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24 April, 2019 11:23:08 AM
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WB to help expand Bangladesh’s renewable energy

The project will help mobilise up to US $212 million from the private sector, commercial banks and other sources of financing in Bangladesh
Prof. Sarwar Md. Saifullah Khaled
WB to help expand Bangladesh’s renewable energy

Bangladesh is suffering from acute energy crisis for long. In the face of growing alarm of global devastating climate change due to the burning of fossil fuels the concept of renewable energy is gradually gaining increasing impotence across world countries. Bangladesh has to keep pace with the global trend to meet its energy needs. To that end, in continuation of the concept of renewable energy the World Bank (WB) has approved US $185 million to help Bangladesh add up to 310 Megawatt (MW) in renewable energy generation capacity. This is also to mobilise private sector participation to meet the growing demand for electricity in the country. For the Scaling-up Renewable Energy Project the support will increase the country’s installed capacity of renewables through piloting and expanding investments in key market segments. It will build the first 50 MW phase of a large scale solar panel energy park in the Feni district. This will be implemented by the Electricity Generation Company of Bangladesh (EGCB).

The share of the total installed renewable energy in grid supply currently in Bangladesh is only 1.5 percent and has significant potential for scaling it up. By avoiding the burning of fossil fuels the project will help provide the country better access to cleaner electricity as well as clean air. It will help cut emissions of carbon dioxide by 377,000 tons equivalent a year. With about 80 percent of the country’s population having access to grid electricity, Bangladesh is well on its way towards becoming an upper middle-income country. The World Bank maintains that Bangladesh also has one of the most successful off-grid renewable energy programs in the world. This project will help expand renewable energy generation capacity of the country. The World Bank added that the expanded renewable energy sector by leveraging all sources of finance is ready to push the country's growth trajectory further.

      The project will help mobilise up to US $212 million from the private sector, commercial banks and other sources of financing in Bangladesh. And to provide credit to developers of both rooftop solar photovoltaic (PV) and large-scale solar PV projects, it will establish a dedicated Renewable Energy Financing Facility (REFF). With the development of the financing facility the project will support the country’s Infrastructure Development Company Limited (IDCOL). To build market capacity and develop a pipeline of renewable energy projects this will provide resources to the Sustainable and Renewable Energy Development Authority (SREDA) also. All that is required, in addition, to make the project a success is the private sector to come forward along with the public sector of the country to meet the requirement of the necessary fund to that end.  

The World Bank Team Leader for the Scaling-up Renewable Energy Project, Jari Vyrynen, said that in Bangladesh the power sector has grown rapidly from a little over 4,000 MW in 2009, with maximum generation capacity increased to more than 20,000 MW in 2018. The World Bank official added that a strong collaboration between the public and private sector will not only help meet energy demand of the country but will also lower carbon emissions to avert climate change the impact of which the country is already experiencing. The US $185 million credit also includes a US $26.38 million loan and a US $2.87 million grant from the Strategic Climate Fund (SCF) of the World Bank's Climate Investment Funds (CIFs).

The World Bank's International Development Association (IDA), from which the credit comes, provides concessional financing with a 30-year term, including a five-year grace period. This is also with an interest rate of as low as 1.25 percent a year with a service charge of 0.75 percent that makes the charge 2.0 percent in total. The SCF loan has a maturity of 40 years, including a grace period of 10 years and is on Scaling-up Renewable Energy Program (SREP) Loan terms.

However, the main characteristic and attraction of the loan is that in addition to improving the cleaner electricity supply for the country it will cut carbon dioxide emission in the air as well reducing climate change. But care will have to be taken so that the project does not harm or reduce the already scarce crops land of the country.  

The writer is a retired Professor of Economics, BCS General, Education Cadre

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Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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