Bangladesh Gets $167mn ADB Loan to Improve Gas Infrastructure

The Asian Development Bank has approved a $167mn loan to Bangladesh to improve gas production and transmission infrastructure. This would be a part of a larger $453mn project that is expected to be completed in late 2021.

ADB said November 21 domestic gas supplies are not able to keep pace with the expanding demand, resulting in a rising dependence on oil and diesel-based power generation. “The project will help the government address the country’s energy crisis by making available additional clean energy, particularly imported natural gas, through the transmission network,” said Hongwei Zhang, finance specialist (energy) in ADB’s South Asia Department. “By addressing gas supply constraints and transmission bottlenecks, the project will increase the energy sector’s contribution to sustainable economic growth in Bangladesh.”

The project will install seven wellhead gas compressors to increase pumping pressure and ensure steady extraction at the Titas gas field, Bangladesh’s largest field. The project will also boost gas transmission by building 181 km of transmission pipeline from Chittagong to Bakhrabad southeast of Dhaka.

If approved, the Asian Infrastructure Investment Bank is expected to lend an additional $60mn, which will be managed by ADB. It is the second project to be cofinanced by ADB and AIIB. The Bangladesh government will provide the remaining $226mn for the project, ADB said.

Natural gas is Bangladesh's main energy source and a major driver of economic growth, providing nearly 75% of total primary energy consumed. More than half of the natural gas produced is used to generate electricity. To reduce the demand gap, the government has taken the initial step towards importing LNG by signing an agreement for the construction and operation of Bangladesh's first LNG import terminal – Moheshkhali Floating LNG. The terminal is expected to be in operation in 2018.

Shardul Sharma