Country Report Bangladesh January 1996 Main report

Aid & Development: Donors consider $729m in new loans

Following a significant improvement in both the rate of system loss and the ratio of electricity paid for to that generated, a number of donors announced in September that they were considering new funding to the electricity sector totalling $729m. The donors and projects are:

* the World Bank: $300m for two power infrastructure development projects and the rationalisation of distribution;

* the ADB: $150m for the Meghanghat power project and other schemes under the ninth power project;

* Japan: $222m for a loss reduction scheme, the 103-mw Haripur extension project and rural electrification; and

* Germany: $57m for the construction of the Comilla-Chittagong trans- mission line.

System losses were down to 36%, from 44% in 1990, while the collection/ generation ratio has increased from 50% to about 70%. Before committing new loans, however, the donors have asked for the price of electricity to be raised to reflect the substantial increase in the costs of fuel and manpower over recent years, as well as the depreciation in the value of the taka.

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