Bangladesh, Germany sign €81 million deal to modernise power infrastructure
The Bangladesh Rural Electrification Board (BREB), under the Power Division, will implement the project.
Bangladesh and Germany today(30 October 2025) signed a loan agreement worth €80 million and a grant agreement worth €1 million for a new project titled "Promotion of Climate-Friendly Energy Supply (Smart Grids 2)", aimed at modernising the country's power distribution network and enhancing energy efficiency.
The agreements were signed in Dhaka between the Government of the People's Republic of Bangladesh and the Government of the Federal Republic of Germany.
On behalf of Bangladesh, Md Shahriar Kader Siddiky, secretary of the Economic Relations Division (ERD), signed the documents, while Carolin Gassner, director for South Asia, and Christina Poppe, portfolio manager, represented the KfW Development Bank on behalf of the German government.
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According to the ERD, the project seeks to modernise and increase the capacity of 25 existing outdoor substations from 842 MVA to 1,260 MVA, ensuring an uninterrupted, reliable, and efficient power supply. It aims to reduce system loss from 6.62% to 5.82% and lower the System Average Interruption Duration Index (SAIDI) from 332 minutes to 300 minutes within the project areas by June 2029.
The Bangladesh Rural Electrification Board (BREB), under the Power Division, will implement the project.
The total estimated cost of the project is Tk1,817.99 crore. Of this, the Government of Bangladesh will contribute Tk479.97 crore, project aid will amount to Tk1,080.67 crore, and Tk257.35 crore will come from the implementing agency's own funds. The project is scheduled to run from 1 July 2025 to 30 June 2029.
Under the grant agreement, €1 million will be provided as a grant to BREB to cover expenditures for expert services. The project received approval from the Executive Committee of the National Economic Council (ECNEC) on 17 August 2025.
Germany has been a long-standing development partner of Bangladesh. Since 1972, the country's total commitments in financial and technical cooperation have reached approximately €4 billion. Currently, KfW Development Bank is financing 12 projects in Bangladesh, providing €567.5 million in loans and €169 million in grants.
