The Asian Development Bank (ADB) is extending a $300 million energy infrastructure loan to help Bangladesh address critical power shortages that are undermining the economy and slowing poverty reduction efforts.

The ADB's Board of Directors has approved the loan for the Power System Efficiency Improvement Project, which will help meet Bangladesh's need for more energy-efficient generating plants and greater use of renewable power sources.

An agreement to this effect will be signed at the Economic Relations Division (ERD) at Shere-e-Bangla Nagar in Dhaka tomorrow between the Bangladesh government and the ADB, an ADB spokesman told the news agency yesterday.

ERD Secretary Iqbal Mahmud and country director of the ADB Thevakumar Kandiah will sign the agreement on behalf of their respective sides.

In a statement, ADB said aging thermal plants, inadequate natural gas supplies and lack of diverse power sources have left the country with a large gap between electricity supply and demand, estimated at over 1,200 megawatts for 2011.

Only 49 percent of people have access to electricity, and frequent shortages and unreliable supplies have perpetuated underdevelopment with nearly half the population living below the extreme poverty line of $1.25 a day.

The Daily Star/Bangladesh/ 3rd Jan 2012