Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: The People’s Republic of Bangladesh
Project: Dhaka Underground Substation Construction Project
Loan Agreement: June 29, 2017
Loan Amount: 20,477 million Yen
Borrower: The Government of the People‘s Republic of Bangladesh
2. Background and Necessity of the Project(1) Current State and Issues of the Power Sector in Bangladesh
The People's Republic of Bangladesh has been experiencing a surge in power demand due toeconomic growth and industrialization, which has allowed the nation to maintain an annual
GDP growth rate of over 6% for the past decade and more. This is evidenced by the fact thatpeak-time demand for power, which had stood at 4,230 MW in 2005, roughly doubled to8,920 MW in 2015. It is predicted that the Dhaka Metropolitan Area, in particular, which
accounts for approximately 45% of the country's total power demand, will see the local power
demand continue to grow by an average of 9% annually in coming years. In Bangladesh,
operators routinely conduct a planned power outage with distribution suspension totaling 934
MW for FY2013. The Government of Bangladesh is now engaged in new power development
programs with a stated goal of raising the nation's power generation capacity to approximately
21,000 MW by 2020. Meanwhile, experts are now concerned about the reliability of local
power supply because many Dhaka-based substations, which are already running at 80%
capacity and higher, will find it difficult to transfer its power load to other substations in theevent of an accident. Moreover, they are worried that the peak-time demand will exceed local
substation capacities within the next six to seven years, which may cause a widespread power
outage to occur regularly in the Dhaka Metropolitan Area at peak times. As such, thegovernment must tackle the urgent task of enhancing the equipment in the entire Dhaka area
by installing additional substations and taking other measures.
Although there is a need to promptly enhance the equipment for the entire Dhaka area, thegovernment finds it challenging to acquire sites on which to build a substation. This isattributable to the fact that: 1) Being the most crowded city in the world, Dhaka has less than
one percent of unoccupied land, according to Dhaka Structure Plan 2015 (the average
unoccupied land in major cities in developed countries is 20% to 30%); 2) land prices in thecity have been soaring; and 3) land owners in Dhaka are generally reluctant to relinquish theirlandholdings. Therefore, to strengthen the equipment swiftly, the government is required toexpand the power capacity on the premises of existing substations while maintaining thecurrent power supply levels and without putting the substations out of operation.

(2) Development Policies for the Power Sector in Bangladesh and the Priority of the Project
In its 7th Five-Year Plan (FY2016/17–FY2020/21), the Government of Bangladesh set
addressing the soaring demand for power as one of its top-priority challenges. In addition toexpressing an intention to give prioritized budget allocation to bolster the nation's power
generation, transmission and distribution, the government has set an urban development goalof using local land resources more effectively and moderating the soaring demand for housing
and urban services.
The Project will newly construct an underground substation beneath an existing substation site
without suspending operation by employing techniques used for high-density urban areas inJapan. After completion, the new substation is expected to temporarily substitute thecapacities of other existing substations and allow the government to lay the groundwork forboosting the entire power equipment in Dhaka by expanding the existing local substations one
at a time. Thus, the project is considered to be an initiative that will achieve the priority
policies and development goals advocated by the Government of Bangladesh.
(3) Japan and JICA's Policy and Operation in the Power Sector
The Country Assistance Policy for Bangladesh (June 2012) sets the accelerated economic
growth as a priority area and cites power shortage as the biggest impediment to economic
development. The JICA Country Analysis Paper for Bangladesh (April 2013) identifies stable
power supply as a priority issue and this project is in line with these policies and the analysis.
The major support activities in the power sector in the past include the following:
・Loan: New Haripur Power Plant Development Project (FY2007–FY2008); Bheramara
Combined Cycle Power Plant Development Project (FY2010–FY2013); National Power
Transmission Network Development Project (FY2013); Matarbari Ultra Super Critical
Coal-Fired Power Project I and II (FY2014–FY2016); Dhaka-Chittagong Main Power
Grid Strengthening Project (FY2015) and so forth.
・Technical Cooperation: Dispatching Power Sector Adviser (FY2004–present);
Strengthening Management and Performance Standards in Power Sector of Bangladesh
through Promotion of TQM (FY2006–FY2009); Master Plan Study on Coal Power
Development in Bangladesh (FY2009–FY2010); and so forth.
(4) Other Donors' Activity
The Asian Development Bank has been stepping up efforts to provide assistance to the power
grid and substation sector in Dhaka with multiple power grid upgrading projects now
underway. The French Development Agency is engaged in a substation construction project,while the Asian Infrastructure Investment Bank is assisting substation rehabilitation programs.

