Internship Report by Fatima

PROSPECT OF INVESTMENT IN BANGLADESH POWER SECTOR
by
Fatima Begum
ID: 0330011
An Internship Report Presented in Partial Fulfillment

of the Requirements for the Degree of
Bachelor of Business Administration
INDEPENDENT UNIVERSITY, BANGLADESH

SEPTEMBER, 2007
by
Fatima Begum
ID: 0330011
has been approved

September, 2007
_________________________________
Dr. Osman Gani
Assistant Professor
School of Business
Independent University, Bangladesh
SEPTEMBER 09, 2007
Dr. Osman Gani
Assistant Professor
School of Business
Independent University, Bangladesh
Dear Sir,
It is a great pleasure for me to submit the report on “Prospect of investment in Bangladesh
Power Sector”. I am submitting this report as the part of my internship (BBA-499A) at IDLC
Finance Limited. This report will help the organization to find out the prospect of investment
in Bangladesh power sector.
This is the first time I have done this kind of study in a complete form and I have tried my
level best to complete the study in proper way. It is true that it could have been done in better
way if there would not be the limitations due to confidentiality and sensitive issue.
I hope you will asses my report considering the limitations of the study. Your kind advice
will encourage me to do richer research in future.
Yours’ most obediently
Fatima Begum
ID: 0330011
Acknowledgement
At the very beginning, I would like thank the omnipotent Allah for giving the chance to
complete my internship and preparing the internship report. In the preparation and finish this
internship report, I acknowledge the encouragement and assistance given by a number of people
and institution. I am most grateful to IDLC Financial Limited to give me the opportunity to
complete my internship in their organization. Thus I want to mention the name of Bilkis Jahan,
the head of HR, for allowing me to do the internship in the organization. I would like to express
my gratitude to my, organization supervisor Hosam Md. Sheraj, Assistant Manager, Merchant
Banking Division; for providing me the opportunity and much needed feedback to furnish my
qualities in the real job world. I also want to show my up most respect to Mahmudul Bari,
Assistant General Manager, Merchant Banking Division; for providing me a smooth and very
gracious learning period in the organization by teaching me, literally by hand on practice.
I am grateful to my honorable supervisor Dr Osman Gani, School of Business, Independent
University, Bangladesh (IUB) for providing me much needed assistance and diluting time
constraints and also to encouraging me to prepare the internship report on “Prospect of
investment in Bangladesh Power Sector”.
Finally, I would like to thank some persons who had given me appointment from their
precious time to collect related data of my report and also helped me to understand many related
matters and gave me their precious time to me more then once, they are Mahbub Murshed,
Assistant Director (Finance), Bangladesh Power Development Board (BPDB); Md. Ataur
Rahman Patwary, Deputy Maneger (Finance), Power Grid Company of Bangladesh Ltd. (PGCB);
KNM Tariqur Rashid, Executive Director, Summut Power; Md. Faridul Haq, Deputy General
Manager, Dhaka Electric Supply Company Ltd. (DESCO); Md. Nurul Huda, Company Secretary,
Dhaka Electric Supply Company Ltd. (DESCO); Tanvir Hasan Zoha, Consultant (E-
Governance), Asian Development Bank; Moumita Manzoor, Research Associate, IDLC
Securities Limited.
Table of Content
List of Tables I
List of Figures I
Executive Summery II
1.0 Introduction: .......................................................................................................................1
2.0 Purpose of the Study:.........................................................................................................2
3.0 Methodology: .....................................................................................................................3
3.01 Analysis Design: ......................................................................................................... 3
3.02 Analysis Instrument:................................................................................................... 3
3.03 Data Collection: .......................................................................................................... 3
3.04 Data Analysis: ............................................................................................................. 4
4.0 Limitations:.........................................................................................................................5
5.0 Background of Power Sector:............................................................................................5
6.0 Overview: ...........................................................................................................................8
7.0 Current Power Sector Structure: .................................................................................... 10
7. 01 Power Division: ....................................................................................................... 10
7.02 Energy Regulatory Commission (ECR):................................................................. 12
7.03 Power Cell ................................................................................................................. 13
7.04 EA & CEI: ................................................................................................................. 14
7.05 Bangladesh Power Development Board (BPDB) ................................................... 14
7.06 Ashuganj Power Company (APS) ........................................................................... 14
7.07 Electricity Generation Company Bangladesh (EGCB) .......................................... 15
7.08 Power Grid Company of Bangladesh (PGCB) ....................................................... 15
7.09 Dhaka Electric Supply Authority (DESA) .............................................................. 15
7.10 Dhaka Electric Supply Company (DESCO) ........................................................... 15
7.11 West Zone Power Distribution Company (WZPDC)............................................. 16
7.12 Rural Electrification Board (REB) .......................................................................... 16
7.13 Palli Bidyut Samity (PBS): ...................................................................................... 16
8.0 Government’s Vision and Policy for Power Sector:..................................................... 16
8.01 Government’s Vision:............................................................................................... 17
8.02 Policy Objective:....................................................................................................... 17
9.0 Current Power Situation: ................................................................................................ 18
9.01 Demand Forecast: ..................................................................................................... 18
9.02 Generation Capacity and Maximum Demand Served:........................................... 19
9.03 Net Generation and Capacity of Private and Public Sector: 20
9.04 Electricity Growth and Availability: ....................................................................... 21
9.05 Technology Lacking:................................................................................................ 21
9.06 Load Shedding and System Loss:............................................................................ 22
9.07 Management Inefficiency:........................................................................................ 23
9.08 Corruption Exists in Power Sector: ......................................................................... 24
9.09 Effect on Economy: .................................................................................................. 24
10.0 Government Future Plan:.............................................................................................. 27
11.0 Power Sector Reform and Restructure: ....................................................................... 28
11.01 Reform Objective:................................................................................................... 28
11.02 Components of Reform .......................................................................................... 29
12.0 Power Market Structure:............................................................................................... 30
13.0 Investment Opportunity:............................................................................................... 30
13.01 Fiscal Incentives: .................................................................................................... 31
13.02 Facilities and Incentives for Foreign Investors:.................................................... 32
13.03 Private Investment in Power Sector: ..................................................................... 33
13.04 Foreign Investment in Power Sector: .................................................................... 35
14.0 Investment Analysis:..................................................................................................... 35
14.01 Power Generation: .................................................................................................. 35
14.02 Power Generation Mix: .......................................................................................... 36
14.03 Power Generation Cost:.......................................................................................... 36
14.04 Fuel Availability: .................................................................................................... 37
14.05 Technology:............................................................................................................. 38
14.06 Analysis:.................................................................................................................. 38
15.0 Managing Finance:........................................................................................................ 39
16.0 Capital Market Performance of Power Sector: ........................................................... 40
16.01 Market Capital of Power Sector: ........................................................................... 42
16.02 Current Market Capital of Three Power Companies:........................................... 42
16.03 Dividend Distribution and Major Sponsors Three Power Sector Companies: ... 43
17.0 Participants in Capital Market:..................................................................................... 44
17.01 General Information of DESCO ............................................................................ 44
17.02 Future Prospect of Desco: ...................................................................................... 44
17.03 General Information of PGCB:.............................................................................. 47
17.04 Future Prospect of PGCB:...................................................................................... 47
17.05 General Information of Summit Power:................................................................ 50
17.06 Future Prospect of Summit Power:........................................................................ 51
18.0 Conclusion:.................................................................................................................... 52
Reference 54
Bibliography 55
I
LIST OF TABLES
1. Power demand forecast Page
2. Year wise Installed Capacity, Production Capacity and Maximum Demand Served 18
3. Segregation of Power Generation 19
4. Year wise Growth, Access and Per Capita Generation of electricity 21
5. Year wise power generation and load shedding and system loss: 21
6. Contribution to country’s GDP: 23
7. Government’s future plans: 25
8. Segregation of Power Generation Mix 27
9. Segregation of Power Generation Cost: 36
10. DSE sectoral performance – June 2007: 37
11. Position of Power and Fuel in Capital Market 41
12. Participants of Power Industry in Capital Market and Their Market Position 42
13. Dividend Distribution and Major Sponsors of Power Industry in Capital Market 43
LIST OF FIGURES
Page
1. Diagram of Current Power Sector Structure 10
2. Price graph of one year of DESCO 46
3. Price graph of one year of PGCB 49
4. Price graph of one year of Summit Power 52

II
Executive Summery
Electricity is a fundamental requirement, to upgrade the socio economic condition and
to alleviate poverty. Proper and enough electricity supply have a great positive impact on
our national economy as well as on GDP of the country, where GDP is one of the
important measures of the economic condition for a developing country like Bangladesh
to attract foreign investment. But Bangladesh is going through a huge power crisis for a
long time. Demand of power is very high but supply is not adequate. Only 42%
population of Bangladesh has access to electricity which is very low compared to other
developing country. This power crisis is slowing down the economic growth of the
country. Now to reduce this power crisis huge additional power generation is required
and to increases power generation huge investment is required in this Bangladesh power
sector. For this reason Bangladesh government created the environment for private and
foreign investor to invest in power generation in power sector through approving “Private
sector power generation policy” and through reforming and restructuring the power
sector. Increasing demand and very low supply of power created an investment
opportunity in Bangladesh power sector and government is also encouraging private
investment so this power sector has a huge prospect for investment in power sector. In
this report the prospect of investment in power sector in power generation has been
elaborately discussed. As power sector is a rising sector, the companies which are listed
in capital market are also doing very well and the future prospects of those companies are
also very good so investing in capital market in power sector will also be profitable. In
this report investment prospect in capital market in power sector has also been discussed.
The report will help an investor to know the prospect of investment in power sector.
1.0 Introduction:
Electricity is a vital ingredient, to upgrade the socio-economic condition and to
alleviate poverty. The supply of electricity has a great impact on the national economy.
Proper and enough reliable electricity supply have a great positive impact on our GDP
and GDP is one of the key measures to understand the economy of a country. Because
when the foreign investors want to invest in any country at first they observe the
economic growth or the GDP growth rate of the country and for the developing country
like Bangladesh, investment of foreign investors is very necessary to develop the country.
Bangladesh is densely populated country of 140.03 million (approximately) which is
expected to be 140.6 million (approximately) in 2007. Population is increasing but
generation of power is not increasing. Only 42 % of the country’s population has access
to electricity, which is very low compared to other developing countries of the world.
And per capita generation is 164 kWh which is also lower compared to the neighboring
countries. This current power crisis is slowing the pace of our GDP growth rate.
Currently, Bangladesh GDP growth rate is 6.51% which need to be increased a lot to
have a stable economy. To increase the GDP growth rate, available and reasonably priced
electricity is a prerequisite. Because Bangladesh economy is depending upon educational,
agricultural, industrial, commercial and other economic development and these
development directly and indirectly depend upon fluent electricity supply.
The main reason for the current power crisis is the demand of power is very high but
the generation capacity is very low and for that there is a huge short fall of power. Huge
power capacity addition is needed. Additional generated power will need to be
transferred to the desired distribution centers so transmission capacity also need to be
upgraded and transmitted power need to distributed with a minimum system loss to
Prospect of investment in Bangladesh Power Sector 2
different places so distribution technology also need to be upgraded. For the
improvement of power sector huge investment is required.
There is huge gap existing in Bangladesh power sector. For this reason government is
attracting foreign and private investors through vision and policy guideline, making
reform and restructure and by giving fiscal incentives. So investment opportunities in
Bangladesh power sector are promising for private sector and foreign investors.
2.0 Purpose of the Study:
The growing future of any country is totally dependent upon the socio-economic
situation. Power is a very important ingredient to improve the socio economic situation.
Power sector one of the most important sectors which need a huge investment. Huge
power crises exist in Bangladesh. Demand for power is very high but supply of power is
very low. This demand supply gap has created an investment opportunity. Currently net
generated power is not enough more power need to be generated. For new generation of
power huge investment is needed in power sector. Bangladesh government alone can not
invest such a big amount in power sector. So government opened the door for private and
foreign investors to invest in power generation. As power sector is a growing sector so
investing in power sector in capital market will also be very profitable. Thus the purpose
of this paper is to document the investment opportunity in Bangladesh power sector.

