Bangladesh to get $793 mln from Japan for development projects

People wait to commute on different modes of public transportation before iftar (breaking fast) during the holy month of Ramadan in Dhaka August 1, 2012.

DHAKA (Reuters) - Japan will provide $793 million to Bangladesh to fund four infrastructure projects, a senior Japanese aid official said on Wednesday.

The bulk of the money will come in loans along with a $8.0 million grant under separate deals signed in Dhaka, said Takao Toda, chief representative of the Japan International Cooperation Agency (JICA) in Bangladesh.

Two of the projects will be for power development, one for mass rapid transit (MRT) and the other for water development.

"The MRT is aimed to cope with the growing traffic demand ...and improvement of environment through alleviation of traffic congestion and reduction of exhaust fumes," Takao told reporters.

Bangladesh's first MRT will involve construction of 16 stations in the capital Dhaka and 20.1 kilometres of rail.

"It will carry 4.2 million passengers a day and shorten the average travel time by more than half," Takao said.

The 360 megawatt Bheramara Combined Cycle Power Plant will balance supply and demand in the west of the country while the other energy project will improve power supply reliability, the JICA official said.

"Both the projects on power will strength our transmission capacity as well as augment electricity generation," Finance Minister Abul Maal Abdul Muhith said.

The water project will involve a search for safe deep aquifers in arsenic and saline water prone areas.

Some 19 million people do not have access to safe drinking water in Bangladesh, according to a survey conducted by the government and JICA.

The loans will carry 0.01 percent annual interest, and is repayable in 40 years, with 10-year grace period.

Japan is Bangladesh's largest bilateral development partner, having provided or committed more than $9.0 billion since 1971.

(Reporting by Serajul Quadir; editing by Anis Ahmed and Jason Neely)