The Asian Development Bank (ADB) board of directors has approved $583 million in debt financing and partial risk guarantees to develop the Reliance Bangladesh Liquefied Natural Gas (LNG) and power project.
The project includes a power generation facility to be located at Meghnaghat, near Dhaka, and an LNG terminal near Kutubdia Island, south of Chittagong, and will significantly increase power generation and improve energy infrastructure in Bangladesh.
ADB's financing package includes loans and partial risk guarantees for the power generation facility, as well as for the LNG terminal.
The total cost of the project is approximately $1 billion.
Also Read- 3,600-MW LNG based power plant to be built at Payra
"ADB's partnership with Reliance Power will help Bangladesh scale up its energy infrastructure to sustain and support the country's economic growth," Michael Barrow, director general of ADB's Private Sector Operations Department, was quoted as saying in a statement on Tuesday.
"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," he said.
Diversifying Bangladesh's sources of energy is critical for the country, as the demand for natural gas has placed significant pressure on domestic 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, said ADB.
ADB's support will help Reliance Power Limited develop approximately 750 megawatts (MW) of gross power generation capacity and terminal facilities for LNG imports in the initial phase.
Also Read- $100m contract signed for Summit’s floating LNG facility at Moheshkhali
Reliance Power plans to increase its power generation capacity to around 3,000 MW in Bangladesh.
Energy from the power plant will be sold to 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 in the approval of financing for its landmark project in Bangladesh. This is an important step in helping Bangladesh achieve energy security," said Venugopala Rao, CEO of Reliance Power.
"ADB's leadership in financing will help us develop this clean and reliable LNG-based power project in Bangladesh."
Established in 1966, ADB is celebrating 50 years of development partnership in the region.