The Asian Development Bank and the government yesterday signed agreements for $616 million in loans to enhance the coverage and reliability of Bangladesh's power systems and improve the efficiency of the distribution network.

The deals are aimed at bringing reliable power supply to 950,000 households and commercial users, including 875,000 households in rural areas.

Kazi Shofiqul Azam, secretary of the Economic Relations Division, and Kazuhiko Higuchi, country director of the Manila-based donor, signed the loan agreements in Dhaka.

The Power System Enhancement and Efficiency Improvement Project will contribute to the goal of the government of providing people with 100 percent access to electricity by 2021.

The total cost of the project is $1.059 billion. The ADB is providing a market-based loan of $600 million and a concessional loan of $16 million, with the government contributing $441 million.

“Nearly one million households, majority in rural areas, will be newly connected through this project,” Higuchi said in a statement.

The project will also help in distributing more power to the Dhaka region to meet the rising demand for electricity in the largest and rapidly expanding growth centre in the country, he said.

The project includes rehabilitation and expansion of over 50,000km of rural distribution network, construction of a 174km 400 kV transmission link, and installation of automated control systems for the distribution network in Dhaka.  In addition, the project will support project design, investment planning, and institutional strengthening of the power sector agencies.

A $2 million grant from the Japan Fund for Poverty Reduction, financed by the government of Japan, forms part of the project.

The grant will support establishment of small businesses, especially those owned by women, with affordable and stable power supply, as well as promotion of women employment in the power sector.