$2.67b deals with Jica to finance MRT-1, Matarbari power plant

The government has inked final agreements amounting to $2.67 billion with the Japan International Cooperation Agency (Jica) to finance the country's first underground metro rail (MRT Line-1), Matarbari coal-fired plant and also to provide Covid emergency budget support to tackle Covid-19.

Fatima Yasmin, secretary to the Economic Relations Division (ERD), and Yuho Hayakawa, chief representative at Jica Bangladesh Office, signed the deals on behalf of respective sides at the National Economic Council auditorium in the capital on Monday.

Finance Minister AHM Mustafa Kamal, Japanese Ambassador in Dhaka Ito Naoki, representatives from the ERD, Jica, the Embassy of Japan and project implementing agencies were also present at the event.

ERD officials said $1.10 billion loans from Jica would come as the second tranche for the Dhaka Mass Rapid Transit Development Project (Line 1) and about $1.20 billion as the 6th portion to implement Matarbari Ultra Super Critical Coal-Fired Power Project.

A total of $2.3 billion loan will be disbursed as the first tranche of the 42nd ODA Yen Loan Package from Jica, while another $365 million will come as the second of the Covid-19 crisis response emergency support loan.

In 2020, Japan provided $320 million as budget support for countercyclical expenditure plan to combat Covid-19 impacts in Bangladesh.

For the two development projects under the 42nd ODA Loan Package, the rate of interest is determined at 0.60% for construction, and 0.01% for consultancy service. Another 0.2% front end fee is also to be charged at a time.

The government will have to repay the loan within 30 years, including a grace period of 10 years.

AHM Mustafa Kamal at the event said, "At the beginning of the Covid-19 pandemic, we approached Japan for budget support and we received a very quick positive response."

Japan provided the first-ever budget support to Bangladesh last year and in line with that, the deal for the second tranche was signed.

Matarbari power project

The project is being implemented to meet growing electricity demand and to improve stable power supply by installing 1200MW Ultra Super Critical Coal-Fired Power Plant at Matarbari of Maheshkhali upazila in Cox's Bazar.

Work for constructing the power transmission line, access road, township development, and a channel for the Matarbari port is also going on under this project.

The total cost of the project is over Tk35,984 crore, while Jica will provide Tk28,939 crore. The physical progress of the project is 49% and the financial progress is 51%.

Jica has already provided $2.63 billion for the project in the first five tranches.

Underground metro rail

The 31.241km long MRT Line-1 will offer an underground metro rail from Dhaka airport to Kamalapur with an elevated connecting line from Notun Bazar to Pitalganj of Purbachal.

The detailed study, survey and basic design have been completed for both the routes. Now the detailed design is being worked on.

The total estimated cost of the project is Tk52,561 crore, and Jica will provide TK39,450 crore.

Jica has provided $49.06 million for engineering services and $461.16 million for construction of the first tranche earlier.

Covid crisis response emergency support loan

The objectives of the programme are to realise a resilient health system through concessional financing by supporting the smooth implementation of the policies to strengthen Covid-19 response capacity in the health sector, enhance economic and physical access to health services towards the achievement of universal health coverage and improve health finance thereby contributing to promoting the economic stabilisation and development efforts of the country.

Bangladesh is going to get such budget support of $365 million with an interest rate of 0.55% and front end fee of 0.2%.

The Finance Division is executing budget support and the Ministry of Health and Family Welfare will implement policy actions under the loan.