Asian Development Bank (ADB) has approved a loan of $167 million to improve production efficiency at a key gas field north of the capital Dhaka and expand transmission infrastructure.
Asian Infrastructure Investment Bank (AIIB) is expected to lend an additional $60 million, subject to board approval, to be managed by ADB.
It is the second project to be cofinanced by ADB and AIIB to promote sustainable economic growth and reduce poverty in Bangladesh, according to a press release ADB issued in Manila today (Nov 21).
The project will install seven wellhead compressors to increase pumping pressure and ensure steady extraction at the Titas gas field, the country’s largest field.
It would also boost transmission by building 181 kilometers of transmission pipeline from Chittagong to Bakhrabad southeast of Dhaka.
“The project will help the government address the country’s energy crisis by making available additional clean energy, particularly imported natural gas, through the transmission network,” said Hongwei Zhang, Finance Specialist (Energy) in ADB’s South Asia Department.
“By addressing gas supply constraints and transmission bottlenecks, the project will increase the energy sector’s contribution to sustainable economic growth in Bangladesh.”
Bangladesh’s economy is growing fast. But domestic natural gas supplies cannot keep pace with soaring demand for energy, resulting in a rising dependence on oil and diesel-based power generation.
With reserves depleting, the country is trying to meet the supply shortage by importing liquefied natural gas (LNG).
The $453 million project is expected to be completed in late 2021. It is expected to substitute the use of other fossil fuels, thereby reducing over 700,000 tons of carbon dioxide emissions per year over the ensuing 10 years. The government will provide $226 million for the project.
Natural gas is Bangladesh’s main energy source and a major driver of economic growth, providing nearly 75% of total primary energy consumed. More than half of the production is used to generate electricity.
However, a widening gap between demand and supply has highlighted the urgent need to accelerate exploration and production, and to expand transmission infrastructure.