The World Bank has approved a $507 million fund for two projects in Bangladesh to provide long-term financing to private sector-led infrastructure projects and modernisation of land ports.

On Wednesday, the World Bank Board approved the Investment Promotion and Financing Facility (IPFF) II Project, which is built on the success of a predecessor project IPFF.

The project will help participating local financial institutions to extend long-term credits for building infrastructure beyond the usual lending period of five to seven years, the World Bank said in a statement.

The infrastructure would be built for waste management, water treatment, energy saving equipment, container terminals, land ports and bridges, the multilateral lender said.

The projects will be funded by the World Bank's concessionary arm, International Development Association.

The Regional Connectivity Project 1 will receive $150 million zero-interest IDA credits with a 38-year term, including a six-year grace period, and a service charge of 0.75 percent.

The IPFF II will receive $357 million financing, including $257 million zero-interest credit with a 38-year term and a six-year grace period, and $100 million scale-up facility with a 30-year term with a nine-year grace period.

Due to limited capacity and market constraints, local financial institutions traditionally could not meet the longer-term financing demand for infrastructure investments, the lender said.

Eligible financial institutions can apply for IPFF II funding through Bangladesh Bank, according to the statement.

IPFF financed 11 small power plants that together generate over 550MW electricity, three water treatment plants, an inland container depot, a fibre-optic cable network, and a dry dock.

“Bangladesh needs faster and higher quality growth to attain its vision of becoming a middle income country by 2021,”said Qimiao Fan, World Bank country director for Bangladesh, Bhutan, and Nepal.

“The World Bank is supporting Bangladesh to overcome key bottlenecks to higher growth, including addressing the huge infrastructure gap, and improving intra-regional connectivity and trade logistics.

“These two projects will help develop the much-needed infrastructure through building a private sector-led, long-term infrastructure financing platform.”

To improve connectivity and trade with India, Bhutan, and Nepal, the Regional Connectivity Project 1 will invest in infrastructure, systems and procedures to modernise three key land ports at Bhomra, Sheola and Ramgarh and improve security at the Benapole land port.

Through the modernisation of customs and ICT infrastructure, the project will reduce the average time needed to meet the regulatory requirements associated with trade activities, and clear traded goods at land ports.

In addition, the project will benefit female traders and entrepreneurs through facilitating skills development programmes, improving logistics and transport services at key border points, and developing a simplified trade regime and clearance procedures.