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Rural Electrification in Bangladesh

Rural Electrification in Bangladesh. Sabihuddin Ahmed March 8, 2006 Energy Week at The World Bank. Origins of RE Program. Thana (county) Electrification Scheme Connected 459 Thana (county HQ) with 33 KV line Some called it Growth Center

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Rural Electrification in Bangladesh

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  1. Rural Electrification in Bangladesh Sabihuddin Ahmed March 8, 2006 Energy Week at The World Bank

  2. Origins of RE Program • Thana (county) Electrification Scheme • Connected 459 Thana (county HQ) with 33 KV line • Some called it Growth Center • Number of development schemes surrounding Thana (county) headquarters

  3. Institutional Model Adopted • Bangladesh adopted “Area Coverage RE Program” • United States model from 1930’s • Recently in the Philippines • Formation of (PBS) Rural Electric Society (instead of the RE coop) in each area • 13 separate contiguous areas selected • 13 PBSs established to implement program

  4. Financial Model: To Solve High Startup Cost • REB obtained loan from GOB • 2% interest • 7 year grace period • repayment in 30 years • REB on-lends to PBS (Rural Electric Society) • 3% interest • 7 year grace period • repayment in 30 years • No other subsidy, other than preferential form of loan

  5. Financial Model(2) • Areas for electrification • required to meet minimum financial criteria set forth in lending terms • Minimum criteria set for each mile of line approved for construction • Tariff for each PBS calculated independently • PBSs penalized (higher tariff) for undue systems losses

  6. Political Dimensions • Political interference in planning process and how they were managed • Nomination of non-political board of directors • Only PBS-nominated board of directors involved in initial development of each PBS • Board of Directors election held only after switching on electrical energy

  7. System Design Issues • Engineering model of REA USA was adopted • REB did not consider any low cost alternative for the program

  8. Growth of Program: Number of Connections – Year Wise

  9. Category-wise Consumer Connection 2% 3% 0% 11% Domestic Comm. Irrigation Industry Others 84% Consumer Connections: Cumulative thru Dec ‘05 MIS Rpt.

  10. Power Consumption (MWH) 0% Domestic 42% 43% Comm. Irrigation Industry Others 6% 9% Annual Power Consumption: FY 04-05 June MIS Rpt.

  11. Issues Related To Bill Collection

  12. Recommendation for Africa • Establish independent institution • similar to one adopted by REB • Develop tariff • Based on specific index of purchasing power in rural areas • Involve donor agencies to closely supervise • Selection of project areas • Recruitment of personnel • Training • Management of project areas

  13. Obstacles & ChallengesTo RE Program • Maintaining quality with rapid growth • Inadequate power supply • Poor “consumer mix” – impacts revenue • Keep Program from being politicized • Consultancy for both tech/management areas still needed at appropriate levels given rapid growth and operational complexities

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