Despite remarkable progress during the previous decade, only about a third of Bangladesh’s households had access to electricity in 2005. The country had been suffering from unreliable power supply because of insufficient generation capacity, an inadequate transmission grid, and unbalanced distribution facilities. Low institutional capacity, limited domestic resources, a centralized government management policy, and low employee commitment compounded the problems. A sector reform process addressing these issues was initiated by the government in September 1994. The Asian Development Bank (ADB) supported this process through a series of reform−linked projects that helped unbundle the sector into separate corporate entities.
Building on the success of its first power sector development program, ADB approved the Sustainable Power Sector Development Program in June 2007. The program comprised three loans: a $60 million program loan, a $400 million project loan, and a $5 million capacity−building loan. The program loan was disbursed in 2 tranches, with releases contingent on the fulfillment of policy conditions that aimed to (i) support government efforts to reform the power sector through the financial restructuring of Bangladesh Power Development Board (BPDB) and Dhaka Electric Supply Authority (DESA), (ii) create a new corporate entity for power generation in the west zone, (iii) prepare the sector for long-term financial sustainability, and (iv) gradually remove government financial support for the sector.
The program’s expected impact was increased capacity and reliable power supply for sustained economic growth. Its intended outcomes were financial and organizational restructuring of the power sector, and clean energy power supply capacity expansion and efficiency improvements.
The program achieved the reform objectives envisaged at appraisal. By program completion, a medium-term road map for power sector reform had been formulated; the power system master plan was updated; a capacity building program for the power sector was developed; and a reorganized and fully staffed Bangladesh Energy Regulatory Commission and licensing and tariff regulations were in place. The DESA was corporatized in July 2008 under the name of Dhaka Power Distribution Company; power sector financial self-reliance was achieved in 2010; and a 50% new generation capacity had been installed by the private sector by 2008.
Program investments in new power plants and transmission lines and transmission and distribution systems upgrades increased the availability and reliability of power supply, particularly in the west. Load shedding was minimized, and transmission and distribution losses were vastly reduced. Over 450,000 new consumers, against a target of 230,000, had been connected by 2015. Access to electricity consequently increased to 75% against a target of 60% by 2015. Industrial and commercial growth and job creation, particularly in the west, was facilitated, contributing to a 6% annual growth in Bangladesh’s gross domestic product.
The program was rated successful by ADB’s South Asia Department. It had several executing agencies that also coordinated the day-to-day implementation of the various components. These agencies included the Bangladesh Power Development Board/Northwest Power Generation Company Limited, the Power Grid Company of Bangladesh Limited, the Dhaka Power Distribution Company Limited, and the Dhaka Electric Supply Company Limited.
