ADB approves $200m loan to modernise Bangladesh power distribution network

The Asian Development Bank (ADB) has approved a $200 million loan to help Bangladesh modernise and strengthen its power distribution network in peri-urban areas surrounding Dhaka, improving the reliability, efficiency and resilience of electricity supply for businesses and households.

The Power Distribution Network Enhancement Project will support the Bangladesh Rural Electrification Board (BREB) in upgrading electricity distribution infrastructure across 13 Palli Bidyut Samities (PBSs)—or electric cooperatives—serving rapidly growing industrial and urban areas around Dhaka, it said.

Under the ADB-supported Integrated Growth Network Development initiative, the project will help address overloaded substations, ageing infrastructure, power losses, and increasing natural hazard risks that constrain electric service delivery.

"As Bangladesh advances its vision of becoming a more prosperous, resilient, and globally competitive economy, modern power distribution networks will be essential to sustaining growth, creating more jobs, and attracting investment," said ADB Country Director for Bangladesh Qingfeng Zhang.

"This project will help future-proof the power system in key growth corridors around Dhaka through advanced technologies, stronger infrastructure, and enhanced resilience measures, ensuring that businesses and communities have the reliable electricity they need to thrive," he said.

The project will install 1,150 megavolt-amperes of new transformer capacity across 52 substations and increase the capacity of 12 existing substations by 115 megavolt-amperes.

It will also construct or upgrade more than 2,600 kilometres of overhead and underground distribution lines and install insulated conductors to improve network reliability, efficiency, and safety.

To modernise system operations, the project will build river-crossing transmission structures and switching stations and deploy 900 fault locator sets for faster fault detection and service restoration.

Bangladesh achieved universal electrification in 2022, but rising electricity demand driven by rapid urbanisation and industrial growth continues to increase pressure on the power network, said an ADB press release.

The project will help strengthen the distribution system's ability to meet growing demand while supporting the country's natural hazard-resilient and low-carbon development goals.

ADB's dedicated resilience financing for the project amounts to $146.52 million, including support for adaptation tools such as an environment-friendly gas-insulated switchgear technology, cutting annual greenhouse gas emissions by about 203,751 tons of carbon dioxide equivalent through improved distribution efficiency and reduced technical losses.

The project will strengthen the institutional capacity of BREB and PBSs through training in digital system integration, cybersecurity, natural hazard-resilient operations, environmental and social safeguards, and financial management.

By strengthening the financial sustainability of PBSs, it will help attract greater private sector participation and investments. The project will also promote practices responsive to the needs of women and girls, including measures to boost women's participation in the power sector and improve workplace conditions.

ADB's assistance is complemented by $107.95 million in cofinancing from the Government of Bangladesh and $141.39 million from BREB.

 A $1 million technical assistance grant from the Republic of Korea e-Asia and Knowledge Partnership Fund, administered by ADB, will support institutional development, financial sustainability planning, and implementation of innovative technologies.