Power Sector

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The power sector in Bangladesh is beset with huge management and institutional problems.
The main agency in charge of power is the BPDB (Bangladesh Power Development Board).
Over the years BPDB agreed to undertake reforms, e.g. formation of a separate distribution
company (DESA) for power distribution in Dhaka, creation of DESCO in 1996 as a
subsidiary of DESA, and setting up the Power Grid Company (PGCB) in 1996 to operate and
maintain the transmission system. The reforms have been taking place slowly, mainly to meet
donor conditionalities.
Power production is mainly based on the transformation of natural gas. BPDB is the main
producer of electricity, but production is inefficient. Generators are mainly based on old
vintage technology, while proper maintenance is not undertaken. Lack of available reserve
capacity has meant that frequently generators cannot be shut down for much needed repairmaintenance
work. The problem is compounded by the difficult financial situation of BPDB.

Extensive load shedding, system loss and low collection ratios underscore these problems.
Like the gas sector, the power sector is not viable with the current price structure, since prices
do not cover costs.
In the future IPPs will play an even more important role as producers of power (on a ‘take or
pay’ basis), leading the GoB into financial difficulties without reforming the sector.