The Asian Development Bank (ADB) will provide $300 million loan to replace old units at Ashuganj power plant and set up 12.5 megawatt renewable energy plants across the country.

An agreement in this regard was signed with ADB to address the nagging power crisis as well as efficient use of gas in the power sector at Shere-e-Bangla Nagar on Wednesday. According to the loan agreement, ADB will fund the replacement of five aging generation units at Ashuganj power station with a new energy-efficient combined cycle power plant using natural gas as the fuel source.

It will also finance a 5MW solar photovoltaic generating system that will connect to the national grid, along with a hybrid wind, solar and diesel system on the island of Hatiya.

Iqbal Mahmud, Secretary, Economic Relations Division (ERD), and Thevakumar Kandiah, Country Director of ADB's Bangladesh Resident Mission, signed the agreement on behalf of Bangladesh and ADB respectively.

"After the replacement of the units, the plant would produce 450 MW of electricity with the same amount of gas, which now produce 260 MW," ERD secretary Iqbal Mahmud said.

Streetlights will be installed or retrofitted with solar and light emitting diode technology in the cities of Barisal, Chittagong, Dhaka, Khulna, Rajshahi and Sylhet, under this project.

He said gas would be used at the Ashuganj plant in a more efficient manner.

The total project cost is $581 million, out of which Islamic Development Bank (IDB) is providing $200 million and the government $81 million, the secretary said.

ADB country director Thevakumar Kandiah said his organisation would help Bangladesh prepare proposal for Clean Development Mechanism (CDM).

He said the projects aim to assist Bangladesh in cutting carbon dioxide emissions by hundreds of thousands of tonnes a year and it is an eligible project for carbon financing under the CDM.

“Energy shortage is the most critical infrastructure constraint on Bangladesh's economic growth,” said ADB Country Director.

The Daily Independent/Bangladesh/ 5th Jan 2012