Germany signs loan deal to fund power sector

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Germany yesterday signed a deal to provide €60 million funds to Bangladesh to modernise the power transmission system.

The funds comprise €15 million grants and a promotional loan of €45 million, the German embassy in Dhaka said in a statement.

The funds are part of €320 million earlier sanctioned to support renewable energy and energy efficiency in Bangladesh.

KfW, the German Development Bank, signed the deal with the Economic Relations Division in Dhaka to give the funds. The loans carry a 2.5 percent interest rate and a 15-year repayment period, with five years as a grace period. The initiative will cut transmission losses equivalent to savings of more than 100,000 tonnes of CO2 emission annually, according to the statement.

“This will be the first soft loan in our bilateral partnership. Thanks to the reduction of transmission losses many people in the western parts of Bangladesh will now have electricity,” said Ferdinand von Weyhe, chargé d’affaires of the German embassy in Dhaka said.

“Business can develop. The CO2 footprint will be reduced. This will help us in our struggle to mitigate climate change,” Weyhe said.

The efficiency gains from this project alone will be big enough to provide electricity to nearly 200,000 additional households.