Bangladesh: Ensuring a Reliable and Quality Energy Supply

Challenges – Limited capacity in spite of improving access

A decade ago, less than 50 percent of Bangladeshis had access to electricity; today, 78 percent have it, underlining the impressive progress made by the Government of Bangladesh in providing power to all its citizens, which it aims to do by 2021. 

The performance of Bangladesh’s energy sector compares favorably with that of its larger South Asian neighbors, at least when it comes to distribution and transmission losses (together around 14 percent) and collection efficiency (above 90 percent). 

Bangladesh initiated a successful program of private power production as early as the late 1990s and has since embarked on a large public investment program in the sector as well as a systematic program of electricity imports from India. 

However, considerable challenges remain.  Demand exceeds the supply of power at current prices. Generation capacity is still only 60 percent of Pakistan’s, which has a similar-sized population and per capita annual consumption of 392 kilowatts per hour is among the lowest levels in the world. 

Moreover, power outages are still common in Bangladesh leading to losses of about two to three percent of the country’s gross domestic product, or GDP. Inefficient technology, poor operational practices, and inadequate maintenance limit the supply of energy, as does a shortage of natural gas, which fuels about 70 percent of Bangladesh’s power.

The shortage of natural gas means many energy generators have turned to inefficient, dirty diesel and fuel oil. That has pushed up the cost of power in Bangladesh and led to government subsides of $500 million to $600 million each year to keep prices at current levels. Liquefied natural gas imports are planned but will drive up the price of gas domestically.

Also, transmission capacity in Bangladesh is not growing fast enough to keep up with power generation, resulting in supply bottlenecks in important commercial corridors (such as Chittagong and Comilla). And periodic outages, like the November 2014 country-wide blackout, perpetuate concerns about the security and stability of the country’s power grid.

Solutions – Enhanced energy sources

To grapple with the challenges in Bangladesh’s energy sector, the World Bank has focused its assistance on: new and upgraded transmission capacity, especially in anticipation of greater regional power trade, and improvements in grid stability and dispatch efficiency; repowering existing generators to enhance efficiency of operation; strengthening demand side energy conservation by industry, bringing in private financing where possible; improvements to the rural distribution infrastructure; the growth of grid-tied solar power; and the development of a Gas Sector Master Plan.

To that end, the Bank has committed $1.6 billion to:

The Siddhirganj Power Project, with a loan of $504 million to finance a 335-megawatt combined cycle plant at Siddhirganj, a 60-kilometer natural gas pipeline from the gas processing center at Bakhrabad to the power generation site at Siddhirganj, an 11-kilometer transmission line from Siddhirganj to a substation in South Dhaka, technical assistance and management information systems.

Rural Electrification and Renewable Energy Development II, or RERED II, which is a $235 million initiative to increase access to clean energy in beyond-the-grid rural areas through a solar home system program. It also funds renewable energy mini-grids, solar irrigation pumps for farms, and improved cook stoves, as well as technical assistance to drive demand-side energy efficiency.

Rural Electricity Transmission and Distribution, or RETD, which makes $600 million available to reduce technical losses in the rural electricity grid and expand capacity in the rural electricity distribution network in eastern Bangladesh.

Ghorashal Unit 4 Repowering Project, with a $217 million loan to enhance generation capacity and efficiency at the Ghorashal power station.

Results – Enhanced capacity, wider access

The Siddhirganj Power Project is expected by 2017 to add 335 megawatts of generation capacity to the national power system and improve the gas supply to the Siddhirganj power hub. In 2014, the project completed a power evacuation system was completed, which is now in operation.

RERED II has provided Solar Home Systems (SHS) to 3.9 million remote households and rural shops, is installing new SHSs at a pace of about 20,000 per month, and has contributed to a 14 percent increase in the number of Bangladeshis with access to electricity

Ghorashal Unit 4 Repowering Project is expected to enable the conversation of a 210 megawatt gas-fired steam unit to a 400 megawatt combined cycle unit, increase overall efficiency from 30 percent to 54 percent, reduce green-house gas emissions by 311,936 Tonnes of CO2e and record fuel savings of 303 peta-joules (or PJ)

Towards the future: Many of these projects are in early stages and will continue to strengthen and modernize Bangladesh’s overall energy capacity.