Japan signs $1.8bn to fund six Bangladesh projects in largest loan deal

Japan, one of Bangladesh’s largest development partners, has signed the largest loan package with Bangladesh to fund six major projects, including Matarbari port development and Jamuna railway bridge construction.

Senior Correspondentbdnews24.com
Published : 14 June 2018, 10:16 AM
Updated : 14 June 2018, 10:43 AM

Other projects—two separate lines of the Dhaka Mass Rapid Transit Development Project, Matarbari Ultra Super Critical Coal-Fired Power Project, and Health Services Strengthening Project—will also be under the new funding.

The loan package comprises assistance in six major projects amounting to Japanese yen 200.371 billion which is approximately $1.8 billion, the Japanese Embassy in Dhaka said in a statement on Thursday.

This will help Bangladesh become a middle-income country, according to the statement.

Ambassador Hiroyasu Izumi and Bangladesh’s Economic Relations Division Secretary Kazi Shofiqul Azam represented the two sides during the signing ceremony of Japan’s 39th Official Development Assistance to Bangladesh on Thursday.

JICA Chief Representative Takatoshi Nishikata and Shofiqul Azam signed a relevant loan agreement.

Japan has been the single largest bilateral donor for Bangladesh since 2012.

The loans have a 30-year repayment period with a 10-year grace period.

The annual interest rate for consulting services for all projects is 0.01 percent.

MATARBARI PORT

The objective of the project is to strengthen the port logistics capacity of Bangladesh by constructing a new commercial port at Matarbari area in Chittagong.

The total trade volume of Bangladesh has been increasing at an average 12 percent for the last 10 years due to economic growth rate of average six percent per year.

As a result, the country’s container cargo demand is expected to increase from 1.62 million TEUs (twenty-foot equivalent unit) in 2014 to 9.85 million TEUs in 2040.

But port logistics capacity is insufficient to meet such a sharp increase of demand, the embassy said.

The container handling capacity of Chittagong Port is even lower than current container demand, and the port does not have enough capacity to handle large container vessels.

The 2.655-billion yen project is scheduled to complete by May 2024.

JAMUNA RAILWAY BRIDGE

The objective of the project is to improve capacity and safety of transportation by constructing a dedicated railway bridge over the River Jamuna in parallel to the existing Bangabandhu Bridge.

This is for efficient logistic and passenger network within the country and with neighbouring countries.

This project is one of the five projects included in the ‘Japan-Bangladesh Comprehensive Partnership’ joint statement and was specifically requested by Prime Minister Sheikh Hasina during her visit to Japan in May 2014. The 37.217-billion yen project is expected to finish by 2023.

DHAKA MRT-5

The government has taken a revised strategic transport plan in 2015 to promote an efficient plan of urban-transport development for the Dhaka metropolitan area up to the year 2035.

Mass Rapid Transit Line 5—20km long (approximately) east-west corridor from Hemayetpur to Vatara—is prioritised as one of the high priority projects by RSTP.

The 7.358 billion yen project is scheduled to be completed by Dec 2028.

DHAKA MRT-6

The objective of the project is to alleviate traffic congestion and mitigate air pollution in Dhaka by constructing a mass rapid transit system (MRT Line 6) from Uttara to Motijheel (about 20km).

MRT Line 6 will carry half a million passengers per day and shorten the average travel time from Uttara to Motijheel from 110 minutes to 36 minutes.

The government has assigned a high priority to the MRT Line-6 project as one of the ‘fast-track’ projects. The 79.271-billion yen project is planned to be completed by June 2022.

MATARBARI COAL PLANT

The objective of the project is to meet the increasing electricity demand and achieve stable power supply in Bangladesh by constructing an ultra-super critical coal-fired power plant in Matarbari area.

As domestic natural gas production is declining, Bangladesh is prioritising other energy sources such as coal for diversification of the energy mix.

The coal-fired power plant with coal handling port for imported coal will be leading to critical change in energy diversification.

The net plant efficiency will be 41.29 percent, which is considerable better than 34 percent efficiency of the existing coal-fired power plants in Bangladesh and even higher than the average efficiency of 36 percent in the US.

The 67.311-billion yen project will be completed in 2024.

 HEALTH SERVICES

The objective of the project is to establish a system for strengthening non-communicable diseases or NCDs control and the access to health services by urban poor population in Dhaka through improving the quality of health services at primary and secondary level health facilities in all division.

NCDs account for 59 percent of total death in Bangladesh.

Demand for health services for the urban people is increasing. To reduce this burden, the project will support the government’s ongoing fourth Health Population and Nutrition Sector Programme to achieve universal health coverage.

Japan sanctioned 6.559 billion yen for the project which will end in June 2022.