Electricity Reforms in Bangladesh Taifur Rahman

Introduction Goals 2020: A long way to go 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 2003 Creation 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 2006 Policy guideline for power purchase from Captive Power Plants (CPPs) prepared in 2006.

Current Structure Ministry of Energy and Mineral Resources Energy and Mineral Resources Division BERC Power Division 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.) New addition 2004 2007 2012 2020

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.) 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.