3.0 Methodology:
3.01 Analysis Design:
The study was conducted to uphold and demonstrate the investment pros and corns in
Bangladesh power sector. Thus secondary data was collected. To present the data in a
handy manner the analyst absorbed the descriptive analysis by employing descriptive
statistics. Because a Descriptive study tries to discover answers to the questions who,
what, when, where and sometimes how. The researcher attempts to describe or define a
subject, often by creating a profile of a group of problems, people, or events. Such studies
may involve the collection of data and the creation of a distribution of the number of
times the researcher observes a single event or characteristic (Cooper & Schindler, 2003).
Based on various secondary data regarding statistical facts, the thoughts and
interpretations of professionals of the field had been collected. And prospect of
investment in power sector was described.
3.02 Analysis Instrument:
The analyst of the current paper has used secondary data. The analyst conducted in-
depth interview with the various designated professional of the power sector in
Bangladesh. And to collect the secondary data, different books, valid web sites and
various annual reports and brochures of different company has been used.
3.03 Data Collection:
Secondary data used in the paper has been personally collected by the analyst. The
data has been collected over phone and also by going to designated personnel work place.
The data was collected by the in-depth interview with experts, different insights, and
opinions. Appointments were fixed prior going to the personnel as dedicated time would
be provided to the analyst, which ensures to get the maximum information. Interviewed
persons are: Mahbub Murshed, Assistant Director (Finance), Bangladesh Power
Development Board (BPDB); Zahangir Azad, Assistant Maneger (Account), Power Grid
Company of Bangladesh Ltd. (PGCB); Md. Ataur Rahman Patwary, Deputy Maneger
(Finance), Power Grid Company of Bangladesh Ltd. (PGCB); KNM Tariqur Rashid,
Executive Director, Summut Power; Md. Faridul Haq, Deputy General Manager, Dhaka
Electric Supply Company Ltd. (DESCO); Md. Nurul Huda, Company Secretary, Dhaka
Electric Supply Company Ltd. (DESCO); Tanvir Hasan Zoha, Consultant (E-Governance),
Asian Development Bank; Moumita Manzoor, Research Associate, IDLC Securities
Limited. Secondary data was collected from different prescribed web sites of the
government, and participants of the power sector in Bangladesh, and Bangladesh
economic review has been viewed.
3.04 Data Analysis:
Anticipated study is a descriptive study where industry of power sector has been
analyzed from the investor’s perspective. Thus various numeric projections, rules and
regulations and historic information has been provided in the paper. Based on secondary
data, various analyses have been conducted in this paper. Different statistical data has
been presented in this paper. The data has been presented in different tables and the
explanation of those tables has been provided. Again based on the secondary data, trend
analysis of different graphs has been provided to project the future. In addition the whole
analysis has been done to show the prospect of investment in Bangladesh power sector.
4.0 Limitations:
As most of the data were taken from the web sites, though the cross check was
conducted; still the depth of reliability varies as by the nature of web sites. For data,
interviews were taken and most of the data used in this paper are government published
data, so the verification of this data was not possible. Lastly the limited knowledge of the
analyst, who is conducting such report for the first time, has its effect on the paper.
5.0 Background of Power Sector:
At the very beginning the zamindar of Bhawal (Gazipur district) is known to have
been the first consumer of electricity in East Bengal. He acquired an electric generator in
the nineteenth century. A private enterprise, Octavia Steel Company took the overall
responsibility of power generation and distribution in Dhaka city and in Dhaka, electric
light was first introduced on 7th December 1901. The power generation capacity of this
company was very limited and power was supplied to only posh areas of Dhaka. In 1933,
another private company, with a name “DEVCO”, set up a power station at Paribagh and
started generation and distribution of electricity on commercial basis for the common
people. Then in 1957, the government of East Pakistan took over all private power
generation houses and distribution lines and established Power Development Board
(PDB) in 1959 as an associate of the East Pakistan Water and Power Development
Authority. It became an independent body in 1972 and it’s headquarter was in Dhaka. Its
responsibility was to control power plants and distribution network throughout
Bangladesh. (Banglapidia, retrieved from http://banglapedia.search.com.bd/HT/P )

At first BPDB used to generate transmit and distribute power. Then Bangladesh
government formulated National Energy Policy in 1996 and segregated power
generation, transmission, and distribution functions in to separate services. BPDB started
generating power; transmission responsibility was given to PGCB. BPDB used to
distribute power to mainly the urban areas except the metropolitan city of Dhaka. The
responsibility of distributing power in Dhaka was given to Dhaka Electric Supply
Authority (DESA). Later, DESA went through lots of controversies and corruption, so
government created a new subsidiary named Dhaka Electric Supply Company Ltd.
(DESCO) and provided the responsibility of electricity distribution in Mirpur, Gulshan,
Baridhara and Uttora area of Dhaka. (Banglapidia, retrieved from
http://banglapedia.search.com.bd/HT/P_0241.htm )
A well planned and organized rural electrification program did not exist till 1970s.
One of our main earning sources is agriculture and for irrigation purpose power is very
much needed. Bangladesh was being developed after independence and development
plans of Bangladesh recognized the necessity of electrifying rural area. To increase
economic growth, employment generation, alleviation of poverty and to improve living
standard electrifying rural area is a very important component in the development
infrastructure. At that time, Bangladesh government engaged two consulting firms of
USA to carry out a comprehensive feasibility study on rural electrification in Bangladesh.
The firms studied overall related issues in depth and gave recommendation for a
sustainable and viable rural electrification program. Then in late 1970s Government of
Bangladesh (GOB) created Rural Electrification Board (REB) through REB ordinance LI
of 1977. The Board is a statutory Government organization with primary responsibility to
implement countrywide rural electrification. To achieve this objective of rural

electrification program the Board established Palli Bidyut Samities (PBS) based on the
model of Rural Electric Co-operatives in USA. For the commendable performance of
PBS at present, the rural people are under coverage of electrification, which created new
job opportunities and access to electronic media. This also improved the standard of rural
people’s living. Electricity is now available to operate 86,766 irrigation pumps, 62,875
small and cottage industry units, 373,119 commercial setups and 8,733 other
establishments in the rural areas. REB achieved an outstanding success in electrifying
rural area. The main reason of REB’s success was the introduction of the Performance
Target Agreement (PTA), which encouraged rural electric societies to improve their
performances. (REB history, retrieved from http://www.reb.gov.bd/about_reb.htm )
But Bangladesh power demand was much higher then the supply, so the necessity was
felt to generate more power. Government owned power plants were not enough to fulfill
the power demand. But additional generation capacity required huge investment so
government thought about mobilizing finance by attracting private sector in power
generation and more importantly to increase power supply to alleviate the shortage.
Bangladesh Government formulated “Private Sector Power Generation Policy of
Bangladesh” and adopted in 1996.
In 1996, the independent power producers (IPP) started coming to generate power.
REB signed contracts with Independent Power Producers (IPPs) to purchase power from
them. IPPs came in power market under the condition given by government that they will
be run on build-own-operate (BOO) basis. All the produced power of IPPs is purchased
by REB. Later small power producers (SPP) came in power market to generate power
and to serve those areas which were not electrified. SPPs own generation plant of 9.9
MW to 30 MW. But some remote areas and isolated islands are still not covered by
national grid because of the maintenance of the National Grid and transportation of fuel is
very highly expensive, difficult and risky. This areas are being Electrifying with
renewable energy. REB has taken initiatives to use Solar Photovoltaic Systems (Solar
PV) for producing electricity. For the first time in Bangladesh BPDB implemented a pilot
project of 0.09 MW capacity of the Grid Connected Wind Energy (GCWE). BPDB also
established a Wind Resource Assessment Station (WRAS) in Cox’s Bazar. BPDB also
implemented an excellent Solar PV electrification project in the Chittagong Hill tracts.
(Retrieved from http://www.bpdb.gov.bd/renewables.htm )
Later based on necessity many new entities entered in power sector and in between
time to time Bangladesh government reformed and restructured power sector.
6.0 Overview:
Till date in Bangladesh the power sector has been under the authority of government
directly or indirectly. The power sector in Bangladesh has been managed, facilitated and
regularized by the government in such a way that delivers the flourished outcome.
Overview of Bangladesh power sector has been given below
Owner & Regulator
• Power Division, Ministry of Power, Energy & Mineral Resources
Generation
• Bangladesh Power Development Board (BPDB)
• Rural Electrification Board (REB)
• Ashuganj Power station co. Ltd (APSCL)
• Electricity Generation Company of Bangladesh Ltd. (EGCBL)

• Independent Power Producer (IPP)
• Small Power Producer (SPP)
Transmission
• Power Grid Company of Bangladesh Ltd. (PGCB)
Distribution
• Bangladesh Power Development Board
• Dhaka Electricity Supply Authority (DESA)
• Dhaka Electric Supply Company Ltd. (DESCO)
• Rural Electrification Board through Rural Electric Co-operatives, Palli Biddyut
Samities (PBS)
• West Zone Power Distribution Co. Ltd (WZPDCL).

