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Press Releases

June 29, 2016

Signing of Japanese ODA Loan Agreements with Bangladesh
Provision of yen loans on a large scale for accommodating an increase in demand for electric power and public transportation and for pursuing disaster risk reduction

photosigning ceremony

On June 29, the Japan International Cooperation Agency (JICA) signed Japanese ODA loan agreements with the Government of the People’s Republic of Bangladesh to provide loans of up to a total of 173.538 billion yen for assistance for six projects.

Bangladesh is one of the most populous countries in the world (eighth in the world ranking) with a population of 160 million people. It has continued to grow at an average pace of six percent per annum due to the development of sewing and other ready-made garment related industries. In recent years, Bangladesh has attracted increasing attention from overseas enterprises including Japanese firms due to competitive labor costs, an abundant work force and a potential market size as an upcoming manufacture base and an investment destination. However, compared with its rapid economic growth and urbanization, the infrastructure in Bangladesh, including the transportation network and the power supply, is still at an early stage. As such, the formulation of a business environment has emerged as an urgent issue. Also, Bangladesh is vulnerable to natural disasters such as cyclones and floods and there is a critical need to take measures against them. JICA will continue to support Bangladesh’s effort for further economic growth and overcoming its social vulnerability though six projects agreed to in the foresaid loan agreements.

The features of the yen loan projects are summarized below.

(1) Building infrastructure for enhancing international competitiveness: Response to the demand for electric power and public transportation

In the transportation sector, JICA will support measures to meet the rapidly increasing traffic demand in South Asia in general and in Dhaka in particular by developing infrastructure for urban transportation and a transportation network for connecting South Asian countries. The Dhaka Mass Rapid Transit Development Project (II) will construct the first urban railroad system in Bangladesh to provide an additional means of urban transportation for the people of Dhaka. This will reduce the demand of automobile and bus transportation and, in consequence, mitigate the chronic traffic congestion and air pollution in Dhaka. The Cross-Border Road Network Improvement Project (Bangladesh) will develop economic corridors (including Asian Highway Route 1) to interconnect major cities in the Asian region by: a) replacing severely damaged existing bridges, b) providing national border facilities and c) constructing a Kalna Bridge which currently is the only point where overland traffic between Dhaka and Kolkata is barred. The Jamuna Railway Bridge Construction Project (E/S) will build a railway bridge as part of the Trans-Asian Railway which connects India to respond to the expected increase in demand for container transportation.

In the electricity sector, JICA will counter the increasing power demand due to economic growth in Bangladesh by both increasing the power supply and mitigating the excess electricity demand. The Matarbari Ultra Super Critical Coal-Fired Power Project (II) will develop a highly efficient electric power source with low coal consumption to meet the rapidly increasing power demand while controlling the emission of greenhouse gases. The Energy Efficiency and Conservation Promotion Financing Project will promote efficient power usage by providing two-step low-interest financing services to expedite the introduction of more energy efficient machines and equipment to local companies and households.

(2) Overcoming vulnerability to natural disasters: The Japanese ODA loan project under the Sendai Framework for Disaster Risk Reduction

Since Bangladesh is ranked as one of the most vulnerable countries to natural disasters, the establishment of disaster risk governance for disaster risk reduction is a critical issue. With the Disaster Risk Management Enhancement Project, based upon the Sendai Framework for Disaster Risk Reduction which was adopted at the March 2015 UN World Conference on Disaster Risk Reduction, Bangladesh’s comprehensive disaster risk management capacity will be enhanced by the implementation of a disaster management cycle which consists of three stages: a) the prevention/mitigation of disaster risk through full-scale recovery of infrastructure that has a potential for insufficiency in post-disaster recovery; b) enhancing preparedness for emergency response through the provision of equipment for information communication and rescue operations; and c) recovery/reconstruction through the establishment of a scheme for quick recovery and rapid implementation of the scheme after a disaster occurrence.

Reference

Terms and Amounts of Loans

Project title Amount
(million yen)
Annual interest rate (%) Repayment
period
(years)
Grace
period
(years)
Procurement
Project Consulting services
Dhaka Mass Rapid Transit Development Project (II) 75,571 0.01 0.01 40 10 General untied
Cross-Border Road Network Improvement Project (Bangladesh) 28,698 0.01 0.01 40 10 General untied
Jamuna Railway Bridge Construction Project (E/S) 2,464 - 0.01 40 10 General untied
Matarbari Ultra Super Critical Coal-Fired Power Project (II) 37,821 0.01 0.01 40 10 General untied
Energy Efficiency and Conservation Promotion Financing Project 11,988 0.01 0.01 40 10 General untied
Disaster Risk Management Enhancement Project 16,996 0.01 0.01 40 10 General untied
Total 173,538 - - - - -

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