The New Nation - Internet Edition

Staff Reporter

Japan will provide a new loan worth Tk 21 billion (35,996 million yen or US $324 million equivalent) for New Haripur Power Plant and two other projects at 0.01 per cent interest rate under a newly devised financing package.

An agreement to this effect was signed between the Government of Japan and Government of Bangladesh in Dhaka yesterday.

Japanese Ambassador Masayuki Inoue and Secretary of Economic Relations Division of Finance Ministry M Aminul Islam Bhuiyan signed the Exchange of Notes on behalf of their respective governments.

Following the signing of the notes, Chief Representative in Dhaka of

Japan Bank for International Cooperation (JBIC) Yasuo Fujita and ERD Additional Secretary M Mejbahuddin also signed the loan agreements.

The Government of Japan will provide the loan to the Bangladesh Government through JBIC for the implementation of the three projects.

Of the total, Tk 10 billion will be provided for implementing the New

Haripur Power Plant (360 megawatt) Development Project (Part I), Tk 7 billion for Dhaka-Chittagong Railway Development Project and Tk 3 billion for Small Scale Water Resources Development Project.

The interest rate is 0.01 per cent per annum and the repayment period is 40 years inclusive of 10-year grace period for the three loans.

"The new loan package reflects Japan's strong intention to support Bangladesh to alleviate the recent serious power shortages by newly constructing a 360 MW power plant near Dhaka," a press release from the Embassy of Japan in Dhaka said yesterday.

In addition, some useful technical assistance will be introduced under the projects, such as capacity building for the new power plant operation and management reform of the Bangladesh Railways, which the Bangladesh government is implementing now under policy and institutional reforms.

The Government of Japan will provide the loan assistance to the Government of Bangladesh through JBIC for implementation of the three projects.

Of the loan amount, 17,767 million Yen (Taka 10 billion or US$160 million equivalent) for New Haripur Power Plant (360 MW) Development Project (Part I), 12,916 million Yen (Taka 7 billion or US$116 million equivalent) for Dhaka-Chittagong Railway Development Project, and 5,313 million Yen (Taka 3 billion or US$48 million equivalent) for Small Scale Water Resources Development Project.

In addition, the conditions of the loan are the most generous, the press release said.

It said the interest rate is 0.01 per cent per annum and the repayment period is 40 years inclusive of 10-year grace period for the three loans.

Over the last few years, the Japan government has been sharply increasing the level of its loan assistance to Bangladesh. Recent Japan's loans are as follows: 35,996 million yen ($324 million) in 2007, 24,906 million yen ($224 million) in 2006 and 11,345 million yen ($102 million) in 2005.

The new loan package reflects Japan's strong intention to support Bangladesh to alleviate the recent serious power shortage by newly constructing a 360 MW power plant near Dhaka. In addition, some useful technical assistance will be introduced under the projects, such as capacity building for the new power plant operation and management reform of the Bangladesh Railways, which the Bangladeshi government is implementing now on under policy and institutional reforms.

The accumulated total commitment of Japan's loans to Bangladesh since 1973 is approximately 624 billion Japanese yen (Taka 365 billion or US$5.6 billion equivalent) for 76 projects, including three projects under the new package.