The World Bank yesterday approved $59 million in financing to help Bangladesh meet the increasing demand for electricity by improving the reliability and efficiency of the entire power system, from electricity generation to transmission.
The Power System Reliability and Efficiency Improvement Project will reduce power outages and load-shedding by about 60 percent, as well as cut electricity generation costs significantly. This will be achieved by modernizing the electricity generation processes and practices, with installation of new software and hardware as well as upgrades to the transmission system. The project will also lower greenhouse gas emissions by reducing the use of carbon-intense fuel in electricity generation.
“In the last five years, Bangladesh has almost doubled its electricity generation capacity to meet increasing demand for electricity. Yet, our 2017 Doing Business Report still ranked it 187 out of 190 economies on the Getting Electricity indicator,” said Qimiao Fan, World Bank Country Director for Bangladesh, Bhutan and Nepal. “The project will help address bottlenecks and modernize the overall power system. This will reduce outages, save fuel in power generation, and help bring affordable and reliable electricity to households and businesses.”
According to the 2013 World Bank Enterprise Survey, businesses in Bangladesh face power outages for 840 hours per year on average, with an output loss equivalent to 3 percent of GDP. While almost all urban areas have electricity, only 70 percent of rural households have access to it. As the government aims to double electricity generation capacity again in the next five years, it will be important to expand the transmission network and optimize the national power system operation to accommodate the increased power flows. The project will help construct and rehabilitate a 40-km transmission line and remove bottlenecks in other important lines.
“In Bangladesh, the supply of power has not been able to keep pace with the rapid growth of demand, resulting in frequent outages and load shedding, said M. Iqbal, World Bank Task Team Leader. “To increase reliability, efficiency, and affordability, the project will provide, in addition to infrastructure investments, the necessary tools and know-how to modernize the power system dispatch in Bangladesh. This will enable the National Load Dispatch Center to operate the generation and transmission facilities at an optimal cost.”
The credit by the World Bank’s International Development Association’s scale-up facility will have a 30-year term, including a nine-year grace period.
The World Bank was among the first development partners to support Bangladesh after independence. Since then, the World Bank has committed nearly $26 billion grants and interest-free credits to the country. In recent years, Bangladesh has been the largest recipient of the World Bank’s interest-free credits.