Electricity Reforms in Bangladesh

Taifur Rahman

Introduction

Goals 2020: Providing access to affordable and reliable

electricity to all citizens

A long way to go Electricity coverage – 43% Per capita electricity consumption – 165 kWh

One of the lowest in the world.

Pace of power sector development to be accelerated.

Reforms Overview

Reforms starting in 1977 Rural Electrification Board (REB) created

70 large cooperatives (PBSs) established Electricity Supplied to 7 million consumers out of

country’s 9.7 million consumers in 2006. Significant positive impact on poverty reduction

and social benefits to the rural people

Unbundling starting in early 1991 Creation of Dhaka Electricity Supply

Authority (DESA) Didn’t perform well.

Reforms Overview (cont.)

High power Inter-ministerial Committee on “Power Sector Reform in Bangladesh” (PSRB) constituted in 1993 recommending Unbundling of the sector according to

functional lines Corporatization of sector entities Establishment of an independent Regulatory

Commission.

Reforms Overview (cont.)

Power Cell created under the Energy Ministry in 1995 To drive power sector reforms and to

promote private power development

Two companies created in 1996 Power Grid Company of Bangladesh Limited

(PGCB) Dhaka Electric Supply Company Limited

(DESCO).

Reforms Overview (cont.)

The National Energy Policy adopted in 1996 Sector unbundling Private sector participation Establishment of an Energy Regulatory

Commission

“Private Sector Power Generation Policy of Bangladesh” was adopted in 1996“Policy Guidelines for Small Power Plants (SPP) in Private Sector” approved in 1998.

Reforms Overview (cont.)

Vision Statement and Policy Statement on Power Sector Reforms in June 2000 Corporatization of Ashugonj Power Station in 2002 Energy Regulatory Commission Act 2003Creation of West Zone Power Distribution Company (WZPDC) in 2003 Establishment of Electricity Generation Company of Bangladesh (EGCB) in 2003.

Reforms Overview (cont.)

Bangladesh Energy Regulatory Commission (BERC) starting in 2004 Approval to convert BPDB into a Holding Company in January 2004 New company “Dhaka Power Distribution Company Limited (DPDC)” incorporated in 2006Policy guideline for power purchase from Captive Power Plants (CPPs) prepared in 2006.

Current StructureMinistry of Energy and Mineral Resources

Energy and Mineral

Resources Division

Power DivisionBERC

Power Cell

CEI BPDB PGCB REB DESA DESCO

IPP IPP

Power Sector Scenario

Total generation capacity (June 2007): Total – 5,269 MW

BPDB (government) – 3,872 MW IPPs (private) – 1,397 MW

Modes: Hydro - 230 MW Steam - 2688 MW Gas Turbine - 1099 MW Combined Cycle - 990 MW Diesel - 238 MW

Per capita generation – 165 kWh.

Power Sector Scenario (cont.)

Development Plan: Installed Capacity

4,7106,441

17,765

9,666

14,525

0

5,000

10,000

15,000

20,000

1 2 3 4

Year

Cap

acit

y (M

W)

2004 2007 2012 2020

New addition

Power Sector Scenario (cont.)

Consumer base: Total consumers – 10.42 million

Domestic - 8.50 % Industrial (small) - 1.74% Commercial (small) - 2.15% Large Industrial and Commercial - 5.89% Agriculture - 0.38% Others - 1.27% DESA - 25.36% REB - 38.48% DESCO - 9.69% WZPDCL - 6.55%.

Power Sector Scenario (cont.)

0

20

40

60

80

100

Ele

ctri

fied

h

ou

seh

old

s (%

)

Year

Trends in Electrification

3 5.1 15.1 31 43 100

1976 1982 1991 2000 2007 2020 Target

Regulation of Power Sector

Bangladesh Energy Regulatory Commission (BERC) Act passed in 2003

Establishment of as independent and impartial regulatory commission to regulate energy sector.

Started functioning in April 2004 Objectives:

To frame rules and regulation to ensure transparency in the management, operation and tariff determination in electricity, gas and petroleum sector.

To protect consumer and industry interest and promote competitive market.

Regulation of Power Sector (cont.)

Major functions of BERC: Issue, cancel, amend and determine conditions of

licensees Determine tariff safety enhancement Frame codes and standards and make

enforcement of those to ensuring quality of service Resolve dispute between licensees and and

consumer and refer those to arbitration if necessary.

Advise the Government regarding electricity generation, transmission, marketing, supply distribution and storage of energy.

Regulation of Power Sector (cont.)

Autonomy and accountability of BERC Has been questionable so far Lot of expectation from the new leadership

Public participation Public hearing

Effectiveness questioned Expected to be more effective under new

leadership

No major regulatory decision so far.

Conclusion

New 3-year Road Map for Power Sector Reform (2007-2009) announced last year To create an institutional foundation on

which to ramp, in a sustainable manner, the substantial investments needed for the sector to properly support economic growth and reduce poverty.

Main outcome expected: Further unbundling of electricity supply into an

economically viable number of separate generation and distribution companies, and a single transmission company

Good luck for the Road Map.