Contents

POWER - Introduction and Background

The present Government is committed to implement “Vision 2021” for building Bangladesh as a happy, prosperous country of medium income through maintaining macro economic stability and achieving rapid economic growth by 2021. In the outline of Bangladesh Perspective Plan (2010-2021) projections of raising the existing 6 percent growth rate of GDP to 10 percent by 2021 and increasing the per capita income of US$ 690 to around US$ 2000 have been set up. A prerequisite for achieving this growth is the ensuring of adequate investment in National Priority Sectors.  

According to the Perspective Plan of the Government, a preliminary estimate of expected increase in investment in order to reach the projected GDP growth rate requires investment to be 32 percent of GDP by 2015 and 38 percent of GDP by 2021. Analyzing the investment situation of past years, it is observed that the contribution of public investment in the total investment has comparatively declined while the function of private sector has augmented. In the Fiscal year 2008-09, investment in public and private sector was respectively 19.6 and 4.6 percent of GDP. It is projected that this rate will increase to respectively 25.9 and 6.1 percent by 2015. The lion’s share of the mentioned investment will be achieved through Public-Private Partnership, Private Sector investment and Foreign Direct Investment. It need not be over emphasized that a strong infrastructure is necessary to attract private and foreign investment. The energy and power supply deficit in the existing infrastructure has become an impediment to achieve development goals. The Government is firm to create an investment-friendly atmosphere to attract private ventures according to the set target. The Government has given priority to infrastructure development especially in power and energy sector as means of attaining higher growth.  

Currently, the shortage in electricity production is about 1500-1800 MW as per the demand of peak hours. As the concept of applying Energy Mix has not been given due consideration there is an overwhelming dependence on natural gas as primary fuel for power generation. At present, 88 percent of the power plants are run by natural gas. Due to limited gas extraction, these power plants cannot generate enough power.  

Moreover, around 63 percent of total production comes from public sector while private enterprises contribution is inadequate. In addition, there are also problems relating to management of the growing demand. The Government has already adopted a comprehensive plan to resolve the prevailing difficulties. According to the plan, the shortage of electricity production will be overcome through PPP (Public Private Partnership) and private investment alongside government investment by 2012, and electricity for all will be ensured by 2021. Besides, use of coal and other fuels will be enhanced in order to reduce dependence on natural gas for power generation. The demand for electricity will also be addressed through the use of renewable energy and regional cooperation. Initiatives have been taken to bring qualitative change in demand side management and use of fuels in order to save power and energy. In future, such initiatives will continue and will be well-arrayed.  

When the present Government assumed office, the power generation was 3525 MW which has now been increased to 4020 MW currently. The production capacity will be enhanced to 11,500 MW by 2015 and it requires USD 9.00 billion investment out of which USD 8.00 billion is expected to be provided by private sector.  

Development and investment in the power and energy sector is different from other sectors due to the sector specific characteristics. Huge primary asset accumulation and procurement are required for investment in the power and energy sector. Strategies have been made to meet this need by involving private sector with Government. Keeping this in view, the importance of external investment is infinite. On the other hand, consumer's economic consideration is given priority over commercial interests in price calculation of electricity, gas and other fuel oil. Efforts are continued to attract private ventures considering the risks in large primary investment and profit. However, estimation and reevaluation of power and other energy is required price is to be made more with commercial consideration in order to involve the private sector.  

The existing problems and solutions in power and energy sector are enumerated in Bangladesh Perspective Plan outline (2010-2021). The total production of power is targeted at 8,500MW by 2013, 11,500MW by 2015 and 20,000MW by 2021. To reach these goals the Government has taken immediate, short, medium and long term work-plans for enhancing power generation in order to ensure overall and balanced development of this sector.  

A modest effort has been made through this brochure to reveal the adopted plans and their implementations by the persistent efforts of the Government in order to resolve the prevailing situation of power and energy sectors before the Nation through the Parliament. The power shortages in Bangladesh along with reasons for lower per capita electricity consumption compared to other developing countries have been analyzed in this pamphlet. At the same time, in order to overcome the problems of power sector after identifying those, the steps taken so far and steps to be taken are discussed here. Priority has been given to arrange enhanced power generation, renovate and extend the infrastructure facilities for transmission and distribution, attract investors through private sector and PPP initiatives, encourage the use of renewable energy, create multifarious fuels, demand side management etc. to the develop power sector.
 

Shortage of electricity  

Shortage of electricity may be considered in two forms. Firstly, reviewing the scenario of per capita electricity consumption and percentage of population having access to electricity in Bangladesh compared to other countries and; secondly, determining gap between demand and supply of electricity in perspective of country's economic situation and GDP growth.  

Per capita electricity consumption : While analyzing the cause of electricity shortage it transpires that, at present our per capita electricity production is only 220 kw/hour. It is seen that comparing with the per capita electricity consumption of BRICS countries ( Brazil , Russia , India , China , and South Africa ) as well as SAARC (South Asian Association for Regional Cooperation) countries such as Pakistan , Srilanka the per capita consumption of Bangladesh is very low.  

Access to Electricity : Only 47 percent of the total population has access to electricity. Presently (April 2010) the quantity of transmission and distribution line are respectively 8,359 Line Kilometer and 2,66,460 Line Kilometer. Besides the urban areas 53,281 villages have been brought under electricity coverage. In order to bring the total population under electricity coverage emphasis should be provided to produce electricity from renewable sources besides using non-renewable energy.  

Projection of demand for electricity: One of the aspects to the demand for electricity is the tremendous rise of intensity of electricity use with the pace of economic development. In 1980, there was electricity demand of 30 Gigawatt (GW) per 1000 crore taka of GDP which increased into 80 GW in 2002. With an economic growth of 12 percent on an average the capacity for electricity generation should double every six years. Considering the projection of economic growth the generation of electricity should increase 4 times to 20,000 MW by 2021.