7.0 Current Power Sector Structure:
Power Division
ERC (Ministry of Power, Energy and Mineral
Resource)
Power Cell EA & CEI
Generation BPDB APSCL EGCB IPP SPP
Transmission PGCB
BPDB DESA REB

Distribution
WZPDCL DESCO PBS
Figure 1: Diagram of Current Power Sector Structure
7. 01 Power Division:
The Government created power division and gave it the responsibilities to observe the
following matters:
• All matters and policies relating to Power sector.
• General policies relating to generation, transmission and distribution of electricity
including thermal power, Hydro and Mini Hydro-Electricity etc.
• Formulation and Application of National Power Policy.
• Regulation and development of electrical energy/nuclear energy.

• Acquisition and revocation of licenses for electrical undertaking.
• Administration of Electricity act, rules made there under and allied matters.
• Administration and Control of Bangladesh Power Development Board, Rural
Electrification Board, Office of the Chief Electrical Inspector & Electrical
Adviser.
• Any other matters relating to : -
o Bangladesh Power Development Board
o Rural Electrification Board
o Energy Monitoring Unit
o Office of the Electrical Adviser & Chief Electric Inspector.
o Power Cell.
o Dhaka Electric Supply Authority (DESA).
o Dhaka Electric Supply Company Ltd. (DESCO).
o Power Grid Company of Bangladesh Ltd. (PGCB).
o West Zone Power Distribution Co. Ltd.
o Ashuganj Power Station Company Ltd.
o Electricity Generation Company of Bangladesh Ltd.
o Any other State-owned Agency/Company in the power sector.
• All laws on subjects allotted to this Division.
• Preparation of Budget, all administrative matters & control of financial matters of
the Ministry and Subordinate Dept./Corporations/Companies/Offices etc.
• Inquiries and statistics on any of the subjects allotted to this Division.
• Fees in respect of the subjects allotted to this Division except fees taken in courts.
• Liaison with international organizations and matters relating to treaties and
agreement etc.
(Retrieved from http://www.powerdivision.gov.bd/index.php?page_id=235 )
7.02 Energy Regulatory Commission (ECR):
The National Energy Policy was prepared in 1995 and adopted in 1996. This policy
separated power sector’s generation, transmission, and distribution entities. Then later
Electricity Regulatory Commission Act 2003 (Act No. 13 of 2003) was passed in the
parliament in March 2003 to regulate electricity gas and petroleum sector. The Energy
Regulatory commission, (ERC) was established and started functioning under Electricity
Regulatory Commission Act in April 2004. This commission is responsible to establish
rules and regulation to ensure transparency in the management, operation and tariff
determination in electricity, gas and petroleum sector. This commission will protect
consumer and industry interest and promote competitive market.
Major functions of ERC:
• Issue, cancel, amend and determine conditions of licenses.
• Determine tariff safety enhancement.
• Frame codes and standards and make enforcement of those to ensure quality of
service.
• Resolves dispute between licensees and between licensees and consumer and refer
those to arbitration if necessary.
• Approve investment program.

• Monitor performance of the public sector entities/utilities.
• Protect consumer and investor interest.
• Promote competition.
• Advise the government on power sector development, regarding generation
transmission, marketing, and supply distribution.
• Appoint electrical adviser and chief electrical inspector.
7.03 Power Cell
Power Cell has been created by the government under Power Division, Ministry of
Power, Energy & Mineral Resources under “TA for Implementation of Bangladesh
power sector reform”. Power cell was created in 1995 to design, facilitate, and drive
reform measures. The objectives of the reform program can be stated as (not limited to):
• To develop an implement able plan of reform program.
• To implement specific program to achieve desirable performance improvements,
consumer satisfaction and viability of the sector.
• To help the utilities to achieve accelerated development of the sector with
optimum utilization of resources.
• To develop strategy for corporatization of different entities.
• To structure financial & business plan of the existing & emerging entities.
• To develop strategy for distribution area demarcation & rationalization of the
utilities.
• To develop HR/D plan for the existing & emerging entities.
• To develop & Implement the centrally well designed MIS & IT system of power
sector.
• To build in house capacity of system improvement & the sector's efficiency in
formulating the tariff calculation and cash flow studies.
• To develop the power sector master plan incorporating the updated data.
• To establish a communication system among the sectors utilities.
(Retrieved from http://www.powercell.gov.bd/index.php?page_id=212 )
7.04 EA & CEI:
The office of the Electrical Advisor and Chief Electrical Inspector has been
established under section 36 of the Electricity Act 1910. EA & CEI office performs the
functions as specified in the Electricity Act, Electricity Rule, Cinematograph Act to
control and ensure safety of lives and properties in electricity sector.
(Retrieved from http://www.powerdivision.gov.bd/ )
7.05 Bangladesh Power Development Board (BPDB)
BPDB is responsible for generation, transmission and distribution of electricity. Its
responsible to distribute power mainly urban areas except Metropolitan City of Dhaka.
There is lots of Independent Power Producers (IPP) who generate and sell power to
BPDB. BPDB's retail sale accounts for about 40% of total retail sales.
(Retrieved from http://www.powerdivision.gov.bd/ )
7.06 Ashuganj Power Company (APS)
Ashuganj Power Company is a power generation subsidiary company of BPDB. APS
was created in 2002. The installed generation capacity of APS is 728 MW. APS generate
power through comprising steam, combined cycle and gas turbine generating unit. The
gross energy generation was 3387 Gwh during 2003, which was about 25% of total
energy generation in public sector. (Retrieved from http://www.powerdivision.gov.bd/ )
7.07 Electricity Generation Company Bangladesh (EGCB)
EGCB is another new power generation subsidiary company of BPDB. It hasn’t
started operating. It is expected to be started very soon. (BPDB, unpublished data)
7.08 Power Grid Company of Bangladesh (PGCB)
PGCB was established under the Company's Act, 1994. It is a subsidiary of BPDB.
PGCB is responsible for operation the grid network of 230kV and 132kV system. PGCB
is 100% responsible for power transmission. The company has a massive program to
build new facilities in the coming years including transmission lines and sub-stations, for
mass departure of power with the objective to help electrify more new villages and towns
of the country. (PGCB, annual report, 2006)
7.09 Dhaka Electric Supply Authority (DESA)
DESA is responsible to distribute electricity in a part metropolitan Dhaka & some
adjustment area. It purchases power from BPDB at 132 kV. DESA's retail sale accounts
for about 21% of total sales. (Retrieved from http://www.powerdivision.gov.bd/ )
7.10 Dhaka Electric Supply Company (DESCO)
DESCO was established in 1996 under Companies' Act of 1994. DESCO is
responsible for distribution of electricity in Mirpur, Gulshan, Baridhara and Uttara area of
Metropolitan City of Dhaka. (DESCO, annual report, 2006)

7.11 West Zone Power Distribution Company (WZPDC)
BPDB’s one of the subsidiary distribution company is WZPDC. WDPDC was created
under company act 1994. The company starts functioning since July 2003. The Company
is operating is the South West part of the country. (Retrieved from
http://www.powerdivision.gov.bd/ )
7.12 Rural Electrification Board (REB)
REB is responsible for distribution of electricity in rural areas through a system of co-
operatives known as Palli Biddyut Samities (PBS). It purchases power from BPDB and
different IPPs and SPPs at 33 kV. REB's retail sale accounts for about 38% 0f total retail
national sales. Sixty seven (70) PBS's are operating at present in rural areas. REB
electrified 46640 numbers of villages and they have 61 numbers of districts under their
program. (REB history, retrieved from http://www.reb.gov.bd/about_reb.htm )
7.13 Palli Bidyut Samity (PBS):
Palli Bidyut Samity (PBS) is a consumer owned entity organized on the basic
principles of Co-operative for distribution of electric power to its members and other
consumers. It is an independent corporate body. (REB history, retrieved from
http://www.reb.gov.bd/about_reb.htm )
8.0 Government’s Vision and Policy for Power Sector:
The vision is the first step of any project. If the vision has been projected through the
right path, the implementation will become more attainable. As a sole owner of the
regulation of the power sector, Bangladesh government had to go for a feasible vision of
this sector to ensure that it leads a flawless result. Thus the Vision statement and policy
on power sector was reformed in June 2000.
8.01 Government’s Vision:
• To make electricity available for all.
• To ensure reliable and quality supply of electricity.
• To provide electricity at a reasonable price.
8.02 Policy Objective:
In order to realize the vision, the Government has set a number of objectives for the
power sector reforms. These include:
• Bringing entire country under electricity service by the year 2020.
• Making the power sector financially viable and able to facilitate economic
growth.
• Increase the sector efficiency.
• Making the sector commercial.
• Improving the reliability and quality of electricity supply.
• Using natural gas as the primary fuel for electricity generation and exploring the
possibility for export of power to augment and diversify foreign exchange
earnings.
• Increasing private sector participation to mobilize finance.
• Ensuring reasonable and affordable price for electricity by pursuing least cost
options.
• Promoting competition among various entities. (Government’s vision and policy,
retrieved from http://www.powerdivision.gov.bd/index.php?page_id=237 )
9.0 Current Power Situation:
At present Bangladesh is in huge power crisis. High demand and less supply of power
is creating power shortfall. Socio-economic environment are being effected. Corruption,
technology lacking etc are some reasons behind this current power situation. This current
power situation has been described below:
9.01 Demand Forecast:
As per the Power System Master Plan (PSMP) of 1995 demand forecast is given
bellow:
Table1
Power demand forecast
Fiscal Year Demand Forecast MW
2004 4256
2005 4597
2006 4967
2007 5368
2008 5802
2009 6271
2010 6779
2011 7311
2012 7887
2013 8508
2014 9180
2015 9907
Source: Bangladesh Power Development Board. (Demand forecast, retrieved from,
http://www.bpdb.gov.bd/plan_gen.htm
It can be observed that demand is increasing on an average around 8% every year. But
now it has been observed that demand of electricity is increasing more than, that was
forecasted. For an example, demand of 5368 MW was forecasted for the year 2007 but
now power demand is close to 6000 MW.
9.02 Generation Capacity and Maximum Demand Served:
At present there is a huge shortage of power in Bangladesh. Power crisis always
topped the chart of the problems of our country. Demand has gradually increased over
time but compared to that the amount of demand served is very low due to low power
generation. Demand is more then which was forecast. Professionals say in year 2006
peak demand of power was about 6000 MW (more then forecasted in PSMP-1995) but
against that maximum demand was served only 3587 MW. Because sufficient
production capacity were not been added. Moreover compared to current installed
production capacity, dependable production capacity is very low. A table is given below:
Table 2
Year wise Installed Capacity, Production Capacity and Maximum Demand Served
Installed Production Dependable Production Maximum Demand
Financial Year
Capacity (MW) Capacity (MW) Served (MW)
1995-96 2908 2105 2047
1996-97 2908 2148 2114
1997-98 3091 2320 2136
1998-99 3611 2850 2449
1999-00 3711 2665 2665
2000-01 4005 3033 3033
2001-02 4230 3300 3218
2002-03 4710 3600 3458
2003-04 4710 3700 3622
2004-05 5025 3900 3751
2005-06 5275 4150 3812
2006-07 ( Dec, 06) 5275 4150 3587
Source: Bangladesh Economic Review, 2007
In financial year 2005-2006 dependable production capacity was only 78% of installed
production capacity which is very low and only 91% of production capacity was served
against maximum demand which was only 3812 MW. Not only that year, for the last 10
years production capacity was 72% to 78% of installed capacity which is resulting low
generation of electricity. Installed capacity is also very low to produce sufficient power to
meet the power demand. Power plant efficiency is negatively related with the age of
power plant. The more the power plant gets older its efficiency decreases. Most of the
power plants owned by BPDB are 20 to 30 years old. Some of the power plants are 50
years even more then 50 years old. Production capacity of these power plants are less
then 50% of installed capacity. On an average production capacity is 72% to 78% of
installed capacity. Production capacity is decreasing day by day but to supplement this
trend new capacity installed are not sufficient. On the other hand power demand is
increasing day by day. Decreasing production capacity, insufficient installed production
capacity and increasing demand are responsible for current power crisis. There is about
2500 MW power deficit currently in Bangladesh.
9.03 Net Generation and Capacity of Private and Public Sector:
Many IPPs and SPPs are doing fantastic job in generating power and adding good
amount of power to national grid. Private sector generates power and sells it to BPDB.
Almost all power plants of Private sector generate 100% of its installed capacity. In FY
2006-2007 installed capacity of public sector was 75.55% and private sector was 24.45%
and in same year public sector generated 65.24% and private sector generated 34.76% of
total generated power. Net generation was 11,503 kWh, here public sector generated
7505 kWh and private sector generated 3998 kWh.

