On June 29, 2016, the representatives of the governments of Japan and Bangladesh signed Exchange of Notes on the 37th Official Development Assistance (ODA) Loan Package of Japan to Bangladesh, in the presence of H.E. M A Mannan, Honourable Minister of State for Finance and Planning. H.E. Mr. Masato Watanabe, Ambassador of Japan to Bangladesh and Mr. Kazi Shofiqul Azam, Additional Secretary, Economic Relations Division, Ministry of Finance represented the respective governments. This loan package comprises assistance in 6 major projects amounting to JPY 173.538 billion (approximately BDT 11,600 crore or USD 1.5 billion), the largest ever loan package since its inception in 1974. Based on this agreement between the two counties, Mr. Mikio Hataeda, Chief Representative of JICA Bangladesh Office and Mr. Kazi Shofiqul Azam signed a relevant loan agreement.
The Exchange of Notes covers the following projects:
(1) Jamuna Railway Bridge Construction Project(Engineering Services) (JPY 2.464 billion),
(2) Cross-Border Road Network Improvement Project(Bangladesh) (JPY 28.698 billion),
(3) Dhaka Mass Rapid Transit Development Project(II) (JPY 75.571 billion),
(4) Matarbari Ultra Super Critical Coal-Fired Power Project(II) (JPY 37.821 billion),
(5) Energy Efficiency and Conservation Promotion Financing Project (JPY 11.988 billion), and
(6) Disaster Risk Management Enhancement Project (JPY 16.996 billion).
For all these projects, interest rates are 0.01% and repayment periods are 40 years with 10 years of grace periods.
On the occasion of Honourable Prime Minister Sheikh Hasina’s visit to Japan in May 2014, Prime Minister Shinzo Abe announced his commitment to provide up to JPY 600 billion of additional assistance to Bangladesh in about 4 or 5 years from 2014. With the latest addition of the 37th Yen Loan Package, Japan’s total commitments in 2014, 2015 and 2016 have amounted to 427.8 billion yen.
This 37th Yen Loan Package was discussed in the recent Japan-Bangladesh Prime Ministerial Meeting on 28 May during the Hon’ble Prime Minister Sheikh Hasina’s visit to Japan. During the meeting, Prime Minister Abe expressed his intention to further strengthen the bilateral relations under the ‘Japan-Bangladesh Comprehensive Partnership’. At the same time, he underlined Japan’s willingness to continue to help Bangladesh achieve its vision of becoming a middle income country by 2021. This 37th Japanese Yen Loan Package signed today is expected to provide fresh momentum for the Government of Bangladesh in attaining the goal.
Summary of each project
(1) Jamuna Railway Bridge Construction Project(engineering Services)
The purpose of the project is to improve capacity and safety of the railway transportation by constructing a dedicated railway bridge over the River Jamuna in parallel to the existing Jamuna Multipurpose Bridge, thereby contributing to efficient logistic network within the country and with the neighboring countries.
The project funds from agreed loan agreement will be allocated to the consulting services which includes detailed design, tender assistance, and so on.
The Bangladesh Railways will execute the project under the Ministry of Railways.
(2) Cross-Border Road Network Improvement Project(Bangladesh)
The purpose of the project is to improve intercity transportation and logistics network, by developing major international road networks in Bangladesh, thereby contributing to the facilitation of international trade with neighboring countries.
The executing agency is Roads and Highways department, Ministry of Road Transport and Bridge.
(3) Dhaka Mass Rapid Transit Development Project(II)
The project is to alleviate traffic congestion and improve air pollution in the Dhaka City by constructing 20.1 kilometers long MRT; thereby contributing to regional economic development and improvement of urban environment. The anticipated improvement to the flow of goods and people by the construction of MRT is expected to enhance the economic activities in Dhaka Metropolitan Area; thereby not only contributing to the improvement of the the economic development and poverty reduction in Dhaka Metropolitan Area but also to the economic development of Bangladesh as a whole. Also, the project will contribute to the reduction of the air pollution and climate change mitigation by promoting public transportation system.
The Dhaka Mass Transit Company Limited will execute the project under the Ministry of Road Transport and Bridge.
(4) Matabari Ultra Super Critical Coal-Fired Power Project(II)
The purpose of the project is to counter the rising demand of power while mitigating greenhouse gas emission in Bangladesh by constructing 600MW x 2 units of Ultra Super Critical Coal-Fired Power Plant in Matarbari area in Maheshkhali upazila under Cox’s Bazar district of Chittagong Division, thereby contributing to nationwide economic development and climate change alleviation.
The Coal Power Generation Company Bangladesh Limited, Power Grid Company of Bangladesh Limited, Roads and Highways Department will execute the project under the Ministry of Power, Energy and Mineral Resources, and Ministry of Road Transport and Bridge.
(5) Energy Efficiency and Conservation Promotion Financing Project
The purpose of the project is to promote Energy Efficiency and Conservation (hereafter referred to as “EE&C”) measures by facilitating installation of EE&C equipment in Bangladesh by extending concessional loans in two step bases in which associated financial institutions of Bangladesh’s Sustainable and Renewable Energy Development Authority (SREDA) to be provided to private businesses in the industrial and commercial sectors for the introduction of energy conservation electronics; thereby stabilizing demand and supply of electricity and contributing to the mitigation of climate change.
The Sustainable and Renewable Energy Development Authority, Infrastructure Development Company Limited and Bangladesh Infrastructure Finance Fund Limited will execute the project under the Ministry of Power, Energy and Mineral Resources, and the Ministry of Finance.
(6) Disaster Risk Management Enhancement Project
This project is to enhance comprehensive disaster risk management of the Government of Bangladesh by recovering and rehabilitating infrastructures at high risk for natural disasters, providing equipment for emergency communication and relief, and establishing and implementing the scheme for quick and effective recovery and rehabilitation works, thereby contributing sustainable development of Bangladesh by formulating disaster-resilient society.
The executing agencies are Ministry of Disaster Management and Relief which will coordinate the relevant ministries and agencies of disaster risk management, Bangladesh Water Development Board Ministry of Water Resources, Local Government Engineering Department, Rural Development and Co-operation Local Government Engineering Department, Department of Disaster Management Ministry of Disaster Management, Fire Service and Civil Defense Ministry of Home Affairs.