Today in Dhaka, the German and Bangladeshi governments signed a grant agreement of EUR 1 million and a loan agreement of EUR 80 million for the “Promotion of Climate-Friendly Energy Supply (Smart Grids 2)” project.
The loan and grant agreements were signed on behalf of the Federal Republic of Germany by Carolin Gassner, Director, South Asia, and Christina Poppe, Portfolio Manager, KfW Development Bank, and on behalf of the government of Bangladesh by Md. Shahriar Kader Siddiky, Secretary, Economic Relations Division (ERD).
The project aims to modernize and enhance the capacity of 25 existing outdoor substations from 842 MVA to 1,260 MVA and ensure an uninterrupted, reliable, and efficient power supply by reducing system loss from 6.62% to 5.82% and the System Average Interruption Duration Index (SAIDI) from 332 minutes to 300 minutes by June 2029 within the project areas, said an ERD press release.
The Bangladesh Rural Electrification Board (BREB) under the Power Division will implement the project.
The total estimated cost of the project is Taka 1,817.99 crore, of which the government of Bangladesh’s contribution is Taka 479.97 crore, project aid amounts to Taka 1,080.67 crore, and agency’s own fund is Taka 257.35 crore. The implementation period of the project is from 1 July 2025 to 30 June 2029. The EUR 1.00 million under the grant agreement will be provided as a grant to the BREB to meet the expenditure for expert services.
On August 17, 2025, the Executive Committee of the National Economic Council (ECNEC) approved the proposal.
Bangladesh has long been a development partner of the Federal Republic of Germany. The German government has committed a total of almost EUR 4.00 billion in financial and technical cooperation since 1972.
With a total of EUR 169.0 million in grants and EUR 567.5 million in loans, KfW Development Bank is currently funding 12 projects in Bangladesh.
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