Table 3
Segregation of Power Generation
Year 2007 Public sector Private sector
Production
75.55% 24.45%
Capacity
Net Generation 65.24% 34.76%
9.04 Electricity Growth and Availability:
In Bangladesh electricity is growing at a very low rate, so compared to high increasing
demand, supply is inadequate. Only 42% of the total population has access to electricity
which is very low compared to other developing country. Per capita generation is only
141 kWh which is also very low compared to other neighbor countries. Other neighbor
countries have successfully developed there power sector to achieve economic
excellence, like India has per capita generation of 473 kWh, Pakistan has 431kWh and
Sri Lanka has 336kWh.
Table 4
Year wise Growth, Access and Per Capita Generation of electricity
2000- 2001- 2002- 2003- 2004- 2005-
Item
2001 2002 2003 2004 2005 2006
Growth of electricity % 7.6 7.78 7.29 9.19 8.54 7.45
Access to electricity % 25 30 32 35 38 42
Per capita generation
129 136 144 155 158 141
(kWh)
Source: Data Book, Power Cell, 2006
9.05 Technology Lacking:
Technology of Bangladesh power sector is very poor. Technology improvement is
required in generation system, transmission system and distribution system for more
efficiency. Technology inefficiency is one of the reasons for low generation capacity.
Low generation of power is resulting huge load shedding. Technology lacking in

transmission and distribution system is resulting system loss. Because of system loss a
junk amount of power is being lost from the net generation. There are also other technical
problems like leakage in transmission line and distribution line, as well as gas
transmission line, sudden failure of sub-station, short circuit, unavailability of spare
transformer, voltage dips and flicker etc.
9.06 Load Shedding and System Loss:
Significant load shedding due to lack of generation occurred in each of the historical
years. As maximum amount of produced power are being provided to the main load
centers like to industrial and commercial areas to keep the economy run smoothly and
deficit of electricity are being passed to the domestic areas and domestic areas are under
huge load shedding. Dhaka alone has around half of the customer of electricity as it is
one of the pick lode centers. Another load center is east zone (Chittagong) for
commercial use. Still huge load shedding accurse in industrials and commercial areas.
Power generation is increasing but at the same time load shedding is also increasing.
Because power generation is increasing at a lower rate compared to increased demand of
power. Hugh power theft was also a reason for the load shedding.
Another reason for power shortage is system loss. Because of system loss a substantial
amount of power are being lost from the net generation. System loss accrues at the time
of transmission and distribution. System loss of a weak power plant is higher then strong
power system. Total (transmission and distribution) standard system loss of a weak
power system is 16.5% and for strong power system is 8.75. Though system loss
decreased year to year, still high system loss exist in power sector. In 2006 system loss
was 20.97% which is much higher then standard system loss of a weak power system.
Table 5
Year wise power generation and load shedding and system loss:
Load Shedding
Financial year Actual generation (MW) System Loss (%)
(MW)
1996 2087 545 31.20
1997 2114 674 30.40
1998 2136 711 31.30
1999 2449 774 31.80
2000 2665 536 31.60
2001 3033 663 28.47
2002 3248 367 27.97
2003 3458 468 25.69
2004 3622 694 24.49
2005 3751 770 22.79
2006 up to
3812 891 20.97
Mar,06
Source: Power Sector Data Book, Power Cell, (2006)
9.07 Management Inefficiency:
Government management is very inefficient. Huge mismanagement is affecting our
power sector for the absence of proper guide line. Existing guide lines are not being
followed. Different foreign companies are interested for investing in power sector of
Bangladesh. Foreign companies bid for different tenders but due to lack of efficiency
BPDB and other public companies till the tenders get approved tender cost goes up then
those investors don’t have any interest for the tender. Many tenders were stopped at the
mid stage because of all these situations. Then process of bidding restarts. For these
reasons many foreign bidders are losing their interest to bid for Bangladesh power sector.
People of Bangladesh are suffering for huge power crisis at this stage additional power
need to be added in national grid as soon as possible but for public sector slow processes
is slowing down the additional power generation.

9.08 Corruption Exists in Power Sector:
One of the major reasons of today’s power problem is corruption. Corruption is at all
level from top management to operational level. Management is also very poor and long
term and short term plans are not strategically managed. Lack of commitment is an
additional problem. It has been seen that, a foreign bidder bid for a project at a certain
cost but for the power sector management irregularities executing on the project gets late
and due to inflation the cost of the project gets high and then the bidder don’t have any
more interest on the project. Inefficiency exists in linkage between project plan and
financing plan. Public sector employees also lose their commitment to their work because
of top level corruption. For this corruption DESA ran at loss for many years. DESA went
through lots of controversies. Many engineers and professionals who are committed to
their work can not successfully work on their business plan because political persons
make many changes on the business plan for their personal benefit. Problem multiplies
because of inefficient linkage between project plans and financing plans. Small power
plants are cost effective for captive consumption. But sponsors face lots of problem to get
approved to set up a captive power plant.
9.09 Effect on Economy:
Electricity is a vital ingredient, to upgrade the socio-economic condition and to
alleviate poverty. This power crisis has been the number one problem of Bangladesh.
This power short fall is affecting our economy. Economy of any country is highly
dependent on power supply. Industrial and commercial activities are being interrupted for
this power crisis. At present electricity coverage in Bangladesh is only 42% and per
capita electricity consumption is about 140 kWh which is one of the lowest in the World.
Table 6
Contribution to country’s GDP:
2001- 2002- 2003- 2004- 2005- 2006-
Particulars
2002 2003 2004 2005 2006 2007
Share of electricity on GDP
1.27 1.3 1.34 1.37 1.38 1.35
%
Growth of electricity sub-
7.78 7.29 9.19 8.54 7.45 4.52
station %
GDP growth rate% 4.42 5.26 6.27 5.96 6.63 6.51
Bangladesh economy is growing and the share of industrial activity is increasing. At
the same time urbanization is taking place to a great extent so the share of electricity on
GDP is growing with the growth of electricity as well as with the GDP growth rate. But
expansion of electricity sub-stations is near to the ground then required and this low
growth rate is affecting GDP growth rate. Low growth rate of electricity is slowing down
GDP growth. Another significant point is growth in the urban population considerably
increased by 38% over last decade by birth and migration.
In Bangladesh, 51% of total man power is involved in agriculture. For irrigation and
other purpose electricity is a very necessary issue in agriculture. Irrigation process is
being interrupted for insufficient power supply. And as a result the cost of production
rises and the timing of the irrigation hampers also. Again when the fuel is used instead of
electricity, the extra cost is charged to the final user and again the farmers are having less
margin. As the prices are high, the cumulative savings go down in the households as they
have to spend more and their fewer saving generates less investment and thus it had its
ripple effect on the total GDP of the country.
Not only agriculture industrial and commercial sector are also incurring huge loss for
power short fall or load shedding. The daily commutation is hampered as the electricity is
having mishaps on its production. Thus to cover up, commercial sector have depend on
the alternatives and again the cost goes high. This electricity also hampers the living
condition of the labors as the alternative power sources does not permit to have normal
working condition as it would have with electricity thus it reduces the productivity of the
employees.
To manage load of the power, caretaker government ordered all commercial and
industrial entities to be closed at seven o’clock. Sales percentage is decreasing in
shopping malls and grossary shops after caretaker government order. Production level is
decreasing in garments and factories. Small to big businessmen, all are incurring huge
lose for that.
Load shedding is also interrupting school, collage university students. The shortfall in
the power sector is hampering the normal practice of our educational sector. The students
of today not only have to deal with the books they also had to plan their time of studying
while matching with the availability with the electricity. Thus it also hampers the broader
version of economy of the long run.
Many cottage industries and SMEs are increasing and creating new job opportunities
and our economy is having a positive out come. This improvement also demands fluent
power supply.
The effect of electricity has a huge impact to play on the economy of a country like
Bangladesh, the improvement on electricity will reduce the general cost of production,
from agriculture to the manufacturing sector, thus the normal households will be allowed
to have better savings, the country will have more cash inflow to the economy as those
collective savings will be invested, thus the investment will provide more jobs and the
GDP will be escalated automatically.

