Japan to provide $2.665b to Bangladesh

Japan to provide $2.665b to Bangladesh; ‘Exchange of Notes’, ‘Loan Agreements’ signed

DHAKA, Nov 22, 2021 (BSS) –

Bangladesh today signed ‘Exchange of Notes’
and ‘Loan Agreements’ with Japan for availing $2.665 billion (Japanese Yen
292.279 billion) financing for two development projects and one as budget
support loan.

Fatima Yasmin, Secretary, Economic Relations Division (ERD) signed the
‘Exchange of Notes’ and the ‘Loan Agreements’ on behalf of the government of
Bangladesh while ITO Naoki, The Ambassador of Japan in Bangladesh, signed the
‘Exchange of Notes’. Yuho Hayakawa, Chief Representative, JICA Bangladesh
Office, Dhaka signed the ‘Loan Agreements’ on behalf of the government of
Japan.

The signing ceremony was held at NEC-2 conference room in the city’s Sher-
e-Bangla Nagar area. Finance Minister AHM Mustafa Kamal was connected
virtually while representatives of Finance Division, Power Division, Road
Transport and Highways Division, CPGCBL, PGCB, RHD, DMTCL and other officials
of government of Bangladesh, Embassy of Japan and JICA were present in the
loan signing ceremony, said a Finance Division press release.

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

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

The Finance Minister further said that at the beginning of COVID-19
pandemic last year, Bangladesh approached Japan for budget support and it
received very quick positive response. He informed that the government of
Japan provided first ever budget support loan assistance of $320 million to
Bangladesh last year and in line with that $365 million under ‘COVID-19
Crisis Response Emergency Support Loan Phase-2 which was signed today.

“It is also a great pleasure for us that two loan agreements of $2.3
billion under 1st Phase of 42nd Yen Loan Package for 6th tranche Matarbari
Ultra Super Critical Coal-Fired Power Project and 2nd tranche of Dhaka Mass
Rapid Transit Development Project (MRT, Line 1) were signed today,” Kamal
added.

For the two development projects under the 42nd ODA Loan Package (1st
batch), the rate of interest is 0.60% for construction, 0.01% for consultancy
service, Front End Fee (at a time) 0.2%, and repayment period is 30 years
which includes 10 years grace period. For’COVID-19 Crisis Response Emergency
Support Loan Phase 2’, interest rate is 0.55%, Front End Fee (at a time)
0.2%, repayment period is 30 years which includes 10 years grace period.

The projects which are being implemented with these 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
under Cox’s Bazaar district. Power transmission line, access road, township
development, channel for Matarbari Port works are also going on under this
project. Total cost of project is Taka 35,984.46 crore (GOB Taka 4,926.66 cr
+JICA Taka 28,939.03cr + CPGCBL Taka 2,118.77 cr.).

Project implementation period is July 2014 to June 2023. Up to October
2021, physical progress of the project is 49% and financial progress is 51%.
JICA is providing assistance for 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):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 Kilometre long
underground Airport Route will have 12 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 kilometer long Purbachal Route of MRT Line-1 will have 9 stations.
The detail study, survey and basic design have been completed for both the
routes. Now detailed design is going on. The total estimated cost is of the
project is Taka 52,561.43 crore (GOB Taka 13,111.11 cr +JICA Taka
39,450.32cr) and 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 ($49.06Million) 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 Program are to realize resilient health system through concessional
financing by supporting smooth implementation of the policies to strengthen
COVID-19 response capacity in 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 promotion the
economic stabilization and development efforts of the country.

Bangladesh is going to get such budget support of 40 Billion JPY ($365
million) with interest rate 0.55%, Front End Fee (at a time)0.2%, repayment
period is 30 years which includes 10 years grace period. Finance Division is
the executing Ministry for budget support and Ministry of Health and Family
Welfare will implement policy actions under the loan.

Earlier Japan provided 35 billion JPY ($320 million) as budget support in
the year 2020 to support Bangladesh’s countercyclical expenditure plan to
combat the impact of COVID-19 pandemic.