ADB to pour $120 million in loan into project to upgrade India-Bangladesh electricity network

The Asian Development Bank (ADB) will provide financial assistance to help increase transmission capacity of a cross-border electricity link between India and Bangladesh.

This will allow Bangladesh to better meet sharply rising power demand and support increased power exchanges across South Asia, the Manila-based lending agency says.

The ADB’s loan of $120 million to Bangladesh will help double the capacity of the existing interconnection system which links the power grid of western Bangladesh at Bherhamara with the grid of eastern India at Bharampur.

Bangladesh government will finance $63.2 million in this interconnection project, which is expected to be completed in June 2018.

The two networks were first interconnected in 2013, under a previous project financed by the ADB. New transmission capacity is expected to rise from 500 megawatts (MW) to 1,000 MW.

“There are power surpluses and shortfalls across the region and this project assistance will help these two countries move forward to better utilize their energy generation capacities and to support the broader goal of South Asian regional energy cooperation,” Anthony Jude, Director, Energy Division, in the ADB’s South Asia Department, was quoted as saying in a statement.

Bangladesh’s fast-growing economy has soaring energy needs but domestic natural gas supplies cannot keep up with demand, resulting in an increasing dependence on oil and diesel-based plants.

To meet its goal of providing all citizens with electricity by 2021, the government is working to increase generation capacity and source additional supply.

The initial linking of the two national grids helped India deliver over 2,000 gigawatt hours of electricity across the border in 2014.

On its part, India is rapidly scaling up its power generation capacity, including from renewable sources like solar. Some regions in the country have surplus energy.

In addition to Bangladesh, India also has transmission links with Bhutan and Nepal, with whom it engages in bilateral electricity trades.

ADB says the strengthening of regional interconnections is a “step forward” in the development of a South Asian regional electricity grid and will facilitate energy trade between countries in the region.

The interconnection project is part of efforts under the South Asia Subregional Economic Cooperation (SASEC) Program to promote regional prosperity and improve economic opportunities through strengthened cross-border links in trade, power, road and rail networks.

Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka are the members of the programme.