10.0 Government Future Plan:
To deal with the current power crisis, to realize the vision of the Government to
provide electricity to most of the population at reasonable price and to achieve overall
socio-economic development of the country, the Government has developed short-term
(up to 2007), medium-term (up to 2012) and long-term (up to 2020) development plans.
The plans had been developed based on techno-economic analysis and least-cost
option. These plans include balanced development in generation, transmission and
distribution system to achieve desired level of reliability of power supply. A summary of
the development plan is given below:
Table 7
Government’s future plans:
Item 2005-2007 2008-2012 2013-2020
Installed capacity, MW 6441 9666 17765
Peak demand, MW 5368 7887 14600
Net generation, MKWh 26651 39157 76545
Transmission line, Km 4898 7180 8396
Capacity of grid S/S, MVA
230/ 132 KV 5950 11575 19075
132/ 33 KV 9642 17920 27367
Distribution line, Km 266375 345530 477558
No. of consumers, million 9.03 12.75 20.76
Per capita generation, KWh 190 260 450
Access to electricity 47% 65% 100%
Investment requirement (billion Tk) 115 307 575
Source: Power Division (Future development plan, retrieved from
http://www.powerdivision.gov.bd/index.php?page_id=222 )
Government has taken steps to create conducive environment for Private Sector
through appropriate policies and power sector reforms & restructuring.

11.0 Power Sector Reform and Restructure:
Government alone can not fulfill this plan. Huge investment is required in power
sector. To mobilize finance government seek for foreign and private investment in power
sector. Bangladesh Government reformed and restructured power sector time to time to
create an environment and room of investment for private and foreign investors.
Government’s reform objective and components of reform has been stated below which
was collected from (“3-Year Road Map for Power Sector Reform (Year 2007-2009)”
Retrieved from http://www.powercell.gov.bd/index.php?page_id=245 )
11.01 Reform Objective:
GOB issued its Vision and Policy Statement on Power Sector Reforms in February,
2000, with the following objectives:
• Bringing the entire country under electricity service by the year 2020 in phases.
• Making the power sector financially viable and able to facilitate economic growth
• Increasing the sector’s efficiency
• Introducing new corporate culture in the power sector entities
• Improving the reliability and quality of electricity supply
• Using natural gas as the primary fuel for electricity generation
• Increasing private sector participation to mobilize finance.
• Ensuring reasonable and affordable price for electricity by pursuing least cost
options.
• Promoting competition among various entities.

11.02 Components of Reform
The principal components of the reform programme are as follows:
• Segregation of power generation, transmission and distribution functions into
separate services and creation of BPDB holding company as a head body where
generation, transmission and distribution operating companies will be the
subsidiaries of the holding company.
• Corporatization and commercialization of emerging power sector entities.
• Effective regulation under BERC for power and gas.
• Private sector participation and private-public partnership in power sector.
• Financial Restructuring and Recovery Plan for the sector.
• Introduction of cost reflective tariff for financial viability of the utilities and
promoting efficient use of electricity.
• Development of Demand Side Management (DSM) including energy efficiency
measures to conserve energy.
• Creation of appropriate framework and institution to facilitate the development of
alternative/renewable energy resources.
• Utilization of captive power potential of the country through appropriate policy
framework.
• Capacity building and HRD for sector entities and corporative bodies.
12.0 Power Market Structure:
At present power market has been designed as a single buyer model. BPDB is
functioning as a single buyer. Single buyer purchases all the power from generators and
sells the power to different distributor.
Multi buyer and competitive pool may be adopted when the market becomes mature and
stable.
13.0 Investment Opportunity:
Power sector is a capital intensive industry. Huge investment is required to serve the
electricity demand. In Bangladesh there is an extensive demand gap for electricity.
Private sector participation will help to mobilize finance. Only 42% of populations in
Bangladesh have access to electricity. New generation of power is the immediate
requirement for Bangladesh. So for foreign and private sector opportunities exist in
developing new plants (barge-mounted and other, large, small and mini), constructing
transmission and distribution system, rehabilitating or upgrading existing plants and
supplying a variety of support services. Investment opportunities also exist under build-
own-operate (BOO) basis for private sector.
To encourage the private sector investment government decided to issue a “Private
Sector Power Generation policy of Bangladesh” in October 1996. This policy encouraged
privet sector to invest in power sector. Bangladesh government has created a good
investment climate for foreign and private investors through reform and restructure in
power sector. Government is promoting private sector power generation, private-public
partnership in power sector. Investment is also well protected by law and practice in
Bangladesh. Government approved many fiscal incentives in private sector power
generation policy for private and foreign investors to invest in power sector.
Fiscal incentives stated in “Private sector power generation policy of Bangladesh (revised
in November 2004)” are given below:
13.01 Fiscal Incentives:
• The private power companies shall be exempt from corporate income tax for a
period of 15 years.
• The companies will be allowed to import plant and equipment and spare parts up
to a maximum of ten percent (10%) of the original value of total plant and
equipment within a period of twelve (12) years of Commercial Operation without
payment of customs duties, VAT (Value Added Tax) and any other surcharges as
well as import permit fee except for indigenously produced equipment
manufactured according to international standards.
• Repatriation of equity along with dividends will be allowed freely.
• Exemption from income tax in Bangladesh for foreign lenders to such companies.
• The foreign investors will be free to enter into joint ventures but this is optional
and not mandatory.
• The companies will be exempted from the requirements of obtaining
insurance/reinsurance only from the National Insurance Company, namely
Sadharan Bima Corporation (SBC).
• Private power companies will be allowed to buy insurance of their choice as per
requirements of the lenders and the utilities.

• The Instruments and Deeds required to be registered under local regulations will
be exempted from stamp duty payments.
• Power generation has been declared as an industry and the companies are eligible
for all other concessions which are available to industrial projects.
• The private parties may raise local and foreign finance in accordance with
regulations applicable to industrial projects as defined by the Board of Investment
(BOI).
• Local engineering and manufacturing companies shall be encouraged to provide
indigenously manufactured equipment of international standard to private power
plants.
(Investment opportunity, retrieved from

http://www.powercell.gov.bd/index.php?page_id=232 )
13.02 Facilities and Incentives for Foreign Investors:
The following facilities and incentives would be provided to private power producers:
• Tax exemption on royalties, technical know-how and technical assistance fees,
and facilities for their repatriation.
• Tax exemption on interest on foreign loans.
• Tax exemption on capital gains from transfer of shares by the investing company.
• Avoidance of double taxation in case of foreign investors on the basis of bilateral
agreements.
• Exemption of income tax for up to three years for the expatriate personnel
employed under the approved industry.

• Remittance of up to 50% of salary of the foreigners employed in Bangladesh and
facilities for repatriation of their savings and retirement benefits at the time of
their return.
• No restrictions on issuance of work permits to project related foreign nationals
and employees.
• Facilities for repatriation of invested capital, profits and dividends.
• Provision of transfer of shares held by foreign shareholders to local shareholders/
investors.
• TAKA, the national currency, would be convertible for international payments in
current account.
• Re-investment of remittal dividend to be treated as new foreign investment.
• Foreign owned companies duly registered in Bangladesh will be on the same
footing as locally owned companies with regard to borrowing facilities.
(Investment opportunity retrieved from

http://www.powercell.gov.bd/index.php?page_id=232 )
13.03 Private Investment in Power Sector:
Huge demand gap created investment opportunities in power sector and government
also provided lots of facilities in a “Private Sector Power Generation policy of
Bangladesh” in October 1996. This policy encouraged privet sector to invest in power
sector. With the name of Independent Power Producer (IPP) private sector started
generating power. To increase small power generation Government also adopted a “Small
Power Generation Policy”. This policy encourages small local generation projects to
server electricity in under served areas. Inviting private sector and allowing to setup such
a small power plants has been proved to be an effective solution to manage the power
crisis with in a very short time. Because, such small plants need very low investment and
short time to be installed. Government has granted permission to Privet operators to
install power plants with a generation capacity from 10 MW to 30 MW and more in
different places to help to overcome power crisis situation. Independent power producers
having power plant of install capacity from 10 MW to 30 MW is known as Small Power
Producer (SPP).
Under the policy guideline it was stated that entrepreneurs have to take license from
the Electricity Regulatory Commission (ERC) before setting up any power plants in any
place of the country. It was also approved that, the government will buy electricity from
private power plant through mutual agreement. IPP’s projects will be implemented on
Build-own-operate (BOO) basis. BOO projects may involve limited resource financing
and funds will be raised with out guarantee of repayment. Minimum requirement of
equity investment is 20%.
There are seven IPP they are: Khulna Power Company Ltd.(KPCL) of 110 MW,
Baghabari, WESTMONT of 90 MW, NEPC, Haripur of 110 MW, Rural Power Co. Ltd.
(RPCL) of 140 MW, AES, Haripur of 360 MW, AES, Meghnaghat of 450 MW, Summit
Power Co. Ltd of 70 MW all together these IPPs are contributing 1330 MW in net
generation of power. There are five small power producer those are M/S Meghna Energy
Ltd of 9.9 MW, M/S Rahim Energy Ltd of 30 MW, M/S Surma Energy Ltd of 30 MW,
M/S Amirate Power Co. Ltd of 10 MW, M/S Unique Power Plant Ltd of 10.8 MW and
these SPPs are contributing 90.7 MW to the net generation. (Power Cell, Bangladesh
Power Sector Data Book, 2006)

