Japan has finally agreed to provide US$1.3 billion funds for Matarbari 1,200MW thermal power plant, softening its earlier position.
The Asian economic giant did not confirm the funding during the Prime Minister's recent visit to Tokyo, officials said on Saturday.
Now, the Japan International Cooperation Agency (JICA), the official funding agency, has agreed to sign the loan deal by the end of this month, they said.
The officials said the JICA declined to sign US$1.3 billion loan deal in Tokyo for constructing the coal-fired Matarbari power plant on the grounds of possible environmental impacts.
During the visit of Prime Minister Sheikh Hasina from May 28-June 2, the JICA signed US$1.2 billion loan deals for four other projects under its 40th Official Development Assistance (ODA) package.
"Japan has agreed to sign the loan deal for facilitating the Matarbari power plant project. The deal is expected to be signed on June 30," said a senior Economic Relations Division (ERD) official.
He said although the Matarbari power project was dropped from the list of five schemes under the US$2.50 billion aid package in Tokyo, now Japan has agreed to confirm the $1.3 billion for the power plant construction.
During the PM visit, four loan projects were signed.
"Actually, JICA did not sign the loan for Matarbari power plant as its law is very much strict about environmental protection," the official said. "Japan is such a country that it will not support or facilitate any coal-fired power station and sign such deals in its territory," he added.
Earlier, JICA concluded negotiations with Bangladesh on providing $2.5 billion in assistance for implementing five development projects, including the coal plant.
For four other projects, the JICA will finance the Matarbari port development project (I), MRT line-1 from Airport to Kamlapur along with a connecting line from Jamuna Future Park to Purbachal project (I), ongoing foreign direct investment project (II), and energy efficiency and conservation promotion financing project (Phase 2).
Under the ODA package, the JICA is providing JPY38,898 million (US$355 million) for the Matarbari port development project in the 1st tranche, JPY52,570 million ($480m) for the MRT line-1, JPY21,147 million ($193m) for the investment promotion project and JPY19,000 million ($173m) for the energy project.
The 5th tranche of loan for the power plant project is JPY143, 127 million ($1.3 billion).
Bangladesh will have to repay the loan at 0.95 per cent rate in 30 years in which the first 10 years will be considered the grace period.
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