The Government of Bangladesh aims at providing electricity to its entire rural population by 2020 to help boost social development and economic growth. In 2002, access to electricity in Bangladesh was about 30 percent. With the Rural Electrification Board connecting about 400,000 consumers every year, it would take it more than 35 years to provide access to all. Furthermore, it is physically difficult and economically not feasible to bring the whole country under a grid based electricity network because Bangladesh is a delta with more than 400 rivers.
To achieve the government’s target of full access in a cost effective manner, this project proposed a two track approach: (i) expand the electricity distribution grid to connect new consumers and
(ii) support renewable energy options to provide electricity in areas not reached by the grid by making solar home systems (SHS) available to households and a biomass pilot project to electrify village markets and associated small enterprises and households. The project is implemented by the Rural Electrification Board (REB) through its rural electric cooperatives (Pally Bidyut Samities – PBS) and the Infrastructure Development Company (IDCOL) through its participating organizations – mainly NGOs and private sector companies. IDCOL provides the participating organizations with subsidies and concessional loans to purchase PV systems in bulk, and the partners can then provide credit to rural households to buy systems.
As of September 2006, the project has brought electricity to more than 400,000 consumers in Bangladesh. Access to electricity has increased to 38% from 30% in 2002. At the same time 80,000 consumers had been provided with Solar Home Systems (SHS), surpassing the original target of 50,000. These households, connected by SHS, would have never received electricity if only conventional electrification methods had been used.
Highlights:
This is some of the impact electricity is bringing to people’s lives (findings of a baseline survey measuring the socioeconomic impact of rural electrification):
- Time spent by a child on reading/studying is likely to increase by about 6 percent under electric lighting than when kerosene lamp of dry cell battery is used
- Increase of electricity use at home leads to a decrease of 20 percent in children’s school-days missed caused by illness, compared to non-electrified areas;
- Electricity use at home makes 18 percent more time available per day for listening to radio compared to areas without electricity
- Time spent on household chores decrease by 6 percent in the electrified households compared to non-electrified households
- Use of electricity at home increases the incidence of home business by about 8 percent compared to non-use of electricity at home
- The total project cost is about US$ 298 million, of which IDA provided US$ 191 million credit, government provided US$ 92 million, GEF provided US$ 8 million grant, and local communities provided US$ 7 million equity.
- Apart from the investment component of increasing access to rural people, IDA contributed in designing components to increase the financial viability of the rural electric cooperatives.
- By rationalizing the service boundaries between urban and rural utilities and renovating of the old distribution network (both supported by the project) the system losses of REB have been reduced from more than 18 percent in FY 2001 to less than 13 percent in FY 2006.
- Rationalizing the service boundaries reduced duplication of investment as previously both the urban power utilities and REB were connecting consumers in semi-urban areas. As this project has clearly demarcated service boundaries and the urban utilities are transferring their assets in semi-urban areas to REB, investment requirement to connect the same consumers have been halved.
- This project proved the importance of renewable energy options as a practical method of electrification. Previously, government had little faith in these schemes. Now government has also started to contribute funds to promote renewable energy options
- With support from IDA, REB is computerizing its Head Office along with most of the PBSs and is carrying out a financial restructuring study to review the subsidy mechanism of the PBSs and to find out ways to target the subsidy better and to commercialize the financially viable PBSs.
To achieve the Government’s vision of the power sector is to provide electricity for all by 2020, government needs to ensure that REB and PBSs are working towards this vision in a sustainable manner. IDA strategy is to strengthen the managerial capability of the Rural Electrification Board to ensure that it can function autonomously and at arms length from the government. This would require some changes in the way REB is currently structured. IDA would like to support this change given the strategic role of REB in rural electrification. The SHS market created by this project would also require some further support to become mature. While other donors such as KfW and GTZ have already shown interest further assistance from IDA and GEF may be required.
Rural Electrification and Renewable Energy Development Project (2002-08)
Project documents
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