13.04 Foreign Investment in Power Sector:
Lots of foreign investors have invested in Bangladesh power sector and there are also
many foreign investors who are interested to invest in Bangladesh power sector. Energy
sector is the largest recipient of all foreign investment in Bangladesh. Foreign investors
bid for tenders offered by BPDB and the lowest bidder gets the tender. Recently, Dhabi
Group of United Arab Emirates, Tata Group of India showed their interest to invest in
Bangladesh power sector.
14.0 Investment Analysis:
Bangladesh government is planning to corporatize and privatize different sectors of
power. Till now Bangladesh government allowed fully private sector investment for
power generation. A good investment opportunity exists in power generation in
Bangladesh power sector, as main problem in power sector is low power generation,
enough transmission and distribution line is available now. Many private IPPs and SPPs
are doing profitable business by generating power, as Bangladesh has huge power
demand.
14.01 Power Generation:
A power plant generally set up close to the load center to lower the transmission cost.
Transmission of fuel is also a huge cost so setting the power plant close to fuel is also
necessary. So a cost benefit analysis needs to be done before setting up a power plant. A
power plant needs to be set up beside the river, for cooling the plant. A sound, safe place
is also a prerequisite. Generation plant near the peak demand is also needed to minimize
the transmission cost. So factors such as expense and availability of fuel, cooling water,
transportation of heavy equipment, proximately to grid network and load center etc are
considered for plant setting. Bangladesh has favorable environment for power generation.
14.02 Power Generation Mix:
Power is generated from different types of power plants and transmitted through
national grid. Most of the power plants are gas fired in Bangladesh. Mainly gas and some
percentage of hydro, liquid fuel, and coal are being used as fuel to generate power. As in
Bangladesh gas is available and cheaper then other materials of generating power.
Table 8
Segregation of Power Generation Mix
Fuel type 2004-05 2005-06 2006-07
Gas 91% 86% 81.53%
Hydro 2% 3% 4.06%
Liquid fuel 7% 8% 9.74%
Cole - 3% 4.74%
Source: Bangladesh economic review, 2007
Depending on different region other materials are also being preferred to generate
power. Like, in west side gas is not very available so most of the liquid fuel is being used
in west side and as gas is more available in east side so most of the plants are gas fired.
Gas as a fuel is cheaper but efficiency level is a bit low on the other hand imported liquid
fuel is expensive but its efficiency level is comparatively high. One year ago coal was not
being used as fuel for generating power but Bangladesh has huge prospect on coal.
14.03 Power Generation Cost:
Power generation cost depends upon the power plant type, fuel type and source of
finance. On an average generation cost per kilo watt calculated by BPDB is given below:
Table 9
Segregation of Power Generation Cost:
Fuel Type Production cost TK/kW

Hydro 1.16
Gas 1.82
Coal 2.87
Liquid Fuel 8.9
Source: Bangladesh Power Development Board. (Unpublished internal data)
Power generation cost using hydro power is lowest and generation cost using liquid
fuel is highest. Generation cost using liquid fuel is four to five time higher then
generation cost using other type of fuel. Bangladesh exports liquid fuel different
countries from the four types of fuel and the other three types of fuel are available in
Bangladesh.
14.04 Fuel Availability:
Gas: Bangladesh has sufficient gas reserve, more exploration and development is
needed. Bangladesh explored 23 gas fields. Huge amount of gas is reserved in those gas
fields. Many foreign companies exploring Bangladesh gas reserve and many other
foreign companies are interested to for exploration. As exploration proceeds there will be
additions to existing reserve.
Coal: There is also enough coal to produce power but only five coal basins are been
explored. Substantial amount of coal reserve is in northern area, which is an alternative
source of energy to produce power. Coal can be a very cost effective fuel to generate
power. Barapukuria Coal Mine in the north-west side of Bangladesh is supplying good
amount of coal for Barapukuria power plant. Phulbaria Coal Project mines will provide
adequate coal supply for power generation. The Geological Survey of Bangladesh (GSB)
is responsible for locating coal resources present in Bangladesh. Eminent geologist and
former chief of GSB, Khurshid Alam said, 13 coal basins was identified in the northern
region of the country. Experts say 5,000 MW of electricity could be generated for upto 90
years by coal.
Liquid fuel: In Bangladesh, “Eastern Refinery” at Chittagong provides 50% liquid
fuel for generating power and exports the other 50% of liquid fuel. Reserved liquid fuel
of Bangladesh is not enough moreover it is very expensive to generate power from liquid
fuel.
Hydro power: Hydro power is not very available in Bangladesh. Currently used
amount of hydro power will be available and used further.
14.05 Technology:
Power generation plants are not so technically efficient. But private power producers
are concentrating on technical improvement. Technology improvement will increase
power generation efficiency. By using modern technology, setting up a power plant with
optimum capacity cost of generation can be reduced.
14.06 Analysis:
In Bangladesh, still there are many suitable sites for generating power near the rivers.
All kind of power plants need to be set up near the river and Bangladesh is very lucky in
that case, as Bangladesh is full of rivers and it is called “the land of river”. As power
generation cost through liquid fuel is very high so lowering the percentage of using liquid
fuel, usage of gas, coal and hydro power can be increased. From the generation mix it can
be observed that only 4.74% of power is generated through coal but 9.74% of power is
generated through liquid fuel where liquid fuel is very expensive and generation cost of
power using liquid fuel is very high. Percentage of producing power through liquid fuel
can be reduced by increasing generation of power through coal. Bangladesh has only one
coal power plant at Barapukuria. A coal power plant at Phulbaria will be set up after coal
mining. Some more coal power plant can be set up near the coal plant. Increasing the
percentage of using coal for power generation will also decrease the generation pressure
on gas where in 81.53% of power is generated through gas.
Bangladesh has enough reserve of gas and coal, also a favorable environment for
generating power. There are also some new sites which can be explored and can be
invented as very cost effective sites for power generation. Technological improvement
will also increase efficiency in generation and transmission. So by setting up new power
plants and by replacing old power plants from the existing sites, huge additional power
can be produced and can be add to the national grid and private sector can make good
profit.
15.0 Managing Finance:
Energy sector is the largest recipient of all foreign investment in Bangladesh. In the
year 2005, 3.2% of Foreign Direct Investment was provided to power sector which was
27.2 million of U.S doller. Asian Development Bank (ADB) is also providing huge
amount of lone to Bangladesh Bank (BB) for power sector every year and Bangladesh
Bank provides lone to private power generation companies like IPPs and SPPs. Many
private commercial banks are giving lone to many IPPs and SPPs. Infrastructure
Development Company Limited (IDCOL) a Non-Bank Financial Institution established
in Bangladesh in 1997 as a government owned public limited company to promote

participation of the private sector in investment in infrastructure facilities and in
operation, ownership and maintenance of them. IDCOL provides long-term senior and
subordinate debt financing for viable infrastructure projects in the private sector. It
finances up to 40% of the total project costs. So managing funds will not be a problem to
invest in power sector, more over power sector always gets some priority every where.
16.0 Capital Market Performance of Power Sector:
Bangladesh capital market had a tremendous growth from last year and also has a
strong growing prospect in future. As Bangladesh political situation is improving so
people are feeling risk free to invest in capital market. Both foreign and local investors
are taking part in trading of securities in wide scale. As a result, both turnover and market
capitalization crossed a new milestone. Market capitalization was Tk. 21542.18 in FY
2005-06 now in FY 2006-2007 market capitalization is 47585.54, as capital market is
improving price of stocks are also increasing as well as new companies are also being
listed. Market PE also increased from 10.66 to 17.28 (June, 2007).
In capital market, power sector is increasing day by day and this sector is always on
investor’s concentration. In power sector there are three companies and price of these
three companies are increasing at an increasing rate. As to meet the power demand and to
over come from the current power crisis many initiatives and development plans have
been taken and power sector in improving tremendously and investors are being
interested to invest in power sector. In capital market Fuel and power has second highest
percentage of total market capital which is 11.69%. Market capital of this sector
increased about 2680.92 million taka from May to June in 2007.