(5) Necessity of the ProjectThis Project is in line with Bangladesh's development challenges and policies, as well as withthe assistance policies and analysis of the Government of Japan and JICA. It contributes to theimprovement of the local investment environment by delivering an improved balance of
supply and demand for power, and to the establishment of a sustainable urban environment bytapping into local land resources effectively. In addition, it contributes to the achievement of
three Sustainable Development Goals (SDGs): the seventh goal (Ensure access to affordable,reliable, sustainable and modern energy for all), the ninth goal (Build resilient infrastructure,promote inclusive and sustainable industrialization and foster innovation), and the eleventh
goal (Make cities and human settlements inclusive, safe, resilient and sustainable). Therefore,
the necessity for JICA to support the Project is substantial.
3. Project Description(1) Project Objective
The objective of the Project is to improve electric supply reliability and electric power supplyand demand balance by constructing two underground substations in Dhaka, thereby
contributing to improvement of investment environment of Bangladesh and nationwide
economic development.
(2) Project Site / Target Area
Gulshan and Kawranbazar, Dhaka(3) Project Components
1)
Design and construction of underground substation including the transformer coolingsystem (2 sites: Gulshan and Kawranbazar), cable tunnel for undergroundtransmission line (around the concerned underground substation) and vertical shaft
and cable tunnel for distribution line (around the concerned underground substation)
2)
Design, procurement and installation of electric facilities for underground substation(132/33 kV Gas Insulated Transformer, etc.), underground transmission line
(Gulshan: around 3 km, Kawranbazar: around 2 km), distribution line (around theconcerned underground substation)
3)
Consulting Services (e.g., F/S review, basic design, bidding assistance, application ofbuilding permit assistance, construction supervision)(4) Estimated Project Cost (Loan Amount)
31,179 million Yen (Loan Amount: 20,477 million Yen)
(5) Schedule
June 2017 - September 2024 (88 months in total). The Project will be completed when thefacilities are put in place (September 2023).

(6) Project Implementation Structure1) Borrower: The Government of the People’s Republic of Bangladesh
2) Executing Agencies: Dhaka Electric Supply Company Limited (DESCO), Dhaka PowerDistribution Company Limited (DPDC)
3) Operation and Maintenance System
The operation and maintenance of the Project is provided by DESCO and DPDC
(7) Environmental and Social Consideration / Poverty Reduction / Social Development
1) Environmental and Social Consideration① Category: B② Reason for the Categorization: The project is not likely to have significant adverse
impact on the environment under the JICA Guidelines for Environmental and SocialConsiderations (April, 2010) in terms of its sectors, characteristics and areas.
③ Environmental Permit:
The Environmental Impact Assessment (EIA) Report on the project is expected to beapproved by the Department of Environment of Bangladesh in June 2017.
④ Anti-Pollution Measures:With respect to the air quality, water quality, soil condition, noise and vibration, theenvironmental effects shall be minimized by sprinkling water at work sites inconformity to the nation's environmental and emission standards, developing sewage
conduits and septic tanks, and using low-noise and low-vibration machines. After thecommencement of service, the newest equipment in operation is not expected to cause
any environmental impact such as noise and vibration.
⑤ Natural Environment:
Although there are plans to install underground power grid lines in the vicinity of theGulshan Lake, an area designated as an Ecologically Critical Area, no environmental
impact is likely to occur because the project's designs and work procedures will
adhere to the Bangladeshi legal system. The other target areas do not apply to avulnerable area, such as national park, or its surrounding, and the expected influenceon the local natural environment is minimum.
⑥ Social Environment:
The project will likely not involve any land acquisition and resident relocations
because the underground substations in question will be installed beneath the site of
the existing substation. The Kawran Bazar substation will cause a temporary
relocation of street vendors comprising 10 households in the bazar due to a one-time
use of nearby streets when constructing the underground substation and power gridline conduits. However, they will be compensated according to the JICA Guidelines
for Environmental and Social Considerations as well as to the nation's procedures. No

