Energy ( Power )

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ENERGY

Introduction

Energy is essential for promoting living standards. It is a pre-requisite for economic growth and technological progress. In Bangladesh, per capita generation of electricity in 1995 was only 92 kwh which is lower in comparison to that in neighbouring countries. In view of the prevailing low generation and consumption of energy, efforts should be made to develop this sector in such a way that the needs of all sectors can be met adequately, efficiently and economically.

Electricity demand grew at an average rate of 11 per cent per annum during 1972-94; per capita generation increased from 15.6 kwh in 1973 to 92 kwh in 1995. Notwithstanding, the progress made to date, only about 15 per cent population have access to electricity.

Review of Past Development

During the War of Liberation, power installations suffered extensive damage. As a result, at the worst case, peak demand dropped to 30 MW from the pre-liberation level of 225 MW. So, after independence the immediate problem was rehabilitation of power supply. By the end of 1972-73, a rehabilitation and development programme was undertaken in the First Five Year Plan. However, because of the shortage of fund the programme was carried over to the Two Year Plan. Several projects, initiated before the Liberation War were completed and a number of new projects were undertaken during the periods. As a result, installed generation capacity increased to 822 MW from 545 MW, while the peak demand rose to 462 MW from 222 MW.

To reduce the gap between demand and generation capacity, the Second Plan undertook a rapid expansion programme. The most important achievement during this period was the construction of the East-West electrical inter-connector which enabled the transfer of gas-based low cost power from the east to the west. Five power generation plants having a total installed capacity of 330 MW were completed during this period. But generation capacity still lagged behind the demand. The main constraint to the expansion of power supply was shortfall of resources coupled with a huge system loss and a slow response to tariff adjustment against rising fuel cost. By the end of the Second Plan, the system loss stood at 37.5 per cent. An investment programme of Tk. 14,370 million at 1979/80 prices was undertaken. The actual investment was Tk. 20,970 million at current prices. The Second Plan also pursued a policy of substituting imported fuel by natural gas. A significant progress was made in this direction. By the end of 1984/85, total number of electricity consumers stood at about 964,000 compared with 522,000. Table shows the progress of power development in the country .

Overview of Fourth Plan

Ensuring supply ahead of demand is the ideal situation in case of electricity for meeting manufacturing, irrigation, commercial and domestic needs of any economy. However, it was not possible to do so in Bangladesh. Against a peak demand of 1640 MW in 1990/91 and 1970 MW in 1994/95, the installed capacity was only 2352 MW and 2908 MW respectively. The operational capacity (2133 MW) was again interrupted by occasional power outages owing to fluctuations in gas pressure, transmission and distribution faults. These caused enormous losses to industrial production and commercial activities. Irrigation suffered relatively less due to its use of diesel power and electricity supplied by REB in off-peak hours.

Electricity generation, transmission and distribution require large financial investment. Although Bangladesh has considerable gas reserve and promising potentials, due to high system loss, large account receivables, poor management and inability to rationalise tariff rate and introduce other reforms, concessional loan for the power sector from the multilateral development partners was not available in the Fourth Plan period. Consequently, needed investments for generation, transmission and distribution of electricity could not be made during 1990-95. Hard term suppliers' credit and inadequate government resources made it possible to add only about 581 MW of generation capacity in the following power plants during the Fourth Plan Period:

However, due to non-completion of scheduled rehabilitation of some power stations, generation capability decreased by 271 MW and about 11 MW capability was retired during the period. The net capacity increase was thus 299 MW. In addition, reduced gas supply caused shut-down of some power stations resulting in lower operational supply of electricity.     

Organisational changes were made in the area of transmission and distribution of power in the country with BPDB entrusted with generation, transmission and distribution in urban areas, DESA with distribution of electricity in the greater Dhaka area and REB with distribution in the rural areas. Power generation and distribution was opened to both local and foreign private investments. To this end, a Power Cell was created to facilitate private sector investment in electricity production and distribution. A Rural Power Company (RPC) was set up for generation and supply of power exclusively to the REB. Concrete results of these measures are expected during the Fifth Plan period.

Fourth Plan Targets and Achievements

The Fourth Plan was formulated with a public sector allocation of Tk. 64,500 million at 1989/90 prices for the power sector. This allocation was inadequate in relation to the physical targets set in the Plan document. Due to shortage of both local and external resources, the Plan allocation as well as Plan targets had to be revised. The revised allocation was Tk. 45,360 million at 1989/90 constant prices against which Tk. 67,480 million was spent at current prices. Major targets as well as the achievements during the Plan period are shown in Table

Targets and Achievements of Power Sector During Fourth Plan

* 2352 MW+581 MW new - 25 MW retired/standby = 2908 MW

** 1834 MW+581 MW new - 11 MW retired - 271 MW derated/decrease for maintenance & rehabilitation = 2133 MW