DHAKA, Jan. 18 (Xinhua) -- A power sector project of the Asian Infrastructure Investment Bank (AIIB) is considered as a transformative milestone for rural Bangladesh, elating the country's millions of people who live in areas which were earlier without any access to the national power grid.
The AIIB-financed 165-million-U.S. dollar Power Distribution System Upgrade and Expansion Project including its distribution system, its upgrading and expansion, already help Bangladesh expand electricity coverage by providing nearly 1 million new service connections in rural areas within four months till December, 2017.
The AIIB project is designed to expand electricity coverage by providing 2.5 million new service connections in rural areas and upgrade grid substations and convert overhead distribution lines into underground cables in northern Dhaka.
Bangladesh Rural Electrification Board (BREB) and Dhaka Electric Supply Company Limited (DESCO) have been entrusted to implement three separate components of the project for which AIIB provided 165 million U.S. dollars, the first batch of loan for the country from the development bank.
Shafiqur Rahman, director for the project's 98.64 million U.S. dollars BREB component, said, "We've already provided almost 1 million new service connections in rural areas across the country."
"Every month we have been providing some 300,000 new service connections," he added.
He said the implementation of the project's BREB component began in September last year after all relevant formalities were completed following its approval at a meeting of Bangladesh's highest economic policy-making body, Executive Committee of the National Economic Council (ECNEC) chaired by Prime Minister Sheikh Hasina in July 2016.
The AIIB said in a website post that "the project, upon completion, is expected to benefit about 12.5 million people in rural areas."
According to the AIIB, the project will supplement other development partner efforts by providing additional financial resources to connect more rural and urban consumers, further reduce distribution losses, and improve the quality and reliability of power supply in Bangladesh.
DESCO Sub-Divisional Engineer Khandoker Istiaque Ahmad said work is underway to upgrade two substations and install 33kv distribution lines underground in urban areas.
"Agreements were signed in this connection with contractors last month," he said.
The capacity of both the substations will be augmented to 360 MVA each from their existing 150 MVA and 225 MVA.
Officials said implementation of all the components of the project will immensely benefit rural Bangladesh people and it will also improve quality and reliability of power supply in Bangladesh by reducing distribution losses.
They said Bangladesh is now eyeing more AIIB funds for many more power sector projects.
"An AIIB delegation will visit Bangladesh soon to discuss its funding for more BREB projects," Rahman said and expressed his pleasure to work with AIIB fund.
The Bangladeshi government has already requested the China-initiated international financial institution to consider providing more financial support for other power sector projects.
Officials say Bangladesh is looking to AIIB as the country has already identified inadequate electricity supply as a major constraint on GDP growth, and its overall economic development is in dire need for more funds to develop mega infrastructure projects.
To address these challenges, Bangladesh has adopted a multi-pronged plan involving substantial sector investments, regional power trade, and sector reforms.
Bangladeshi State Minister for Power, Energy and Mineral Resources Nasrul Hamid has recently told Xinhua that they are looking to China for help to build a major power hub at Payra, 204 km south of capital Dhaka.
"We're thinking of generating at least 9,000 MW of power from the hub, investing 10-12 billion U.S. dollars in this area. China can be one of the big investors to make finance of this construction and take the advantage of this huge infrastructure."
In March 2016, Bangladesh signed an engineering, procurement and construction (EPC) contract with the consortium of two Chinese firms for the installation of some 1.56-billion-U.S. dollar coal-fired power plant in the Payra Power Hub.
The first plant of the electricity hub which is being built on a 397-hectare piece of land is part of the government's plan to set up a series of coal-fired power projects to generate 40,000 MW electricity by 2030.
Against this backdrop, officials said Bangladesh is now keen to explore alternative sources like AIIB which is expected to offer more loans than other traditional international lending agencies.