The government of Bangladesh hopes to sign an agreement on a $ 2.80 billion loan with the Japan International Cooperation Agency (Jica) for the Japanese fiscal year 2021 (April 2020-March 2021) as part of the 42nd Jica’s official development assistance program (ODA), according to officials from the Directorate of Economic Relations (ERD).
Previously, a $ 3.15 billion loan agreement was signed with Jica under the 41st loan program in 2020.
ERD sources said Bangladesh requested a loan for five infrastructure projects under the 42nd Loan Package – Dhaka Mass Rapid Transit Line 1 (2nd Tranche), Dhaka Mass Rapid Transit Line 6 (5th Tranche) , Matarbari Coal Fired Power Project (6th Tranche), Matarbari Coal Fired Power Project (2nd phase) and Southern Chattogram Regional Development Project.
In addition, the Japanese government has confirmed that it will provide a health sector development policy loan in the Japanese fiscal year 2021. Last year, the government of Bangladesh requested a loan of $ 500 million. dollars from the Japanese Agency for the Development of the Health Sector in Bangladesh.
The 42nd loan agreement will consist of three phases. In the first phase, a $ 1.05 billion loan agreement could be signed this month for the Matarbari Coal Fired Power Project (6th tranche) and Dhaka Rapid Transit Line 6 (5th tranche).
ERD officials said almost the same loan amount would be available for both projects.
Jica enters into loan agreements in several stages depending on the importance and progress of a project. The loan agreement will be signed for the sixth tranche of the 1,200 MW Matarbari coal-fired power plant project and the fifth tranche for the Metrorail project (MRT-6).
These two ongoing projects require rapid disbursement of funds. As such, the government wishes to complete the loan agreement process in both projects first.
Mohammed Shahid Ullah, Executive Director (Finance), Coal Power Generation Company Bangladesh Limited (CPGCBL), said final discussions between CPGCBL and Jica have been completed regarding the sixth tranche of the loan for the Matarbari project. The ERD will now complete the formalities concerning the loan.
Project stakeholders said that work on the Matarbari power plant started in July 2014. The cost of the project has increased with the ongoing works to increase the depth and width of the canal for the construction of ports as part of the project. of this project.
Therefore, a proposal to increase the cost of the project has already been sent to the Planning Commission.
Initially, Jica was supposed to lend Tk 28,939 crore, which will now be Tk 44,427 crore under the new proposal.
Although the project was to be completed in June 2023, the new proposal extended the duration of the project until December 2026. Until June 2021, the physical progress of the project was 46.74%.
Meanwhile, CPGCBL is trying to finance another new 1,200 MW coal-fired power project in Matarbari. Jica’s initial consent was also obtained in this regard. Based on this, a feasibility study has also started, officials from CPGCBL said.
Meanwhile, the government aims to launch Metrorail from Uttara to Agargaon in December of next year. Up to August, 88% of the works on this road have been completed, while from Agargaon to Motijheel, the works are 68% complete.
Officials at Dhaka Mass Transit Company Limited (DMTCL) hope implementation will accelerate as the Covid-19 situation improves in the country. Therefore, the demand for foreign financing will also increase. Jica agreed to finance the project in her 42nd ODA package.
The total loan provided by Jica in this Tk 23,490 crore project is Tk 16,594 crore.
Besides Metrorail or MRT-6, Jica will also provide loans for the MRT-1 project for the second time. Construction work on Line 1 of the MRT is scheduled to begin in June.
The project will also benefit from a loan agreement from Jica to finance the second tranche, but ERD officials said discussions were still ongoing on the loan amount.
In accordance with the revised strategic transport plan, line 1 of the MRT will be divided into an airport road and a Purbachal road. The total cost of implementing the project is estimated at Tk 52,561 crore. Of this amount, a loan of Tk 39,450 crore will be available from Jica in different stages.
Meanwhile, Japan has expressed interest in helping infrastructure development in South Chattogram and Cox’s Bazar district with a focus on Matarbari. To this end, Jica mainly agreed to provide loan assistance under the 42nd ODA package.