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Press Release

June 16, 2014

Develop Solid Socio-economic Foundation and Realize BIG-B Initiative

On June 16, 2014, Mr. Mikio Hataeda, Chief Representative of JICA, and Mr. Mohammad Mejbahuddin, Secretary, Economic Relations Division, Ministry of Finance signed Loan Agreement for five projects under 35th ODA Loan Package in Dhaka, in presence of H.E. Mr. Abul Maal Abdul Muhith, the Hon'ble Finance Minister, Mr. MA Mannan, the Hon'ble State Minister for Finance, Mr. Nasrul Hamid, the Hon'ble State Minister for Power, Energy and Mineral Resources, Mr. Hiroyuki Minami, the Hon'ble Chargés d'Affaires ad interim, Embassy of Japan, and Dr. Akihiko Tanaka, JICA President.

The 35th ODA Loan Package will serve for financing five projects amounting to 120,986 million JPY (1.18 billion USD) to promote socio-economic development in both urban and rural area and to provide solid foundation for BIG-B (Bay of Bengal Industrial Growth Belt) Initiative proposed in the summit talk between two Prime Ministers Mr. Shinzo Abe and Ms. Sheikh Hasina in Tokyo last month. The concessionality of the loan is most generous with the interest rate at 0.01% per annum and 40-year repayment period with 10-year grace period.

(1) Matarbari Ultra Super Critical Coal-Fired Power Project (I) (406 million USD) will construct 1200MW coal-power generation plants (600MW x 2units) with the country's first deep sea port for coal imports (18m-depth with 3km channel for 80,000ton-class ships) to mitigate the power supply-demand gap and realize energy diversification. It incorporates 60km's 400kV transmission line up to Anowara, and 30km access road to the site from NH1.

(2) Natural Gas Efficiency Project (231 million USD) will enhance gas use efficiency from the exploration (six wellhead compressors to increase 30% gas production), transmission (connecting 66km missing link of gas transmission to West), to distribution (2.6lakh prepaid gas meters) of gas supply chain to ensure gas supply for vital economic growth.

(3) Inclusive City Governance Project (300 million USD) will support comprehensive development of five City Corporations (Rangpur, Gazipur, Narayanganj, Comilla, Chittagong) through governance reform, city planning and infrastructure construction to promote local empowerment for better public services delivery.

(4) Haor Flood Management and Livelihood Improvement Project (149 million USD) will rehabilitate and construct flood management facilities (350km embankment) and rural infrastructures (400km roads) with agriculture and fishery promotion for flash flood risk mitigation and livelihood improvement in Haor area to boost vulnerable farmers' livelihood.

(5) Small and Marginal Sized Farmers Agricultural Productivity Improvement and Diversification Financing Project (97 million USD) will finance agricultural loans and providing agricultural training services through microfinance institutions to increase agricultural productivity and diversity of small/marginal farmers.

Project Name Executing Agency Amount (million JPY) Amount (million USD) * Interest (%) Repayment Period (Year)
Matarbari Ultra Super Critical Coal-Fired Power Project Coal Power Generation Company of Bangladesh Limited 41,498 406 0.01% 40 Years with 10 Years Grace Period
Natural Gas Efficiency Project Bangladesh Gas Fields Company Limited
Gas Transmission Company Limited
TITAS Gas Transmission and Distribution Company Limited
Karnaphuli Gas Distribution Company Limited
23,598 231
Inclusive City Governance Project Local Government Engineering Department under Local Government Division 30,690 300
Haor Flood Management and Livelihood Improvement Project Local Government Engineering Department under Local Government Division
Bangladesh Water Development Board
15,270 149
Small and Marginal Sized Farmers Agricultural Productivity Improvement and Diversification Financing Project Bangladesh Bank as Implementing Agency under Bank and Financial Institutions Division as Executing Agency 9,930 97

* 1 USD = 102 JPY (as of 15 June ,2014)

Details Five Projects under 35th ODA Loan Package

1. Matarbari Ultra Super Critical Coal-Fired Power Project – Develop Most-efficient and Clean Coal Power Plant with First-ever Deep Sea Port For Leading Change on Energy Mix

Bangladesh is experiencing the severe power demand-supply gap along with the rapid economic growth in the last decade together with depletion of natural gas as a current-dominant primary energy source. While power demand is expected to continually increase at 10% per annum, energy diversification for new base load is yet to accomplish.

In order to overcome the power demand-supply gap and diversify the natural-gas dependent energy mix, the project will construct 1200MW ultra-super critical (USC) coal-fired power plants with a deep sea port for the imported coal handling at Matarbari Island in Cox's Bazar District. The Government of Bangladesh decided to apply for the world-most advanced USC and environment-friendly technologies. It will enable the highest thermal efficiency rate at 45% (avg. 29% in India and 34% in USA), 4 lakh ton CO2 emission saving per annum compared to the technology currently used in Bangladesh, and far less CO2 and NOx/SOx emission than those by coal-fired power plants in developed countries. The first-ever deep sea port in the country (18m depth channel for Panamax-class 80000ton ships) will become the gateway for bulk trade of primary resources, which will change the landscape of stalemated country's long-term energy mix scenario.

