China Eximbank provides $276.25 preferential buyer's credit for Rajshahi Surface Water Treatment Plant Project

Project narrative

In 2014, China Eximbank agreed in principle to provide a $500 million loan to the Government of Bangladesh to build the Rajshahi Surface Water Treatment Plant. The project aims to provide 200 million liters of surface water every day. Besides, the plant will supply water to all of the areas of the region by 2035. In January 2015, China Eximbank requested that Bangladesh expedite the commercial contract signing process of the project could commence. The Executive Committee for the National Economic Council (ECNEC) finally approved the project in October 2018. Then, in 2020, a report indicated that the Bangladeshi authorities submitted a request for a $276.25 million loan to the Chinese authorities. The Chinese embassy replied that the authorities were evaluating the loan. Several years later, on May 10, 2023, the Government of Bangladesh and China Eximbank signed a $276.25 million preferential buyer’s credit agreement. The loan carries a 2% interest rate, a 20-year maturity, a 5-year grace period, a 0.25% commitment fee, and a 0.25% management fee. The borrower is expected to use the proceeds of the loan to finance 85% of the cost of a $325 million commercial (EPC) contract between Hunan Construction Engineering Group Ltd. (HNCEG) and the Rajshahi Water Supply & Sewerage Authority (Rajshahi WASA), which was signed on March 21, 2021. As of the June 30, 2023, the China Eximbank loan (PBC) had achieved a 20% disbursement rate ($55.25 million out of $276.25 million). The objective of the project is to construct a surface water treatment plant in Rajshahi to increase water supply as well as population coverage and to make a sustainable water supply system through 100% water supply from surface water sources. It will involve the installation of an intake, a conventional treatment plant, treated water transmission mains, and a booster pump station. The project will also seek to establish a primary and secondary distribution network in Godagari. Upon completion, the plant is expected to supply two hundred million liters of clean water on daily basis to Rajshahi city and its surrounding areas, thereby solving domestic and industrial water problems and improving people’s livelihoods. HNCEG is the EPC contractor responsible for implementation. The project officially commenced in July 2023. Its originally expected project implementation period was 48 months.