Table 10
DSE sectoral performance – June 2007:
% of total Mkt % of total Mkt
sector June May
Cap Cap
Financial Sector
Banks 231,127.95 56.16% 206,300.70 54.39%
Insurance 12,023.45 2.92% 9,714.01 2.56%
Investment 5,327.66 1.29% 4,938.41 1.30%
Total 248,479.06 60.38% 220,953.12 58.25%
Manufacturing
Foods 6,764.53 1.64% 6,622.30 1.75%
Pharmaceuticals 37,901.81 9.21% 36,194.37 9.54%
Textile 10,961.71 2.66% 10,197.37 2.69%
Engineering 10,469.52 2.54% 10,207.28 2.69%
Ceramics 595.36 0.14% 608.48 0.16%
Tannery 3,325.50 0.81% 3,118.93 0.82%
Paper & Printing 271.79 0.07% 272.09 0.07%
Jute 142.4 0.03% 137.6 0.04%
Cement 30,593.00 7.43% 31,895.71 8.41%
Total 101,025.62 24.55% 99,254.13 26.17%
Service & Miscellaneous
Fuel & Power 48,099.58 11.69% 45,418.66 11.97%
Service & Real
Estate 1,828.29 0.44% 1,811.50 0.48%
IT 2,251.24 0.55% 2,117.13 0.56%
Miscellaneous 9,863.19 2.40% 9,737.68 2.57%
Total 62,042.30 15.08% 59,084.97 15.58%
Total
Prospect of investment in 411,546.98
Bangladesh Power Sector 100.00% 379,292.22 100.00%3
Source: Dhaka stock exchange, Monthly review, June 2007.
16.01 Market Capital of Power Sector:
Table 11
Position of Power and Fuel in Capital Market:
Sector Till August-2007 % of Market Capital
Power 41561.34 86.41%
Fuel 6538.24 13.59%
Total Fuel and Power 48099.58 100%
Fuel and power has BDT 48099.58 million of market capital. Out of fuel and power
sector market capital, individually power sector has BDT 41561.34 million of market
capital which is 86.41% of total fuel and power sector market capital.
16.02 Current Market Capital of Three Power Companies:
There are three listed companies of power sector in capital market. Those are:
1. Dhaka Electricity Supply Company (DESCO), it is a government power
Distribution Company.
2. Power Grid Company of Bangladesh Limited (PGCB), it is a government power
transmission company.
3. Summit Power Limited, it is a private power generation company.
These companies have huge growth prospect. Stock price of this companies are
increasing at an increasing rate. Power sector has always been the focus of investors. As
power sector is improving, so these companies are getting new projects and also getting
huge amount of foreign investment which will increase net profit of these companies and
stock price will increase. So investors are investing in power sector, as they are finding
this sector almost risk free. As Bangladesh power sector will improve and investing in
this sector will be profitable.
Table 12
Participants of Power Industry in Capital Market and Their Market Position:
No of Share Market % of Market
Institution Market Cap.
Outstanding Price as on Cap in power
Name (BDT mn)
(Dividend Adjusted) 15.08.07 sector.
DESCO 12,711,940 978 12,432.28 28.10%
Power Grid 36,435,810 532.75 19,411.18 43.88%
Summit Power 8,580,000 1,445.00 12,398.10 28.02%
Total 57,727,750 44,241.56 100.00%
16.03 Dividend Distribution and Major Sponsors Three Power Sector Companies:
DESCO has 12711940 number of shares outstanding from these government has
9533955 number of shares which is 75% and public has 3177985 number of shares which
is 25%. DESCO declared 20% cash dividend in year 2006.
Power Grid has 36,435,810 numbers of shares outstanding and from these, government
has 75% and public has 25% which is 27,326,858 and 9,108,953 numbers of shares
respectively. Power Grid declared 10% cash dividend in year 2006.
Table 13
Dividend Distribution and Major Sponsors of Power Industry in Capital Market:
Dividend Distribution
Company Major Sponsors (%)
(2006-07)
Cash Bonus Right Gen.
Director Institution Foreign Govt.
Name (%) (%) (%) Public
DESCO 20% - - 25 - - 75
Power
Grid 10% - - - 25 - - 75
Summit
Power - 20% - 64 36 - - -
Source: Dhaka stock exchange, Monthly review, June 2007.
Summit Power has declared 20 % bonus share in year 2007. So after adjusting 20% of
bonus share summit power has 8,580,000 number of share outstanding. As it is a private
company so board of directors of this company has 64% of outstanding share which is
5,491,200 numbers of share and public has 36% of outstanding share which is 3,088,800
number of share.
17.0 Participants in Capital Market:
The participation in capital market by the power sector industries has opened a door
for the general people particularly for the medium and small investors and to facilitate
them with the current market position and future prospect, general information of the
participants has been provided below.
17.01 General Information of DESCO
DESCO was established in 1996 under Companies' Act of 1994. DESCO is
responsible for distribution of electricity in Mirpur, Gulshan, Baridhara and Uttara area of
Metropolitan City of Dhaka. DESCO became a listed company in year 2006 with a face
value of 100 Taka. (DESCO, annual report, 2006) In 2007 price of this share highest
reached to 1080 taka. Now till August its price range is around 950-990 Taka. In year
2005-06 EPS was 45.52. Growth prospect of DESCO is very high and this company is
improving tremendously. They are working on some new projects for expansion and
ADB also providing lone for technical improvement. In future price can be higher based
on some future prospect.
17.02 Future Prospect of Desco:
Half Yearly net profit of DESCO was Tk 450 million (end of 2006), with an EPS of
Tk. 35. Roughly, year end EPS on June 2007 is expected to be Tk. 70. However, EPS
could be higher than this because of the following factors.

DESCO incurred Tk. 200 million exchange loss because of currency devaluation
against its U$D 43 million ADB loan, last year. However, as their last year calculated
exchange rate is Tk. 69.72, there is a possibility that exchange rate will remain below Tk.
69.72 in June 2007, because of the current demand supply scenario. Thus, there is a
possibility of exchange gain instead of loss. Even if DESCO will not incur exchange loss
of Tk. 200 million this year, comparing to the last year an extra EPS of Tk.15 will be
added with each share in addition to the normal profit. This is a significant profitability
growth prospect of DESCO for this year.
Recent inclusion of TONGI industrial area under DESCO’s distribution zone, is
expected to increase its net profit by 25% by the next financial year. Previously, DESCO
was distributing 400MW electricity. For the inclusion of TONGI, distribution demand
increased to at least 450MW electricity. Moreover, because of industrial consumption,
profit margin in the TONGI area is more than twice comparing to the commercial and
residential consumption. For example, per unit gross profit margin for TONGI area is Tk.
3.50 where else per unit average profit margin in other distribution area is Tk. 1.60.
Currently, DESCO has system loss of 16.20%. DESCO expects it to be reduced to
14% by the end of this financial year. 1% reduction of system loss contributes Tk. 75
million to net profit.
Recent declaration of the government of 5% enhanced tariff for electricity from
March’1 2007, will also positively contribute to the profitability of DESCO.
The company has signed a loan Agreement with the ADB on 28.06.07. Accordingly,
DESCO will receive USD 100,170,000 as loan bearing an interest rate of 5.5% per
annum (inclusive of foreign exchange risk) having a repayment period of 20 years
including a grace period of 5 years. The proceeds of the loan will be applied to,
Strengthening DESCO's electric distribution network and Upgrading and expansion of
distribution system in Gulshan Circle including Tongi Sales & Distribution divisions.
So it can be expect that the EPS of DESCO will be around Tk. 80 for the year ended
in June, 2007. Then the price will go up from the current price and it will be proved to be
very profitable investment.
Stock Performance of DESCO
1200
1000
800
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200
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06
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Figure 2: Price graph of one year of DESCO
From the graph it can be observed that in September 2006 the price of the stock of
DESCO was around 500 Taka. Then in February after declaration of half yearly EPS the
price went up and reached at around 700 Taka then the price of the stock gradually
increased and now its price is 1050 Taka. As the company has good growth prospect and
the company is improving so the stock price is also increasing and based on their future
growth prospect the price of the stock can increase in future.

17.03 General Information of PGCB:
PGCB was established under the Company's Act, 1994. It is a subsidiary of BPDB.
PGCB is responsible for operation the grid network of 230kV and 132kV system. PGCB
is 100% responsible for power transmission. (PGCB, annual report, 2006) The company
has a massive program to build new facilities in the coming years including transmission
lines and sub-stations, for mass departure of power with the objective to help electrify
more new villages and towns of the country. The main business of the company is to
transmit power, in which it has monopoly at present. There is enormous growth
opportunity of the company because of its monopoly in electricity transmission and only
42% of the population has access to electricity. PGCB has no upcoming threats.
PGCB became a listed company in year 2006 with a face value of 100 Taka. In 2007
price of this share highest reached to 640 Taka. Now till August its price range is around
650-600 Taka. In year 2006 EPS was 17.01. Growth prospect of PGCB is very high and
this company is improving tremendously. They are working on some new projects for
expansion and ADB also providing lone for technical improvement. In future price can be
higher based on some future prospect. So investing in this share will be profitable in
future and the future prospects have been discussed below.
17.04 Future Prospect of PGCB:
Recently, The ECNEC, Executive Committee of the National Economic Council, is
the highest government body that examines, appraises and finally approves all
development projects and programs of Bangladesh, approved setting up of two new
power plants and reconstructing of existing two. Besides, government also taking
initiatives to encourage setting up of independent power plants and find ways to import
power from neighboring courtiers like Myanmar or Bhutan. Also, government has
planned to set up more large power plants. Including all, it can be reasonably expected
that minimum1200 MW additional power will be generated within the next two years. So
in future PGCB will transmit more power and earn more revenue.
By 2008, PGCB is expected to bring all over Bangladesh under Optical Fiber
Network. PGCB has the potential to earn additional Tk 1,000 million per year by giving
Optical Ground Wire (OPGW) network as rental along with its high voltage transmission
lines throughout the country to Telecom and IT operators.
Considering the above, it can be reasonably expected that the revenue of PGCB will
be increased by at least 43% (33% for increased power supply and 10% for increased
rental from OPGW).
Importantly, the company has no direct Cost of Goods Sold. This has a dynamic effect
in its profitability margin. Consequently, increase of revenue generated from increased
transmission of electricity will not entail significant increase in operating expense.
Hence, small extension of capacity will have dynamic effect on the growth of EPS.
Though the main business of the company is transmission of power, it has another
revenue head, comes from leasing of OPGW. The total revenue of Tk. 45 million (year
2006) from this portion was net contribution to the profit, as there is no extra operating
cost for this service. The infrastructure of PGCB is very suitable for telecommunication
and IT companies for their extension of service through fiber optic. Reportedly, as the
fiber optic technology is going to available in Dhaka within a month, Grameen Phone is
in the process of Tk. 700 million leasing contract with PGCB. It can be expected that the
opportunity of this infrastructure is going to be explored by any of the telecom operators
of the country.
Considering the above factors, impending requirement of power sector development
and already sanctioned low cost loan for the development of PGCB, on an average 30%-
40% continued growth of EPS can be expected for the next three years.
However, the price could be even more, as always, at least until 2012, there will be
upcoming prospect of even more investment in the power generation. So, as the prospect
of the stock will be there always, institutions, foreign investors and public will keep
continuing to invest in this stock.
Stock Performance of Power Grid
700
600
500
400
Price
300
200
100
0
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06
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06
07
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Closing Price
Figure 3: Price graph of one year of PGCB
From the graph it can be observed that in November 2006 the price of the stock of
PGCB went down and was around 200 Taka. Then in February after declaration of half
yearly EPS the price went up and reached at around 500 Taka then the price of the stock
gradually decreased due to market fluctuation but now its price is around 570 Taka and
now the price trend is in upward trend. As the company has good growth prospect and the
company is improving so the stock price is also increasing and based on their future
growth prospect the price of the stock can increase in future.
17.05 General Information of Summit Power:
Summit Power Limited (SPL) sponsored by Summit Group was incorporated in
Bangladesh on March 30, 1997 as a private Limited Company; it is a power generation
company. On June 2004 the company was converted to Public Limited Company under
the companies Act 1994. Face value of Summit Power was 100 Taka. In 2007 price of
this share highest reached to 1658 Taka. Now till August its price range is around 1250-
1658 Taka. In year 2006 EPS was 25.66. Growth prospect of Summit Power is very high
and this company is improving tremendously.
The company had initially established three 11MW power plants for sale of electricity
to Rural Electrification Board (REB) on Build Own and Operate (BOO) basis at Savar,
Narsingdi and Comilla. After a subsequent capacity expansion, Comilla plant is now
generating a total 24.50 MW of electricity from 15th November 2006 and Narshingdi
expanded plant is generating a total 35.30 MW of electricity from 16th of December
2006. The entire generated electricity is sold to Palli Biddut Samity (PBS) under Power
Purchase Agreements signed with REB and implementation Agreement signed with
Government of Bangladesh. The future prospects have been discussed below.

