The funds will be used to build gas transmission and distribution pipelines to meet demand and expand coverage to less developed areas in the southwest. The project will install compressors and metering systems to strengthen the management of gas supply and demand. An investment program to promote energy-efficient gas use will be drawn up, and training and support will be given to sector agencies.
Priyantha Wijayatunga, energy specialist in ADB’s South Asia Department, said: “This project will address priority supply and network constraints to ensure sustained growth in the gas sector that is critical to the country’s economic development.”
Around 200,000 households in the southwest, along with 1,400 industrial and commercial establishments, are expected to receive gas as a result of the expanded distribution network.
As part of the project, Sundarban Gas – a newly formed distribution affiliate of state-owned Petrobangla – will enter into contracts with private firms for the operation, maintenance, metering and billing of gas supplied to consumers in the southwest from 2012. ADB’s assistance also comes with conditions linked to regulatory reforms designed to encourage private investment in the gas industry.
Korea Eximbank will provide a loan of $45m for the transmission expansion phase, while the government of Bangladesh will provide $231m equivalent in equity and loans, for a total project cost of $542m.
ADB’s loan, from its ordinary capital resources, has a 25-year term, including a grace period of five years, and interest determined in accordance with its LIBOR-based lending facility. The Asian Development Fund loan has a 32-year tenor, including a grace period of eight years, with interest set at 1% during the grace period and 1.5% for the rest of the term.
Petrobangla, Gas Transmission Company, Bangladesh Gas Fields Company, Sundarban Distribution Company, and Titas Gas Transmission and Distribution are the executing agencies for the project, which is due for completion in March 2015.
