$250 mln ADB loan for Bangladesh

Bangladesh signed a $ 250 million loan agreement with the Asian Development Bank (ADB) on Thursday to develop a surface water supply system.

The Manila-based lender said the project would benefit over 11 million people in Dhaka, where groundwater is depleting fast.

Economic Relations Division (ERD) Secretary Mohammad Mejbahuddin, and ADB’s Country Director for Bangladesh Kazuhiko Higuchi signed the agreement at the ERD.

The concessional assistance, which has to be repaid in 25 years, comes with a five-year grace period and the interest rate is determined in accordance with ADB’s London Interbank Offered Rate (LIBOR).

The sum will help expand the coverage and quality of water supplies, and develop a new raw water intake at the Meghna River, about 22 kilometers east of Dhaka city, as well as a pumping station.

The assistance will also fund a water treatment plant at Gandharbpur, capable of handling 500 million liters a day, and install raw and treated water transmission pipelines.

These initiatives, under the Dhaka Environmentally Sustainable Water Supply Project, are expected to reduce groundwater extraction by 150 million liters a day and help the city water authority raise its overall surface water supply to 1.9 billion liters a day by 2021.

“Dhaka needs more water for its booming population,” said the country director Higuchi. “This assistance will support Dhaka’s water authority to improve facilities, and tap a new surface water source to help conserve precious groundwater sources of the city.”

The project’s executing agency, Dhaka Water Supply and Sewerage Authority, plans to reduce the dependence on groundwater to about 30 percent of the total water supply by 2021, from the current 78 percent, to ensure environmentally sustainable water supply.