2. Natural Gas Efficiency Project – Comprehensively Promote Efficient Use of Precious Domestic Gas for Sustainable Economic Activities

Natural gas, an indispensable energy source that drives economic development in the country, has been inefficiently used throughout the gas system due to low tariff rate. Gas exploitation and transmission technologies remain inefficient, and millions of households are wasting gas even without knowing the volume they use. To overcome the ongoing energy crisis, efficiency improvement in the entire gas system is of urgent need.

The Project will install the country's-first wellhead gas compressors in two gas fields to prolong and maximize gas production by 30%. It will expand the gas transmission to the gas-shortage western zone by connecting 66km missing link pipelines. This project also introduce large scale pre-paid gas meters for 2.6 lakh households in Dhaka and Chittagong to lead drastic improvement of demand side management. By improving the efficiency of the system so that more gas can be served for people and industries (at least 50mmcfd or 3% of gas supply capacity only by the project), the project will contribute to accelerate the economic growth. The investment made through the project to improve efficiency will simultaneously augment the capacity to deliver more gas when the gas supply constrain is addressed by domestic gas development or import of LNG.

3. Inclusive City Governance Project – Develop Better Urban Environment and Public Service Delivery for Underlying Investment and Everyday Life in Cities

Bangladesh undergoes the most rapid urbanization in its history. Urban population has increased from 12 million (15%) in 1980 to 45 million (29%) in 2012, and is swelling to 80 million (42%) by 2035. Although cities are becoming imperative for accelerating economic growth, job creation and poverty reduction, even major cities can only offer vulnerable infrastructure and inadequate basic urban services. City Corporations are facing severe challenges in unclear governance systems with central government, fragile financial base, and insufficient administrative capacity including planning and implementation that constrain them attracting the investment and providing better living environment for city dwellers.

In response to urban governance challenges, the project will provide financial support to five City Corporations (Rangpur, Gazipur, Narayanganj, Comilla, Chittagong) with growth potential, mainly located along the Bay of Bengal in-between Dhaka and Cox's Bazar. The project will facilitate comprehensive development of five City Corporations through governance reform, city planning and infrastructure construction to promote local empowerment. Through a performance-based evaluation and fund allocation system, urban governments showing the improvement in governance and financial management including investment planning will get rewarded with more funds for large infrastructure sub-projects.

4. Haor Flood Management and Livelihood Improvement Project – Sustainable Life with Haor

Haor is a wetland basin spreading over the Northeastern area of Bangladesh in upstream of Meghna River, where as large as 6% of the entire national land goes under the water in the rainy season. Farmers in Haor rely on the single-crop in boro season, which has become highly vulnerable to the flash flood just before the harvest. Also, lakhs of people are forced to move in small uplands scattered in Haor set aside from the public services in the heavy rainy season.

Knowing those challenges requiring wide range of support, JICA decided to extend the first Japanese ODA loan in the disaster management sector. The project will construct flood management facilities (350km embankment and 340km canal excavation etc.) and rural infrastructures (400km roads etc.) in Brahmanbaria, Habiganj, Kishoreganj, Netrokona and Sunamganj Districts. Not only capital investment but agricultural/fishery training will be extend to the localities. 7 million vulnerable Haor farmers and fishermen get benefit from sustainable agriculture and fishery activities, while boro crops of 1 billion taka can be saved from flush flood annually.

5. Small and Marginal Sized Farmers Agricultural Productivity Improvement and Diversification Financing Project – Opportunities for Small Farmers to Ladder the Growth

Agriculture sector, accounting for 17% of GDP and 45% of labor population, is mainly supported by more than two crore small and marginal sized farmers (SMFs) who cultivate 50% of the entire farmland in the country. It is remarkable achievement for Bangladesh to accomplish 100% food self-sufficiency based on those farmers' tireless efforts. However, there are still acute needs for Bangladesh to improve agricultural productivity and diversification to meet the rapid demand increase due to population surge and the farmland decrease by urbanization. Still, many of them are still remote from financial access and appropriate agricultural knowledge.

To foster productivity and diversity of SMFs for sound development of the agricultural sector, the project will support for financing agricultural loans and providing agricultural training services for SMFs by microfinance institutions. 5 lakh farmers (more than 50% are women) will benefit from the loan and training to gain 30% income increase by drastic productivity improvement.

Photo

Picture of the Signing Ceremony

PhotoLoan Agreement Signing between Mr. Mohammad Mejbhauddin, ERD Secretary (left) and Mr. Mikio Hataeda, Chief Representative, JICA Bangladesh Office (right)

PhotoSpeech by Dr. Akihiko Tanaka, JICA President at the Loan Agreement Ceremony

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