17.06 Future Prospect of Summit Power:
There is huge electricity shortage in Bangladesh. There is an opportunity for power
generation and Summit Power has the experience and support to grow its business every
year.
Summit Power had added an additional 38 MW to their Primary generation capacity
of 33 MW, in 2005. So currently it generates about 70 MW of electricity but this capacity
will increase to 105 MW by October 2007.
The company’s capacity will increase further because the company has informed that
it has decided to form two new Special Purpose Companies (99% share of these
companies will be held by Summit Power Ltd. and the remaining 1% by Summit
Industrial & Mercantile Corporation (Pvt.) Ltd.) to Establish 11 MW Gas-fired Power
Plant at Ullapara, Sirajgonj and 33 MW Gas-fired Power Plant at Maona, Gazipur under
one company and 33 MW Gas-fired Power Plant at Rupgonj, Narayangonj and 33 MW
Gas-fired Power Plant at Jangalia, Comilla under the second company on a Build, Own
and Operate (BOO) basis subject to the approval of Power Cell, Power Division, Ministry
of Power, Energy & Mineral Resources, Government of the Peoples Republic of
Bangladesh.
By observing, Summit’s present expansion plans along with the long term vision of
growth by the management, the current government’s initiatives to reforming the power
sector and the existing gap between demand and supply in the power sector it can be
concluded that Summit has very bright future prospect.

Stock Performance of Summit Power
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1600
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Price
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Figure 4: Price graph of one year of Summit Power
From the graph it can be observed that the stock price of summit power was with in
the price range of Taka 500 to 700 from September 06 to May 07. Then after their
expansion and declaration of getting their new projects the price of the stock gradually
increased.
18.0 Conclusion:
The need of electricity in Bangladesh can not be expressed in words; the effect of
power in each and every growing sector of Bangladesh is undeniable. The economic
goals of the country can not be achieved without flourishing the power sector of
Bangladesh. At present, it is way over the time that we still locating the gaps and
shortfalls on the power sector, now it is the time to act. A jam-packed plan needs to be
implemented as soon as possible to make the power sector effective. Though, still
government holds the key of this sector but the private sector is always encouraged to
participate in Bangladesh power sector to fulfill the government future plan of power
sector. Private sector needs to play an important role to upgrade the contemporary
condition of the power sector in Bangladesh. Government has taken lots of initiatives
through reform and restructures programs and policy to facilitate private sector to invest
in this immerging sector. Lots of encouraging incentives has been provided by the
government to the private sector. More over demand for electricity will always exist so
growth opportunity will always exist. Again, private sector can grasp a good amount of
profit from this sector. Demand of electricity in Bangladesh is very high and still
electricity is no available to more then half of the country. Thus the investment in this
sector will only produce profit margins. And also the medium or small investors can also
play their part on the capital market as it indicates the potential growth of the power
sector. Only the combined investment of both large and small investors can manage the
much needed improvement of the power sector of Bangladesh. Hopefully this paper let an
investor know about the prospect of investment in Bangladesh power sector.

Reference
Bangladesh Board of Investment. (2007). Bangladesh Investment Hand Book (3rd edition). Dhaka,
Bangladesh. Dot Net Limited.
Bangladesh Power Development Board. Demand Forecast. Retrieved from

http://www.bpdb.gov.bd/plan_gen.htm
Bangladesh Power Development Board. Renewable Energy Development & Energy Efficiency Measures.
Retrieved from http://www.bpdb.gov.bd/renewables.htm
Banglapidia Retrieved from http://banglapedia.search.com.bd/HT/E_0055.htm
Cooper R. D. & Schindler S. P., (2003), Business Research Methods (9), Boston: McGraw-Hill, NY Series
Dhaka Electricity Supply Company, Annual report, 2006
Dhaka stock exchange, monthly review, June 2007
Government of the People’s Republic of Bangladesh. Bangladesh Economic Review 2007.
Power Cell. About Power Cell. Retrieved from http://www.powercell.gov.bd/index.php?page_id=212
Power Cell. (June, 2006). Bangladesh Power Sector Data Book. Dhaka, Bangladesh.
Retrieved from http://www.powercell.gov.bd/index.php?page_id=245
Power cell. Investment opportunity. retrieved from

http://www.powercell.gov.bd/index.php?page_id=232
Power Division, Ministry of Power, Energy and Mineral Resources, Govt. of the People’s Republic of
Bangladesh. (September, 2006). 3-Year Road Map For Power Sector Reform (YEAR 2007 – 2009).
Retrieved from http://www.powercell.gov.bd/index.php?page_id=245
Power Division, Ministry of Power, Energy and Mineral Resources, Govt. of the People’s Republic of
Bangladesh. (October, 1996). Private Sector Power Generation Policy of Bangladesh (Revised November,
2004). Dhaka, Bangladesh.
Power Division. Future development plan. Retrieved from

http://www.powerdivision.gov.bd/index.php?page_id=222
Power Division. Functions of power division. Retrieved from

Power Division. Government’s Vision and Policy. Retrieved from

Power Grid Company of Bangladesh, Annual report, 2006
Rural Electrification Board. A brief on Rural Electrification Program. Retrieved from

http://www.reb.gov.bd/about_reb.htm
Prospect of investment
Summit Power, Annualinreport,
Bangladesh
2006 Power Sector 55
Bibliography
Asian Development Bank. Gas Sector Development Program. Retrieve from

http://www.adb.org/Projects/approvals.asp?ctry=BAN&year=ALL&query=&browse=1&
p=ctryban
Asian Development Bank. Tendering Process for Independent Power Producer (IPP)
Plants. Retrieve from
http://www.adb.org/Projects/approvals.asp?ctry=BAN&year=ALL&query=&browse=1&
p=ctryban
Bangladesh Board of Investment. Bangladesh Private Sector Infrastructure Guideline.

Retrieve from http://www.boi.gov.bd/publications.htm
Bangladesh Board of Investment. FDI in Bangladesh during 2004. Retrieved from

http://www.boi.gov.bd/publications.htm
Bangladesh Power Development Board. Generation. Retrieve from

http://www.bpdb.gov.bd/generation.htm
Bangladesh Power Development Board. Planning. Retrieve from

http://www.bpdb.gov.bd/planning.htm
Power Cell. Bangladesh Energy Regulatory Commission (BERC). Retrieved from

Power Cell. Future Reform Program. Retrieved from

Power Cell. Private Power Generation. Retrieved from

Power Cell. Present Power Situation. Retrieved from

Power Cell. Reform and Restructuring of Power Sector. Retrieved from

Power Cell. Small Power Policy (SPP_Final) Retrieved from

Power Division. EOI Rental Power. Retrieve from


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PROSPECT OF INVESTMENT IN BANGLADESH POWER SECTOR

An Internship Report Presented in Partial Fulfillment

INDEPENDENT UNIVERSITY, BANGLADESH

has been approved

Dr. Osman Gani

Independent University, Bangladesh

It is a great pleasure for me to submit the report on “Prospect of investment in Bangladesh

in Bangladesh power sector.

will encourage me to do richer research in future.

Yours’ most obediently

I am grateful to my honorable supervisor Dr Osman Gani, School of Business, Independent

constraints and also to encouraging me to prepare the internship report on “Prospect of

investment in Bangladesh Power Sector”.

Governance), Asian Development Bank; Moumita Manzoor, Research Associate, IDLC

1. Power demand forecast Page

1. Diagram of Current Power Sector Structure 10

2. Price graph of one year of DESCO 46

3. Price graph of one year of PGCB 49

4. Price graph of one year of Summit Power 52

Electricity is a fundamental requirement, to upgrade the socio economic condition and

opportunity in Bangladesh power sector and government is also encouraging private

Electricity is a vital ingredient, to upgrade the socio-economic condition and to

Bangladesh is densely populated country of 140.03 million (approximately) which is

expected to be 140.6 million (approximately) in 2007. Population is increasing but

electricity is a prerequisite. Because Bangladesh economy is depending upon educational,

agricultural, industrial, commercial and other economic development and these

development directly and indirectly depend upon fluent electricity supply.

power capacity addition is needed. Additional generated power will need to be

transferred to the desired distribution centers so transmission capacity also need to be

different places so distribution technology also need to be upgraded. For the

improvement of power sector huge investment is required.

reform and restructure and by giving fiscal incentives. So investment opportunities in

2.0 Purpose of the Study:

foreign investors to invest in power generation. As power sector is a growing sector so

of this paper is to document the investment opportunity in Bangladesh power sector.

3.01 Analysis Design:

interpretations of professionals of the field had been collected. And prospect of

investment in power sector was described.

3.02 Analysis Instrument:

3.03 Data Collection:

persons are: Mahbub Murshed, Assistant Director (Finance), Bangladesh Power

Asian Development Bank; Moumita Manzoor, Research Associate, IDLC Securities

government, and participants of the power sector in Bangladesh, and Bangladesh

economic review has been viewed.

3.04 Data Analysis:

5.0 Background of Power Sector:

responsibility was to control power plants and distribution network throughout

Bangladesh. (Banglapidia, retrieved from http://banglapedia.search.com.bd/HT/P )

government formulated National Energy Policy in 1996 and segregated power

generation, transmission, and distribution functions in to separate services. BPDB started

generating power; transmission responsibility was given to PGCB. BPDB used to

responsibility of distributing power in Dhaka was given to Dhaka Electric Supply

(DESCO) and provided the responsibility of electricity distribution in Mirpur, Gulshan,

Baridhara and Uttora area of Dhaka. (Banglapidia, retrieved from

plans of Bangladesh recognized the necessity of electrifying rural area. To increase

economic growth, employment generation, alleviation of poverty and to improve living

standard electrifying rural area is a very important component in the development

infrastructure. At that time, Bangladesh government engaged two consulting firms of

USA to carry out a comprehensive feasibility study on rural electrification in Bangladesh.

of 1977. The Board is a statutory Government organization with primary responsibility to

implement countrywide rural electrification. To achieve this objective of rural

model of Rural Electric Co-operatives in USA. For the commendable performance of

establishments in the rural areas. REB achieved an outstanding success in electrifying