The government has signed $1.18bn (1,209.86bn Japanese Yen) concessional loan deals with Japan for five development projects including a 1,200 megawatt coal-based power plant.

This is the largest ever loan deal between Bangladesh and Japan International Cooperation Agency (JICA).

The biggest loan deal comes after Prime Minister Sheikh Hasina’s recent visit to Japan.

The rate of interest of the Japanese financial package is 0.01% per annum which is payable in 40 years including a 10-year grace period.

Mohammad Mejbahuddin, Secretary of Economic Relations Division (ERD), and Mikio Hataeda, Chief Representative of JICA, have inked the deals yesterday in the city.

Finance Minister AMA Muhith, State Minister for Power, Energy and Mineral Resources Nasrul Hamid, Acting Ambassador of Japan to Bangladesh Hirioki Minami and JICA President Akihiko Tanaka were present at the signing ceremony of 35th of JICA.

The projects include construction of 1200MW coal-fired plant at Matarbari in Maheshkhali, natural gas efficiency improvement, inclusive city governance, haor flood management and livelihood improvement and small and marginal sized farmers agricultural productivity improvement and diversification of financing.

Under the power plant project, line, access road, township development, port development etc will be constructed. The project will get $406.22m loan from JICA.

The natural gas efficiency project is to improve efficient use and supply of natural gas by providing facilities for gas supply and efficient use of gas.

It will receive $231m as loan from JICA while inclusive city governance project will get $149.47m.

Inclusive city governance project is aimed at improving public services and promoting economic opportunities in five city corporations – Narayanganj, Comilla, Rangpur, Gazipur and Chittagong.

Small and marginal-sized farmers project will be given $97.20m. The project aims to increase agricultural productivity and diversity of the small and marginal-sized farmers.

Haor flood management project will be provided $149.47m. The objective of the project is to reduce damage from flood, improve access to basic infrastructure and increase agriculture and fishery productivity.

The works under the project include rehabilitation and construction of flood management facilities and rural infrastructures and implementation of agriculture and fishery promotion activities in haor areas in upper Meghna basin.

Japanese ODA loan (also called Yen Loan) are long-term low interest rate loans advanced to the developing countries and have the liability of being paid back. Assistance can be given to major projects of developing countries that generate larger impact on the economic growth, environmental improvement and social development of the countries, which are indispensable for achieving MDGs.

The obligation to repay Japanese ODA loans gives an opportunity to the recipient countries to develop an incentive to recover the investment cost as much as possible.

This encourages the countries to make efforts to ensure the sustainability of the development projects and leads to the attainment of the MDGs and their sustenance.

News:Dhaka Tribune/17-Jun-2014