Tuesday, 30 November, 2021
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Japan to provide $2.67bn loans for 2 projects, budget support

  • Staff Correspondent
  • 22nd November, 2021 10:02:00 PM
  • Print news

Japan is providing a total of $2.665 billion in loans to Bangladesh for budget support and implementing two development projects under the first phase of its 42nd ODA loan package. 

An Exchange of Notes and Loan Agreements were signed between the two countries at a function at Economic Relations Division (ERD) on Monday, which was virtually attended by Finance Minister AHM Mustafa Kamal. 

Japan is providing $365 million fresh budget support under ‘COVID-19 Crisis Response Emergency Support Loan Phase-2 after providing first-ever budget support loan assistance of $320 million last fiscal to mitigate corona shocks. 

The rest of $2.3 billion under the 1st Phase of the 42nd Yen Loan Package is being provided as the 6th tranche for Matarbari Ultra Super Critical Coal-Fired Power Project and the 2nd tranche for Dhaka Mass Rapid Transit Development Project (MRT, Line 1). 

ERD Secretary Fatima Yasmin signed the ‘Exchange of Notes’ and the ‘Loan Agreements’ on behalf of the Government of Bangladesh while Japanese Ambassador ITO Naoki signed the ‘Exchange of Notes’ and Yuho Hayakawa, Chief Representative, JICA Bangladesh Office, Dhaka signed the ‘Loan Agreements’ on behalf of the Government of Japan. 

 “We express our deep gratitude to the government of Japan for its involvement in several on-going iconic mega projects including Bangabandhu Road and Rail Bridge over river Jamuna, Metro Rail Networks at Dhaka city, Hazrat Shahjalal International Airport 3rd Terminal, Matarbari Coal-Fired Power Plant, Matarbari Sea Port etc,” Kamal said. 

“Japan is the most trusted bilateral friend. Our Father of the Nation’s historic visit to Japan during 18-24 October in 1973 laid the foundation of the Bangladesh-Japan relationship. That was the beginning of the partnership which strengthened over the years,” he added. 

For the two development projects under the 42nd ODA Loan Package (1st batch), the rate of interest is 0.60 per cent for construction, 0.01 per cent for consultancy service, Front End Fee (at a time) 0.2 per cent, and the repayment period is 30 years which includes 10 years grace period.  

For‘COVID-19 Crisis Response Emergency Support Loan Phase 2’, the interest rate is 0.55 per cent, Front End Fee (at a time) is 0.2 per cent and the repayment period is 30 years which includes 10 years grace period.  

The projects which are being implemented with this financing are: 
Matarbari Ultra Super Critical Coal-Fired Power Project (6th tranche): This project is being implemented to meet growing electricity demand and to improve stable power supply by installing 1200 MW (600MWx2 units) Ultra Super Critical Coal-Fired Power Plant at Matarbari Area of Maheshkhali Upazila in Cox’s Bazar.

Power transmission line, access road, township development, channel for Matarbari Port works are also going on under this project. Total cost of project is Tk 359.84 billion (GOB TK 49.27bn+JICA TK 289.39bn + CPGCBL Tk21.19bn). 

Project implementation period is July 2014 to June 2023. The physical progress of the project is 49 per cent and financial progress is 51 per cent up to October 2021. 

JICA is providing assistance to this project in different phases. JICA has already provided 300,502 million JPY ($ 2.63 Billion) in 5 tranches. Under this 6th tranche of ODA Loan for this project, JICA will provide 137,252 million JPY ($1.20 billion). 

Dhaka Mass Rapid Transit Development Project (Line 1) (2nd tranche): The 31.241 km long MRT Line-1 has two routes: (a) Airport Route (Airport to Kamlapur) and (b) Purbachal Route (Notun Bazar to Pitalganj). The 19.872 Kilometers underground Airport Route will have12 Stations. 

This portion will be the first underground rail route of the country. The Notun Bazar Station will have an inter-connection with the MRT Line-5. 

The 11.369-kilometre long Purbachal Route of MRT Line-1 will have 9 stations. The detailed study, survey and basic design have been completed for both routes. 

Total estimated cost is of the project is Tk 525.61bn (GOB Tk 131.11bn +JICA Tk 394.50bn) and the implementation period is September 2019 to December 2026. 

JICA is providing assistance in different phases to implement this project. Earlier JICA has provided 5,593 million JPY($49.06 million) for Engineering Services and 52,570 million JPY($ 461.16 million) for Construction. Under 2nd tranche of this ODA Loan, JICA will provide 115,027 million JPY ($1.10 billion). 

COVID-19 Crisis Response Emergency Support Loan Phase 2: The objectives of the Programme are to realize a resilient health system through concessional financing by supporting the smooth implementation of the policies to strengthen COVID-19 response capacity in the health sector, to enhance economic and physical access to health services towards the achievement of Universal Health Coverage and to improve health finance thereby contributing to promoting the economic stabilization and development efforts of the country.

The government of Bangladesh is going to get such budget support of 40 Billion JPY ($365 million) with an interest rate 0.55 per cent, Front End Fee (at a time) 0.2 per cent, the repayment period is 30 years which includes 10 years grace period.

Finance Division is the executing Ministry for budget support and the Ministry of Health and Family Welfare will implement policy actions under the loan. Earlier Govt. of Japan has provided 35 billion JPY ($320 million) as budget support in the year 2020 to support GOB's countercyclical expenditure plan to combat the impact of the COVID-19 pandemic

Representatives of the Finance Division, Power Division, Road Transport and Highways Division, CPGCBL, PGCB, RHD, DMTCL and other officials of the government of Bangladesh, Embassy of Japan and JICA were present at the loan signing ceremony.