Dhaka: The Asian Development Bank’s (ADB) Board of Directors has approved debt financing and partial risk guarantees totaling $583 million to develop the Reliance Bangladesh Liquefied Natural Gas (LNG) and power project.

The project, which includes a power generation facility to be located in Meghnaghat, near the capital city of Dhaka, and an LNG terminal, near Kutubdia Island south of Chittagong, will significantly increase power generation and improve energy infrastructure in Bangladesh.

ADB’s financing package includes loans and partial risk guarantees for the power generation facility, as well as for the LNG terminal, reports the UNB.

The total project cost is approximately $1 billion.

‘ADB’s partnership with Reliance Power will help Bangladesh scale up its energy infrastructure to sustain and support the country’s economic growth,’ Michael Barrow, Director General of ADB’s Private Sector Operations Department, was quoted as saying in a statement on Tuesday.

‘ADB’s role as a direct lender and guarantee provider will enable Reliance Power to mobilise much needed long-term debt financing and help attract new lenders to Bangladesh.’

Diversifying Bangladesh’s sources of energy is critical for the country as demands for natural gas have placed significant pressures on the country’s domestic gas reserves.

New LNG import facilities will enable the country’s existing gas-dependent infrastructure to remain viable while opening the country to access natural gas from global markets, said the ADB.

ADB’s support will help Reliance Power Limited develop an initial approximately 750 megawatts (MW) of gross power generation capacity and terminal facilities for LNG import.

Reliance Power plans to increase its power generation capacity to around 3,000 MW in Bangladesh.

Energy from the power plant will be sold into the country’s electricity grid under a long-term power purchase agreement with the Bangladesh Power Development Board.

‘Reliance Power has achieved a major and important milestone of approval of financing for its landmark project in Bangladesh. This is an important step in helping Bangladesh achieve energy security,’ said Venugopala Rao, CEO of Reliance Power.

‘ADB’s leadership in financing will help us develop this clean and reliable LNG-based power project in Bangladesh.’

Established in 1966, ADB is celebrating 50 years of development partnership in the region.

It is owned by 67 members-48 from the region. In 2016, ADB assistance totaled $31.7 billion, including $14 billion, in co-financing.

Reliance Power Limited, a part of the Reliance Group, is India’s leading private sector power generation company.

The company has the largest portfolio of power projects in the Indian private sector, based on coal, gas, hydro, and renewable energy, with an operating capacity of 5,945 MW.