Inauguration of the 2x120 MW Siddhirganj Peaking Power Plant

Speech | 14 February 2010

Speech by Paul J Heytens, Country Director of ADB's Bangladesh Resident Mission, at the inauguration of the 2x120 MW Siddhirganj peaking power plant, Dhaka, Bangladesh

Your Excellency Prime Minister Sheikh Hasina, Honorable Ministers and Advisers to the Prime Minister, Distinguished Guests, Ladies and Gentlemen.

It is a great honor for the Asian Development Bank to attend this inauguration of the 2x120 megawatt Siddhirganj Peaking Power Plant today. The commissioning of this first power plant under the current Government is indeed an important milestone, which hopefully marks the beginning of the end of the current power shortages in Bangladesh. ADB wishes to congratulate the Government and its executing agency — the Electricity Generation Company of Bangladesh Ltd — for this fine achievement, which we are pleased to have been able to support through financial and technical assistance. This inauguration, coming on the eve of the Bangladesh Development Forum, also sends a very clear message to development partners of the Government's resolve to address the power situation.

As the largest development partner in the power sector, ADB is heartened that the Government of Her Excellency Prime Minister Sheikh Hasina has set improving the power situation as one of its top priorities. Bangladesh is currently faced with a 1,500 megawatt daily average power shortage during peak hours. Over the last 10 years, net energy demand has grown by around 9% annually, while average annual GDP growth was just under 6%. Though the demand-supply gap continued to rise, only a few plants have been operationalized in recent years, which has not been sufficient to meet the growing demand.

It is therefore reassuring that the Government has prepared a work plan with specific milestones to achieve its ambitious targets in the power sector. In order to reduce the shortage in base load generation, a number of similar new power plants need to be commissioned very urgently. But for this to be a reality, the procurement process for constructing new power plans will have to become more transparent and efficient, and sector reforms will have to be accelerated.

In addition to utilizing captive power, reducing the power gap in the shortest possible time will require a reduction in system losses, more efficient load management, and urgent attention to maintenance of the power stations. A reinvigoration of the Independent Power Producer (IPP) program could also be targeted as a cost-effective measure to improve the power situation in the long run, and regular tariff adjustments are another essential step to ensure the sustainability of the sector.

Further, it will also be very important to take advantage of the recent agreements to improve regional connectivity to establish cross-border interconnections of power grids in South Asia. Finally, the scope for introducing energy saving devices and exploiting renewable energy, such as solar and biomass, should also be further explored—in the latter case also as an option to bring power to households in off-grid areas.

Although substantial reforms have been initiated over the past 10 years, the power sector has a long way to go to fulfill the country's power supply requirements. The reform process needs to be accelerated to further expand power generation capacity and reduce the cost of supply through greater public and private sector participation, for the benefit of the entire economy. Further corporate and financial restructuring, reducing outstanding dues from the Government to the sector entities, progressive adjustment of power tariffs, and steps to ensure efficient management of the corporatized power entities are also critical in addressing the imminent challenges.

ADB has long been supporting the Government in its efforts to provide reliable electricity to the country, focusing on transmission, distribution, and construction of peaking power plants and helping the Government to carry out specific reforms, and is keen to assist Bangladesh in setting up more new plants and expanding transmission and distribution networks. Over the next three years, ADB plans to provide another $800 million in financial support for the power and energy sectors. This is on top of the support we are currently providing to help the Government develop 150 megawatt power plants in Khulna and Sirajganj, construct the National Load Despatch Center, establish the country's first high capacity 400 KV transmission line from Meghnaghat to Aminbazar, and improve distribution systems in DPDC and DESCO, among other areas of support.

Honorable Prime Minister, Honorable Ministers and Advisers to the Prime Minister, Ladies and Gentlemen: Let me conclude on a note of optimism that Bangladesh will succeed in its efforts to become a middle income country, with poverty halved, by 2021. To realize this vision, the country needs to build on the important foundation of this new peaking power plant by delivering results through timely implementation and completion of development projects in all sectors. We are optimistic about Bangladesh's future and stand ready to continue assisting Bangladesh in unlocking the country's development potential.

Thank you.