Sector Assistance Program Evaluation for Bangladesh Energy Sector
Bangladesh has made tremendous strides in improving energy provision to its people in recent years. Electrification increased to cover about 37% of the population by 2008, from just 10% in 1994, while electricity consumption increased more than 100% during 1998-2008. ADB has played an influential role in the progress of reform in the energy sector behind these improvements.
Yet, power shortages in Bangladesh increased during 2002-2008 due to insufficient investment in power generation and failure to attract new investments from the private sector as demand for power has surged.
This study examines the effectiveness of ADB-funded projects in the energy sector in Bangladesh. During 1993-2008, ADB approved $1.7 billion of financial assistance to the sector. Overall, ADB's energy sector assistance to Bangladesh is rated successful.
The study notes the review period was marked by persistent power shortages and a critical shortage of base load capacity, and it points out that major ADB and World Bank funded investments in progress (in 2009) would not help solve this problem. In addition, the policy of relying on the private sector to develop independent power producers for base load capacity while providing development partner support for peaking plants has not proved successful.
The study's recommendations include a suggestion that ADB could support Bangladesh in undertaking a comprehensive energy pricing study through its newly created energy regulator; and explore opportunities to finance projects to improve end-user energy efficiency to address low efficiency in power plants run by the Bangladesh Power Development Board.