The Standing Committee on Non-Concessional Loans (SCNCL) is set to consider proposals for obtaining $3.3 billion in non-concessional loans from the Asian Development Bank (ADB) and the International Islamic Trade Finance Corporation (ITFC) to finance a power distribution project and fuel imports.
The proposals have been placed before the 46th meeting of the SCNCL, with one being a new proposal and the other seeking ex-post facto approval, according to Economic Relations Division (ERD) sources.
Finance Minister Amir Khosru Mahmud Chowdhury chaired the meeting held at the Secretariat on Wednesday.
Under the first proposal, Bangladesh Rural Electrification Board (BREB) will seek a $200 million loan from ADB to finance the Power Distribution Network Enhancement Project.
The total estimated cost of the project is $449.34 million, while the proposed ADB loan will be provided under the bank’s regular Ordinary Capital Resources (OCR).
The loan will carry an interest rate of six-month Secured Overnight Financing Rate (SOFR) plus a 0.50 percent spread, with a 25-year tenor and a five-year grace period. It will also carry a 0.10 percent maturity premium and a commitment charge of 0.15 percent per annum.
Based on the SOFR rate of 3.87 percent on Oct 1, 2026, the grant element of the proposed loan was estimated at 5.70 percent, making it a non-concessional loan as the grant element is below 25 percent. The grant element may change with fluctuations in SOFR.
The project, scheduled to run from October 2026 to July 2031, aims to improve the reliability, efficiency and climate resilience of electricity distribution in 13 rural electricity cooperative areas around Dhaka.
It will involve expansion of new and existing substations, construction of overhead and underground distribution lines, installation of insulated conductors, deployment of fault locators and environmentally friendly GIS technology, digital monitoring systems, and institutional capacity building of BREB and the concerned rural electricity cooperatives.
The second proposal involves a total $3.1 billion loan facility from ITFC, based in Jeddah, Saudi Arabia, to finance petroleum product and liquefied natural gas (LNG) imports during fiscal 2026-27.
Of the amount, $2.5 billion will finance petroleum product imports by Bangladesh Petroleum Corporation (BPC), while $600 million will finance LNG imports by Petrobangla.
The loan will have a six-month tenor from the date of each disbursement, with an interest rate of six-month Term SOFR plus 1.70 percentage points, an administrative fee of 0.20 percent per annum and bullet repayment.
Based on the six-month USD Term SOFR rate of 3.67765 percent on Oct 1, 2026, the indicative interest rate was calculated at 5.37765 percent per annum.
The ITFC proposal was initially received for consideration by the SCNCL on Aug 9. Given the need to maintain regular fuel imports and ensure fuel security, the proposal was placed before the SCNCL chairman on an urgent basis and approved on Aug 17 for subsequent ex-post facto approval by the committee.
Under the $3.1 billion facility, ITFC will provide $600 million from its own resources, while the remaining $2.5 billion will be arranged through co-financing by Bangladesh Bank.
The financing may be rolled over after six months, with Bangladesh Bank’s co-financing amount at around $195 million at a given time and a maximum exposure of $1.25 billion in certain circumstances.
The proposals are being placed before the SCNCL in line with the requirement for committee approval before signing non-concessional foreign loan agreements.
The committee’s consideration also takes into account the government’s policy of limiting non-concessional foreign debt servicing and debt stock within specified thresholds.