FE Report

German development lender KFW has agreed to convert a credit line into grants to help Bangladesh step up its major renewable energy programme, officials have said.

The Frankfurt-headquartered bank will dole out more than US$12 million (9.0 million euros) in grants to IDCOL, enabling the country's top alternative energy financier to expand its solar home programme.

"The money will be a crucial prop for boosting the renewable energy (RE) programme across the country," Mosharraf Hossain Bhuiyan, outgoing chief executive officer of IDCOL, said last week.

"Finance Division has already given us its go-ahead for the conversion of loan into grants. Now a subsidiary loan deal will be signed with the German bank to clear the way for conversion. We hope to utilise the funds by June," he said.

IDCOL (Infrastructure Development Company Ltd) is implementing the country's biggest solar-based lighting programme, financing as many as 280,000 systems in the off-grid remote rural areas.

"Our major donors include the World Bank, GTZ, Global Environment Facility (GEF) and the ADB. The demand for solar home systems (SHS) is on the rise. So KFW's grants will help us reduce the prices too," the IDCOl official, also an additional secretary, told the FE.

At 56 per cent growth, Bangladesh's renewable energy market is the one of the fastest in the world. The size of the market, almost overwhelmingly dominated by solar system, is estimated at $150 million and experts forecast it would top $500 million by 2012.

Officials said KFW has obtained consent of the German Federal Ministry for Economic Cooperation and Development to allow conversion of the proposed refinancing facility into grant.

While KFW is interested to provide grants, a source alleged the approval process has got stuck up since last July, due mainly to the bureaucratic tangle.

"We've a fund worth 9.68 million euros under KFW fund for IDCOL's alternative energy programme. This fund is a grant from KFW to the government of Bangladesh, which the latter has on-lent to IDCOL free of interest for providing refinancing facilities to its partners," Mr Bhuiyan said.

The proposed loan conversion will allow IDCOL to provide grant facilities for 234,000 additional SHS, thus plugging the financing shortfall for additional 300,000 systems, slated to be funded by the World Bank.

He said the World Bank is currently processing upto US$115 million in loan to help the state-run infrastructure lender to re-finance additional 300,000 solar systems across the country.

The IDCOL's outgoing chief said his organisation failed to fund its partners, as the process for the conversion of KFW loan into grant remained pending for months.

"This has seriously affected the smooth operation of the IDCOL's RE programme. The converted loan will be used by IDCOL under its RE programme only," said Mr Bhuiyan.

DHAKA : Bangladesh will apply for a $10 bn global clean technology fund, being established by the World Bank, and use the money to rehabilitate its ageing gas-fired power plants, a senior official said on Wednesday.

The state-run oil, gas and mineral corporation Petrobangla will submit proposals by the end of this month to receive part of the fund, committed by developed countries to reduce carbon emissions and save energy, the official said.

"We need more than $1 billion to upgrade the technology for ensuring smooth and pollution-free power and energy," said Jalal Ahmed, chairman of Petrobangla. Bangladesh has more than 100 power producing units with nearly 5,300 megawatts (MW) of capacity but it can hardly produce 4,300 MW as almost one third of the units are very old, officials said.

"Some plants are up to 40 years old and their generation capacity declined by up to 50 percent," Jalal told Reuters. "If we get assistance from this fund, we will not only be able to raise our power generation but also ensure the use of natural gas at optimum level," he said.
Industrialised countries, chiefly the Group of Eight, have announced the clean technology fund to cut emissions, raise efficiency and save energy in developing countries like Bangladesh, the official said. Bangladesh faces up to 1,200 MW of electricity shortages and up to 200 million cubic feet of gas shortages a day, officials said.

 

 

Prime Minister Sheikh Hasina said Tuesday Bangladesh needed foreign assistance in offshore gas exploration, setting up of hydroelectric and solar energy plants, reports BSS.

"The foreign assistance is very much needed to meet the growing demand of energy," Hasina told British High Commissioner in Bangladesh Stephen Nicholas Evans when he called on her at the Prime Minister's Office (PMO) in the morning.

During the meeting, they discussed trade and investment, climate change, global trade, social safety net project along with other common international concerns.

Finance Minister Abul Maal Abdul Muhith and Prime Minister's Finance Adviser Moshiur Rahman were present.

The Prime Minister said Bangladesh attached importance to its relationship with the UK and expressed the hope that these would be further strengthened in the days to come.

Laying emphasis on her government's commitment to the people, Hasina said several steps including poverty alleviation had been taken up to change the lot of common people.

Referring to the country's food production, the Prime Minister said steps were being taken to increase food stock capacity of the government by constructing silos and godowns across the country for building up buffer stock of food grains.

Prime Minister's Press Secretary Abul Kalam Azad told reporters after the meeting.

Protecting the country from adverse impact of climate change, Hasina said her government had already taken steps for dredging of rivers to increase navigability. She said water reservoir would be constructed to ensure optimum use of water in agriculture sector to increase food production.

The Prime Minister said community health clinics and child and maternal health care service would be restarted for reaching the healthcare services at the doorsteps of the common people. She said that her government had been working for strengthening the social safety net project in the country.

The British high commissioner said that his country would continue its support to Bangladesh to strengthen parliamentary democracy.

Hasina said that her government would implement free education programme up to degree level and introduce tiffin systems at all primary schools to stop dropout as a strategy.

Referring to terrorism, the Prime Minister said terrorists had no boundary so this vice should be contained with combined efforts.

Reciprocating the Prime Minister's view, the British envoy said that his country would continue to cooperate with Bangladesh in its development efforts.

Secretary of the PMO Mollah Wahiduzzaman, Prime Minister's Press Secretary Abul Kalam Azad, PM's Special Assistant Abdus Sobhan Golap and Former Ambassador M Ziauddin were present.

Earlier, a nine-member Chinese delegation led by Lt General Jia Ting'an, deputy chief of the General Political Department of People's Liberation Army, called on Prime Minister Sheikh Hasina at her office. Chinese Ambassador in Dhaka Zhang Xianyi was also present.

During the meeting, the Prime Minister stressed the need for establishing peace in this region and eradicating poverty. Bangladesh was always giving priority to improve the living standard of the people, she added.

Referring to huge Chinese investment in Bangladesh, she encouraged more Chinese investment and support in different development activities of the country.

They also discussed bilateral relations including trade and commerce between Bangladesh and China. Both Hasina and Ting'an laid emphasis on sharing economic and military cooperation between the two countries.

As a trusted friend for a long time, Hasina said Bangladesh always stressed on one china policy giving importance to regional peace. The Chinese delegation praised Bangladesh's role in this regard.

The Prime Minister thanked the Chinese delegation for their visit to Bangladesh.

The Chinese delegation lauded Bangladesh's role in providing medicare support and other goods after the last year's devastating earthquake in China which left thousands of people dead.