The Asian Development Bank (ADB) has approved $583 million debt financing and partial risk guarantees to develop the Reliance Bangladesh Liquified Natural Gas (LNG) and Power Project.
A power generation facility to be located in Meghnaghat near Dhaka and an LNG Terminal near Kutubdia Island in Chittagong are included in the ADB funded project.
The projects will boost power generation and improve energy infrastructure in the country, said a ADB release on Monday.
ADB’s financing package includes loans and partial risk guarantees for the power generation facility, as well as for the LNG terminal.
The total project will cost around $1 billion.
“ADB’s partnership with Reliance Power will help Bangladesh scale up its energy infrastructure to sustain and support the country’s economic growth,” said Director General of ADB’s Private Sector Operations Department Michael Barrow.
He added that ADB’s role as a direct lender and guarantee provider will enable Reliance Power to mobilise much needed long-term debt financing and help attract new lenders to Bangladesh.
Diversifying the sources of energy is critical for the country as demands for natural gas have placed significant pressures on the country’s domestic gas reserves.
New LNG import facilities will enable the country’s existing gas-dependent infrastructure to remain viable while opening the country to access natural gas from global markets.
ADB’s support will help Reliance Power Limited develop an initial about 750 megawatts (MW) of gross power generation capacity and terminal facilities for LNG import.
Reliance Power Limited plans to increase its power generation capacity to around 3,000 MW in Bangladesh.
Energy from the power plant will be sold into the country’s electricity grid under a long-term power purchase agreement with the Bangladesh Power Development Board.
“Reliance Power has achieved a major and important milestone of approval of financing for its landmark project in Bangladesh. This is an important step in helping Bangladesh achieve energy security,” said Reliance Power CEO Venugopala Rao.