ADB plans to lend $1.5b to ratchet up connectivity, energy co-op in S Asia

Sep 12, 2011 - Nazmul Ahsan - thefinancialexpress-bd.com

The Asian Development Bank (ADB) is planning to lend $1.5 billion to improve cross-border connectivity and increase energy cooperation among five South Asian countries -- Bangladesh, India, Sri Lanka, Nepal and Bhutan over a period of three years (2012-2014).

The indicative lending programme of ADB has been included in its draft regional cooperation strategy (RCS) for 2012-2014. The planned lending programme will soon be placed at the board meeting of the Manila-based bank for final decision, a top official in the Economic Relations Division (ERD) under the Ministry of Finance, said.

Of the total, $1.11 billion or 74 per cent will be spent against the head of improving cross-border connectivity, $325 million or 23 per cent for energy cooperation and the rest of above $40 million or three per cent of the total fund has been earmarked for trade facilitation, according to the RCS of the Bank.

"We are mostly convinced over the draft strategy of ADB. The ERD, on behalf of the government, will show its green signal to the Bank latest by next August 20 as we were asked to give our opinion on the draft RCS," a senior ERD official told the FE.

"Intra-regional trade share of South Asian countries is expected to increase from the current 3.9 per cent to above six per cent by 2014 after completion of the programme," he added, quoting a recent estimate of ADB on the issue.

If the efficiency of transport and trade facilitation was improved, intra-regional trade within South Asia would increase by almost 60 per cent and trade with the rest of the world would increase by over 30 per cent, according to the estimate of ADB included in the RCS.

South Asia is home to a quarter of the world's population, but accounts for only three per cent of world GDP.

According to the planned outcome of the lending programme, average cross-border transit time of trucks from Kolkata to Dhaka will be reduced from current 20 days to 11 days; sub-regional cross-border freight traffic will be increased from current $5.0 billion to 6.0billion in 2015 after the successful completion of the lending programme.

Besides, at least 1,000 kilometre of regional transport routes will be constructed or improved under the project. Container handling capacity of Colombo port facilities will be increased by 50 per cent. The $1.5 billion regional development project of ADB has projects to develop road, rail networks, air and maritime gateways.

Under the project, 500 megawatt (mw) power transmission capacity will be attained between Bangladesh and India, 1000mw power transmission capacity will be attained between India and Nepal, another 1,000mw cross-border line will be constructed and 1,000mw of power transmission capacity will be attained between India and Sri Lanka.

Officials in the ERD said, until and unless overall transport system of South Asian countries is improved, the potential of the countries concerned could not be explored to its fullest.

Quoting a recent study report of ADB, a senior official in the Division said, road transport caters to 65-70 per cent or more of the freight movement in South Asia.

The study report said South Asia has one of the largest railway networks in the world, spreading over 77,000 kilometre routes. About 70 per cent of this network is in India, Pakistan and Sri Lanka. The region is also interconnected by mainline and deep-sea container and feeder ships distributing containers throughout the region from hub ports.

Regarding air transport, the report said the overall passenger growth in intra-regional travel has been one of the highest in the world at 12 per cent per annum, while for freight it has been equally impressive at a 7.5 per cent growth per annum over the period 2001-2004.