi’s geographical proximity to Bangladesh. Diplomatic sources suggest PM Hasina’s visit to India is planned for early July, following India’s elections.
Pre-election surveys indicate strong prospects for Indian Prime Minister Narendra Modi’s re-election. Modi previously congratulated PM Hasina on her electoral victory in January, expressing optimism about strengthening ties between the two nations.
The last bilateral engagement between the prime ministers occurred during the G-20 Leaders Summit in September 2023. Modi is expected to invite South Asian and BIMSTEC leaders to his swearing-in ceremony, fostering regional cooperation.
Addressing border killings, Mahmud emphasized the government’s commitment to ending such incidents and promoting the use of non-lethal weapons by border forces. Discussions also covered enhancing physical and people-to-people connectivity, including cooperation with India to import hydropower from Nepal and Bhutan through India. Mahmud highlighted the need to further ease visa restrictions to strengthen people-to-people relations.