objections were raised by those households during resident consultations on theproject.
⑦ Other/Monitoring:
In this project, the monitoring of air quality, water quality, soil, noise, vibration, etc.,
during construction and after the commencement of service will be done by theexecuting agency and contractors. Compensation for temporary relocation prior to theconstruction will be monitored by the executing agency.
2) Promotion of Poverty Reduction: None
3) Promotion of Social Development: None
(8) Collaboration with Other Donors: None
4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators (Operation and Effect Indicators)
Indicator
Availability Factor(Gulshan Substation) (%)
Availability Factor(Kawranbazar Substation) (%)
Annual Electricity Supply(Gulshan Substation) (GWh)Annual Electricity Supply(Kawranbazar Substation) (GWh)Bank Capacity(Gulshan Substation) (MVA)
Bank Capacity(Kawranbazar Substation) (MVA)

Baseline *1(Actual Value in 2016)

Target (2015) *2【Expected value 2 years
after project completion】

8661

89

32

254.6

1,005.6

145.8

564.4

02880288*1 Baseline is the data of existing substation.
*2 Target will be the data of the substation which will be constructed by the Project.
2) Internal Rate of ReturnAccording to the following preconditions, this project’s Economic Internal Rate ofReturn (EIRR) will be 39.9% at Gulshan Substation and 29.5% at Kawranbazar
Substation. The Financial Internal Rate of Return (FIRR) will be 5.6% at Gulshan
Substation and 4.4% at Kawranbazar Substation.

【EIRR】
Cost: Project costs (excluding tax), Power purchase costs, Operation/maintenance costs(excluding tax)
Benefit: Increase in power sales and reduction of power loss
Project Life: 50 years【FIRR】
Cost: Project costs, Power purchase costs, Operation/maintenance costs
Benefit: Power sales, Increase in income by the Reduction of Power Loss
Project Life: 50 years(2) Qualitative Effects
Improvement of supply and demand balance in Dhaka, Improvement of investment
environment of Bangladesh and nationwide economic development
5. External Factors and Risk Control
Delays in civil engineering works due to natural disasters such as a flood and the continuity ofpower supply to the substation.
6. Lessons Learned from Past Projects(1) Lessons Learned from Past Projects
The results of the ex-post evaluation (in 2011) of the Construction of 230 kV Underground
Transmission Line between Bangkapi and Chidlom Substation Project for the Kingdom ofThailand revealed that when a project involving multiple agencies as stakeholders isimplemented in the future, it will be necessary to consider setting up meetings with suchparties and have it coordinate closely. This is because the project for the development ofunderground power transmission tunnels and lines beneath canals in Bangkok involved manyagencies including the Bangkok Metropolitan Administration, the Electricity Generating
Authority of Thailand, the Bangkok Mass Railway Transit Authority, the Expressway
Authority of Thailand and the State Railway of Thailand, and coordination among relevant
parties took longer than expected, which was one of the reasons for the project's delay.
(2) Application of Lessons Learned to the Project
The Project will probably have multiple agencies as its stakeholders. Therefore, any
implementation delay will be avoided by setting up meetings to facilitate coordination in theplanning and design stages for relevant parties such as the Ministry of Power, Energy andMineral Resources of Bangladesh, Power Grid Company of Bangladesh Ltd., DESCO andDPDC. In addition, we will have meeting participants coordinate closely by periodicallysharing information on project designs and issues faced by individual agencies.

7. Plan for Future Evaluation(1) Indicators to be Used
1) Availability Factor (%) , Annual Electricity Supply (GWh), Bank Capacity (MVA)
2) Economic Internal Rate of Return (EIRR) (%), Financial Internal Rate of Return(FIRR) (%)(2) Timing: Two years after the project completion