BPDB is a key stakeholder jn the power sector of Bangladesh, being responsible for   generation and transmission of electricity in the country and distribution of electricity in the urban areas except the Metropolitan City of Dhaka. BPDB's retail sales accounts for about 36% of total retail sales. BPDB's staff strength is 23,000. Given the importance of power development for socio-economic development of the country, the accelerated development and efficient management of power sector is essential. The Government of Bangladesh recognizes that for achieving desirable efficiency and development of the sector, reforms and restructuring of the sector would be necessary. In this respect, the Government has issued a Vision/Policy Statement which has highlighted various components of reforms and demonstrates its commitment to the reforms. BPDB also recognizes the necessity of appropriate reforms. It is very important to ensure that during implementation of reform programme, the services being provided are not retarded or disrupted. Therefore, the implementation programme should be so designed that the transition to the reformed structure is as smooth as possible. For this to happen, adequate preparatory works/studies should be undertaken and all the relevant issues including employees issues should be addressed. A road map for implementation of the reform programme induding the intermediate steps and a realistic time frame has to be prepared.

BANGLADESH POWER SECTOR REFORM:

BPDB'S PERSPECTIVE

To alleviate poverty in the face of resource limitations and high population density, Bangladesh requires an economic growth rate of 6-7% p.a. to provide employment to its rapidly growing labor force that cannot be absorbed by agriculture. In order to achieve this growth rate, availability of a reasonably priced and reliable source of electricity is a prerequisite. Starting' from a small base, the power sector in Bangladesh has grown significantly. The installed generation capacity has increased to about 3700 MW (as of June 2000) from a meager 88 MW in 1960. Electricity generation grew at about 7% p.a. during last ten years, compared with average annual GDP growth rate of about 5.5%. Notwithstanding the progress made to date, Bangladesh's per capita electricity generation of 120 kWh p.a. is still among the lowest in the world. About 20% of the population have access to electricity, which is also low compared to many developing countries. This implies that there is scope for significant growth in  power sector.  Given  the  huge  investment  requirement for power development in the country, Bangladesh would be looking forward to various sources of finance. The Government has already opened the power sector for private investment and "The Private Sector Power Generation Policy" has been formulated in 1996. The Government is also committed to reforms of the power sector for achieving efficiency of the sector.

2.0 Power Sector

2.1 The power sector of Bangladesh is presently organized as follows

Power Sector of Bangladesh

   Administrative Link                              Power Flow Link

(i) Bangladesh Power Development Board (BPDB) 

BPDB is responsible for  generation, transmission and distribution of electricity. Its distribution jurisdiction covers  mainly urban areas except Metropolitan City of Dhaka. There are a number of Independent Power Producers (IPP) who  generate and sell power to BPDB. BPDB's retail sale  accounts for about 40% of total retail sales.

(ii) Power Grid Company of Bangladesh (PGCB) 

PGCB, established under the Company's Act, 1994 is wholly owned by BPDB. It is presently responsible for operation of a small part of the grid network and implementation of 100 Km new 230 kV transmission line including related substations.

(iii) Dhaka Electric Supply Authority (DESA) 

DESA is responsible for distribution of electricity in greater Dhaka area. It purchases power from BPDB at 132 kV.DESA's (including DESCO), retail sale accounts for about 39% of total sales.

(iv) Dhaka Electric Supply Company (DESCO) 

DESCO, established under Companies' Act of 1994 is responsible for distribution of electricity in Mirpur area of the Metropolitan City of Dhaka in Greater Dhaka. DESCO purchases power from DESA.

 (v) Rural Electrification Board (REB)

REB is responsible for distribution of electricity in rural areas through a system of co-operatives known as Palli Biddyut  Samities (PBS). It purchases power from BPDB and DESA at 33 kV. REB's retail sale accounts for about 21% Of total retail sale.


3.0 Future Generation Scenario

Demand Projection

Generation Capability, Peak demand, Firm capacity and Reserve margin
up to 2007 is shown in the Table below with graphical representation.

Generation-Vs-Peak Demand

4.0 INVESTMENT REQUIREMENT  

The investment requirement for the next ten years for power sector would  be in the range of  $5 to 6 billion. However, it is difficult to mobilize such huge amount of fund in the public sector alone. Therefore, Bangladesh will be looking forward to bilateral and multilateral financing and also private investment for the power sector development.

 5.0 POWER SECTOR POLICY  

The Government's vision:  

"To provide access to affordable and reliable electricity to all by the Year 2020".

 • To introduce competition, induct foreign capital and more importantly, to increase power supply to alleviate the acute shortage, Private Power Generation Policy was developed and adopted in 1996. This policy has set  out the  transparent  modality for  implementation  of private generation projects as well  as  incentives for the investors.  In pursuance of this policy, 1158 MW of capacity has been contracted with IPPs through competitive bidding, offering some of the lowest tariffs in the world.

• The transmission segment is in the process of unbundling and J - separation. Power Grid Company of Bangladesh (PGCB) has been set up in 1996 under Companies Act 1994 and made operational in stages. PGCB is a public sector enterprise of BPDB.

•  A  distribution  company  named  Dhaka  Electric  Supply  Company (DESCO) has been created in 1996 under the Companies Act, 1994, with public ownership. Distribution assets of Mirpur area from DESA has been handed over to DESCO about a year ago.

•  To setout a level playing field for all stakeholders and ground rules for participation, draft legislation has been prepared for setting up of a Regulatory Body. This draft has been approved in principle by the Government and it is expected that it will be enacted by the parliament soon.

Reform Strategy

The guiding principles for the reform strategy for the future will be pragmatism based on the experiences gained from the ongoing measures, reliance on the empirical findings about the best practices and giving due consideration to the socio economic and governance context. The pace and sequence of reform should be tailored to solve problems and deliver results rather than be driven by any fixed notion. This would help mobilize support for the programs both within and outside the concerned organizations and thereby contribute to their success.

6.0  Initiatives Taken by BPDB

Management Efficiency for Generation

Transmission: The transmission company named Power Grid Company of Bangladesh (PGCB) has already been created. However, its business plan, its functions and institutional framework, staff transfer scheme etc. are required to be developed. Linless its functions and responsibilities are clearly identified and formally known by the other entities, proper functioning of the sector will be affected.

Distribution: Steps necessary to transform existing distribution system of BPDB and DESA into a number of new corporatized entities are:

(1) Carry out area demarcation and rationalization study.

7.3 Priority area for reforms

In the Policy Statement, it has been highlighted that performance improvement in distribution functions would be at the top in the agenda for reforms. Therefore, in preparation of the implementation programme for power sector reforms, priority should put on reforms and restructuring of distribution functions. It cannot be over emphasized that unless and until the performance of distribution segment is improved, reforms in other segment such as generation and transmission will not achieve significant improvement in the overall situation of the power sector, particularly in respect of consumer service standards and financial viability.

7.4 Employees Issues

7.5 Lessons from ongoing reform measures

Some reform measures have already been implemented. DESCO and PGCB have been established in 1996. It may be useful to evaluate their perfomiance and identify the deficiencies, while designing the implementation programme for power sector reform.

7.6 Regulation of the Sector

For creating a competitive environment and a level playing field in the power sector, attaining desired efficiency and improving consumer service standards, the role of the Regulatory Commission would be critical. Therefore, 'the Regulatory Commission should be independent and established as soon as possible.

7.7 Commercial Relations between entities

While designing the reform programme, development of clear and transparent commercial relations between the emerging entities should be given due importance.

7.8 Preparation of a reform road map

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Source National Energy Policy 1995