The regional lending agency will also provide support to Bangladesh in its fight against novel coronavirus
The Asian Development Bank (ADB) will provide Bangladesh with an additional $400 million to expand the two-lane Elenga-Hatikumrul-Rangpur Highway to four lanes.
This will be the second slab of the total assistance of $1.2 billion that the regional lending agency has committed for the project. The ADB has already provided the country with $300 million in the first chunk.
Economic Relations Division (ERD) Secretary Fatima Yasmin and ADB Country Director Manmohan Parkash signed an agreement yesterday for the second portion of the loan on behalf of their respective sides.
The deal-signing ceremony took place at the NEC auditorium in the capital.
The highway, being expanded under the South Asian Sub-regional Economic Cooperation (Sasec) programme, will improve connectivity of Dhaka to northern districts. It will also facilitate the sub-regional road links among Bangladesh, Bhutan, India and Nepal, said Manmohan Parkash.
The road is aligned with Sasec-4, Asian Highway-2, Bimstec-2 and Saarc Highway Corridor-4, said the ADB country director.
He also said that the ADB provided $198 million in 2012 for the expansion to four-lanes of the 70-kilometre road from Joydevpur to Elenga, the first Sasec road connectivity project.
Manmohan added that the implementation of the project will boost Bangladesh's sub-regional trade with Bhutan, India and Nepal.
ERD Secretary Fatima Yasmin said the second phase of the project will cost $500 million, of which $400 million will come from the ADB, and the rest from the government's funds.
ADB will provide the loan from its Ordinary Capital Resource window at 0.50 percent interest, in addition to the Euribor or the average interest at which some European banks provide one another with short-term loans.
The loan also includes a 0.10 percent maturity premium and a 0.15 percent service charge on unspent money.
The maturity period for the loan is 25 years along with a grace period of 5 years, Fatima added.
Officials concerned said the Elenga-Hatikumrul-Rangpur Highway project includes about 190km of road which has to be expanded to four lanes, and also to two more lanes for slow-moving vehicles.
Foot-bridges and footpaths will also be constructed for pedestrians.
The estimated cost of the project is $1.67 billion, of which the government will pay $472.6 million.
The project was scheduled to be completed by August 2021, but the tenure may be extended to 2028, said Project Director Quazi Shahriar Hossain.
ADB officials said the lending agency is providing support to develop roads in the South Asian sub-region in order to accelerate economic development in the region by boosting regional trade.
Beginning in 2001, ADB has so far provided Sasec countries with $12.5 billion to help them implement 55 projects, including 36 worth $10.23 billion in the transportation sector.
Officials also said ADB prioritises road-connectivity given the fact that almost 70 percent of the people in Sasec countries use road transportation. Moreover, about 60 percent of goods are transported by road in these countries.
ADB to support Bangladesh's fight against coronavirus
Meanwhile, ADB Country Director Manmohan said that the regional lender will provide support to Bangladesh in its fight against the novel coronavirus.
The health ministry and ERD have sent a proposal to the ADB on this issue, and the regional lender is processing the document, he said.
He also said the ADB is ready to support Bangladesh with any of its three components – loans, grants and technical assistance – if the government wants.
The ADB is working with the government on this issue, he added.