Bangladesh

The Government of Bangladesh has accorded the highest priority to the power sector in view of its importance in the overall development of the country. The Government envisions providing the entire population with electricity by 2020. A number of reform measures have been taken to encourage private and joint venture investments for this capital intensive sector and to ensure transparency and accountability as well as to create competition. Utilities have become more active in order to improve their performance. As a result, significant progress has been achieved in this sector. If this trend continues, the power sector will be able to reach its goal.

Major achievements

Development of the power sector in 2001 and 2002

During financial years 2001 and 2002, electricity generation increased and new transmission and distribution lines were constructed. As a result, the extent of load shedding has been reduced. During this period the total number of consumers increased to about 1.7 million, including 13,000 irrigation consumers. Moreover, about 7,600 new villages have been electrified. All of these improvements have had a positive impact on the development of Bangladesh’s agro-based economy.

Electricity sales have increased by 24.6 per cent in the last two years, amounting to 2,489 million units. System losses have come down from 31.62 per cent to 27.97 per cent. Maximum demand has increased by 583 MW. Revenue has also increased by 2,385.2 million taka during the last two years, which has resulted in financial improvement for the utilities.

Major challenges

To meet the increasing electricity demand, a huge investment is required. Owing to funding constraints, the timely construction of new power plants and maintenance of the existing power plants are not possible.

Power sector reforms

To overcome this problem, the Government has taken a number of reform initiatives.

The power sector reform started in 1977 through the creation of the Rural Electrification Board (REB) to augment the Rural Electrification Programme. As a continuation of the reform, the Dhaka Electric Supply Authority (DESA) was created in 1991, and the industrial policy was amended in 1992 to allow private sector participation in power generation.

In 1995 the Government approved the National Energy Policy, which contained a recommendation to unbundle the power sector and establish an energy regulatory commission.

The Government has embarked on some reform programmes consistent with the approved policy to enhance overall efficiency and to attract private capital in this sector. These programmes have resulted in a number of achievements:

• The Private Sector Power Generation Policy of Bangladesh was approved in 1996 to generate and sell power in the private sector;

• The Government has approved the “Vision Statement and Policy Statement on Power Sector Reform”;

• The Government has approved the Policy Guidelines for Small Power Plants in the Private Sector to develop power plants;

• The second largest power station belonging to the Bangladesh Power Development Board (BPDB), Ashugonj power station, has been incorporated;

• Steps have been taken to build three power plants at Serajgonj, Bheramara and Meghnaghat, each having a capacity of 450 MW;

• The Power Grid Company of Bangladesh Limited (PGCB) has been established under BPDB’s ownership. PGCB has already taken over 100 per cent of transmission and other assets from BPDB;

• The Dhaka Electric Supply Company Limited was established under DESA;

• Steps have been taken to extend the electrification system to people in remote areas of the country under the Remote Area Power Supply System and a feasibility study will be conducted;

• Strategic business unit (SBU) activities have been adopted in 47 distribution divisions under BPDB and DESA. Owing to the SBU programme, system loss has been reduced and revenue has increased considerably;

• As part of the reforms and restructuring, the West Zone Power Distribution Company has been established and is now functioning under the Companies Act of 1994;

• Programmes have been initiated to introduce a pre-paid metering system in Chittagong and Sylhet under BPDB and in the Lalbag area under DESA to improve the revenue collection;

• A tariff study has been undertaken and is currently being reviewed by the Government. As an interim measure, the tariff is being adjusted biannually on the basis of changes in gas prices and fluctuations in the foreign exchange rate;

• The Energy Regulatory Commission Act was passed by Parliament on 10 March 2003. This Act will regulate the electricity, gas and petroleum sector.

National energy plan

As a result of the reform measures taken by the Government, the power sector has made a remarkable improvement. In order to meet the increasing demand for electricity it is imperative to continue the current trend. With this objective, the Government has produced mid-term (up to 2007) and long-term (up to 2012) development plans.

By 2012, the Government plans to have increased the installed capacity by 5,130 MW, installed 5,422 kilometres of transmission lines and over 120,000 kilometres of distribution lines, electrified more than 21,500 villages and increased the population’s access to electricity by 33 per cent.

Renewable energy

Steps have been taken to produce electricity from the solid waste of the Dhaka Municipality Corporation. A consultant has been engaged to design a power station, conduct a feasibility study, prepare a draft of the security package document and assist in the selection of a sponsor.

A draft renewable energy policy has been prepared and is in the process of approval by the Government. Further to this, the Government is seriously considering electricity generation by renewable energy sources such as wind, solar, biomass, biogas, mini-hydro and solid waste.

Stand-alone electricity supply for rural electrification

BPDB has already initiated efforts for the development of renewable energy and the implementation of energy efficiency measures. Under the Hill Tracts Electrification Project, over 300 photovoltaic (PV) panels have been installed in Juraichori. In addition, in the second and third phases, Bilaichori and Barkal will each have 300 PV panels installed.

Under the Rural Electrification Programme of REB, 2,200 residential and small commercial shops in remote areas without the possibility of accommodating grid facilities shall receive solar energy through the installation of solar home systems.

Demand-side management

Keeping generation availability at the highest level in the supply-side and managing unproductive demand by end users are the best ways to alleviate the load shedding of power in Bangladesh.

To keep load shedding at a minimum, BPDB has taken a number of steps under a demand-side management programme. These include encouraging irrigation during off-peak hours, enhancing consumer awareness of electricity conservation during peak hours and undertaking a demand-side management programme that encourages the use of energy-efficient equipment. Further initiatives include requesting industries and commercial customers to use their own captive generation and not to operate during peak hours, whenever possible, encouraging commercial establishments to operate only during daylight hours and forming crisis management committees to face emergencies and implement demand-side management measures in their area.

Environmental impact

Development of the electrical power sector is based on sustainable, environmentally friendly and cost-effective methods. Environmental impact assessments are mandatory for any new project in both the private and public sectors. At the planning stage all new projects conform to the required limits, codes, guidelines and environmental standards.

As about 90 per cent of power generation is from indigenous natural gas, the emissions from generating plants are much lower than facilities utilizing other fuels.

Financial aspects

During 2001 and 2002, Bangladesh received funding from a number of sources, such as the Asian Development Bank, the German KfW fund and the United Kingdom DFID. Funding included US$ 195.6 million for a power sector development programme, 7.5 million euros for expansion of renewable energy technologies, 50 million pounds sterling for the intensification and expansion of the distribution system, and 40.2 million euros for the Dhaka North Power Project.