Bangladesh Power Sector

1

• Bangladesh Power Sector
• Present Scenario
• Prospect Challenges

2
Profile of the Country

• The Country The
  Peoples Republic of Bangladesh

• Area (without offshore) 1,47,570
  Sq. Km.

• Population
  134 Million

• Per Capita Income US 440

• GDP Growth Rate 5.8 in
  2009.

7.0 Average since 1990.

• Present Installed Capacity 5166 MW Power

• BPDB 2522
  MW

• APSCL
  6062 MW

• EGCB 190
  MW

• IPP
  1596 MW

• Rental 252 MW

• Present Available Generation 3800 4200 MW

• Demand 4200 -
  5500 MW

• Access to electricity 45

• Per capita generation 175 kwh/
  year (FY08)

3

• PRESENT SCENARIO

4
Present Structure of the Power Sector
Rental Generation
BPDB Generation
APSCL
EGCB
IPPs
SIPPS
Single Buyer-BPDB
PGCB
BPDB North West Zone
REB/ PBSs
BPDB South Zone
BPDB Central Zone
WZPDC West Zone
DPDC
DESCO
5
Power Utilities Charactererized by Poor Finances,
Slow Pace of Reforms

• Unviability of the power sector utilities due to

• Inadequate cost recovery of operating and capital
  costs from user charges

• Heavy subsidies and cross-subsidies built into
  the consumer tariffs

• Inefficient operation of generation, transmission
  and distribution due to cost-plus approach of
  determining tariffs as against market based
  setting of tariffs

• Considerable operational inefficiencies across
  the value chain, and especially in the
  distribution and commercial segment.

6
Reasons of Present Crisis of Shortfall

• Delay in adding New Generation.

• Complacent attitude of the Policy Makers.

• Lack of Transparency in Awarding The Project

7
 
Opportunities and Challenges
8
Major Event in Reform Process

• National Energy Policy
  January 1996

• Private Sector Power Generation Policy of
  Bangladesh

1996

• Creation of PGCB (Transmission Company)

1996

• Creation of DESCO
  (Distribution Company for part of Dhaka)

1996

• Creation of APSCL (Ashugonj
  Power Station Company)

2002

• Creation of WAPDC (Distribution Company)

2003

• Regulatory Commission Act
  March 2003

• Creation DPDC

October 25, 2006
9
Key Issues in Investment

• Demand supply gap

• Condition of the power sector

• Historical track record in private investments

• Scale of opportunities

• Export possibility

10
Opportunity of Private Investment

• A Power System Master Plan (PSMP) containing
  least cost generation expansion plan for the
  period of 2005-2025 existed.
• PSMP Considered three type of growth scenarios
  namely
• BASE, HIGH and LOW
• About 18,000MW Generation capacity addition is
  required under base case scenario.
• Substantial Investment is required in order to
  expand the system in the next 20 years as
  envisaged in the PSMP.
• Average US2.7 Billion for Generation and US0.3
  billion for Transmission will be required for
  every five years.

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IPP Financing Basics

• As stand-alone, for development of green-field
  assets, sponsors do not have access to cash
  flows because of non-existence of any form of
  assets.
• Must raise all of its capital from external
  sources.
• Create Special project companies to finance
  illiquid assets with long, but usually limited
  lives.
• In order to get Project, Sponsors are required to
  offer competitive tariff which forces sponsors
  ,among others, to look for long term debt with
  initial couple of years of operation as
  moratorium.
• Assessment of all factors affecting generation of
  future Cash flow.

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