ADB approves $200m loan to modernise power distribution network
The Asian Development Bank (ADB) has approved a $200 million loan to modernise, strengthen and make the electricity distribution network more resilient in rapidly growing industrial and peri-urban areas surrounding Dhaka. The funds will support the upgrading of distribution infrastructure across 13 Palli Bidyut Samities (PBSs) under the Bangladesh Rural Electrification Board (BREB). The ADB’s Dhaka office disclosed the information on Wednesday.
According to the ADB, the recently announced Power Distribution Network Enhancement Project aims to address overloaded substations, ageing infrastructure, power losses and increasing natural hazard risks that constrain electricity service delivery. The project, undertaken under the ADB-supported Integrated Growth Network Development initiative, is expected to help ease network constraints caused by rising electricity demand in industrial and urban areas around Dhaka.
ADB Country Director for Bangladesh Qingfeng Zhang said modern power distribution networks are essential as Bangladesh advances towards a more prosperous, resilient and globally competitive economy. He said the project would help future-proof the power system in key growth corridors around Dhaka, creating more reliable electricity supplies for businesses and communities while supporting job creation and investment.
The ADB said the project will install 1,150 megavolt-amperes (MVA) of new transformer capacity across 52 substations. The capacity of 12 existing substations will also be increased by 115 MVA. More than 2,600 kilometres of overhead and underground distribution lines will be constructed or upgraded, with insulated conductors used to improve network reliability, efficiency and safety. In addition, 900 fault locator sets will be deployed to enable faster fault detection and restoration of electricity services. River-crossing transmission structures and switching stations will also be built under the project.
Bangladesh achieved universal electrification in 2022, according to the ADB, but rapid urbanisation and industrial growth have continued to increase pressure on the power distribution system. The bank estimates that the project will help reduce greenhouse gas emissions by about 203,751 tonnes of carbon dioxide equivalent annually through improved distribution efficiency and reduced technical losses. Of the ADB financing, $146.52 million will support resilience measures, including the use of gas-insulated switchgear technology.
Alongside power infrastructure, the project will place particular emphasis on strengthening the institutional capacity of BREB and the PBSs. Officials and employees will receive training in digital system integration, cybersecurity, natural hazard-resilient operations, environmental and social safeguards, and financial management. The ADB said stronger financial sustainability of the PBSs could help attract greater private-sector participation and investment. The project also includes measures to increase women’s participation in the power sector and improve workplace conditions.
The $200 million ADB loan will be supplemented by $107.95 million from the Bangladesh government and $141.39 million from BREB, bringing the project financing outlined by the ADB to $449.34 million. In addition, a separate $1 million technical-assistance grant from the Republic of Korea’s e-Asia and Knowledge Partnership Fund, administered by the ADB, will support institutional development, financial sustainability planning and the introduction of innovative technologies.
