ADB approves $200m loan to strengthen power supply around Dhaka

The Asian Development Bank (ADB) has approved a $200 million loan to modernise Bangladesh’s power distribution network in rapidly developing areas surrounding Dhaka.

The Power Distribution Network Enhancement Project will assist the Bangladesh Rural Electrification Board (BREB) in upgrading infrastructure across 13 Palli Bidyut Samities (PBSs) that serve industrial and urban communities around the capital. The project will address overloaded substations, ageing infrastructure, power losses and vulnerabilities to natural hazards.

As part of the project, 1,150 megavolt-amperes (MVA) of additional transformer capacity will be installed at 52 substations, while the capacity of 12 existing substations will be increased by 115 MVA. More than 2,600 kilometres of overhead and underground distribution lines will also be constructed or upgraded, alongside the installation of insulated conductors to improve safety and reliability.

The project will introduce 900 fault locator sets to enable quicker fault detection and restore electricity services more efficiently. It will also include river-crossing transmission structures and switching stations.

ADB Country Director for Bangladesh Qingfeng Zhang said modern and reliable power distribution systems would be vital to sustaining economic growth, generating employment and attracting investment.

He said the project would reinforce the electricity network along key growth corridors around Dhaka by deploying advanced technologies and strengthening infrastructure.

Bangladesh achieved universal electricity access in 2022, but rapid urbanisation and industrial expansion have continued to drive up electricity demand and put pressure on the distribution network. The financing package includes $146.52 million in dedicated ADB resilience funding, including support for gas-insulated switchgear technology.

According to the ADB, greater distribution efficiency and lower technical losses could reduce annual greenhouse gas emissions by approximately 203,751 tonnes of carbon dioxide equivalent.

The project will also strengthen the institutional capacity of BREB and the PBSs through training on digital system integration, cybersecurity, natural hazard resilience, environmental and social safeguards, and financial management.

The ADB said improving the financial sustainability of PBSs would help encourage greater private-sector investment in the electricity sector. The project will also include measures to increase women's participation in the power industry.

The ADB loan will be supplemented by $107.95 million from the government and $141.39 million from BREB.

In addition, a $1 million technical assistance grant from South Korea’s e-Asia and Knowledge Partnership Fund will support institutional development, financial sustainability planning and the adoption of advanced technologies.