Bangladesh Power Development Board

Introduction:

Electricity is the major source of power for country's most of the economic activities. Bangladesh's installed electric generation capacity was 4.7 GW in 2009; only three-fourth of which is considered to be ‘available’. Only 40% of the population has access to electricity with a per capita availability of 136 kWh per annum. Problems in the Bangladesh's electric power sector include corruption in administration, high system losses, delays in completion of new plants, low plant efficiencies, erratic power supply, electricity theft, blackouts, and shortages of funds for power plant maintenance. Overall, the country's generation plants have been unable to meet system demand over the past decade.

In generating and distributing electricity, the failure to adequately manage the load leads to extensive load shedding which results in severe disruption in the industrial production and other economic activities. A recent survey reveals that power outages result in a loss of industrial output worth $1 billion a year which reduces the GDP growth by about half a percentage point in Bangladesh. A major hurdle in efficiently delivering power is caused by the inefficient distribution system. It is estimated that the total transmission and distribution losses in Bangladesh amount to one-third of the total generation, the value of which is equal to US $247 million per year.

Company Profile: (Bangladesh Power Development Board)

Bangladesh Power Development Board (BPDB), established in 1972, is the authority for planning, construction and operation of power generation and transmission facilities throughout Bangladesh and for distribution in urban areas except metropolitan city of Dhaka and its adjoining area.

In the recent past a number of Generation and Distribution companies have been created under the reform programme.

Ashuganj Power Station Company Ltd. (APSCL), Electricity Generation Company of Bangladesh (EGCB), North West Power Generation Company Ltd. (NWPGCL) and West Zone Power Distribution Company Ltd. (WZPDCL) have already started functioning as company under BPDB.

The BPDB is responsible for major portion of generation and distribution of electricity mainly in urban areas of the country. The Board is now under the power Division of the ministry of power, Energy and Mineral Resources.

Page | 1

With the aim to provide quality and reliable electricity to the people of Bangladesh for desired economic and social development, the power system has been expanded to keep pace with the fast growing demand.

History of BPDB:

At the time of partition of Indo-pak sub-continent, in the year 1947 when the British colonial rulers left, power generation and distribution of this part of the country were in the hands of some private companies. The power supply to then 17 provincial districts was within the township in a limited way. The generation voltage was 400 volts. Power used to be supplied to most of the districts during nighttime only. Only exception was Dhaka City where power used to be supplied by two 1500 kW generators and the generation voltage was 6600 volts and this was the highest supply voltage. There was no long distance transmission lines. Besides power used to be generated by some industries (tea, sugar and textiles) and railway workshops. Dhakeswari Cotton Mills, Pahartali Railway workshop, Saidpur Railway workshop and Sugar Mills were amongst them. In aggregate the generation capacity of the country was 21 MW. The generation capacity of the power utility companies together was only 7 (seven) MW and there was no transmission system.

In 1948, Electricity Directorate was created in order to plan and improve power supply situation. In 1959, Water and Power Development Authority (WAPDA) was created and the power sector really started working satisfactorily. In 1960, Electricity Directorate was merged with WAPDA. The basic philosophy was to give more autonomy to an organization for development of this basic infrastructure. At that time relatively higher capacity plants were built at Siddhirganj, Chittagong and Khulna (highest plant size was only 10 MW Steam Turbine at Siddirganj). At the same time Kaptai dam was under construction under Irrigation department. Unit size of Kaptai was 40 MW, which for that time was considered to be a large power plant. Side by side construction of Dhaka-Chittagong 132 KV transmission line was in progress. Construction of Kaptai dam and commissioning of Dhaka-Chittagong 132 KV transmission line in the year 1962 may be taken as milestone of power development of this country. In 1972, after the emergence of Bangladesh through a bloody War of Liberation as an independent state, Bangladesh Power Development Board (BPDB) was created as a public sector organization to boost the power sector. During mid 1970s government emphasized on the rural electrification for achieving a desirable social upliftment in the country. A different approach and a new model was considered for undertaking a comprehensive scheme. Thus the Government created Rural Electrification Board (REB) in October 1977. Later in 1991 Dhaka Electric Supply Authority (DESA) now DPDC was created basically to operate and develop distribution system in and around Dhaka (including the metropolitan city) and bring about improvement of customer service, collection of revenue and lessen the administrative burden of BPDB. Public investments and state ownership have been the traditional means to exercise

Page | 2

control over the electricity sector. Government regulated the natural monopoly of power supply primarily to protect the consumer’s interest. The situation is fast changing. Structural changes are taking place and new corporate characters are emerging. The gradual expansion of the infrastructure has also been justified by the need for realizing social goods relating to rural electrification and low.

As on June-2010, in FY 2009-2010, BPDB has total installed capacity of 5823 MW at 88 units (BPDB 3719 MW at 50 Unit and IPP,SIPP & Rental at 38 units) of Power Plants located at different parts of the country. The main fuel used for power generation is indigenous gas. Total 17,079 Gwh gross energy was generated in the public sector power plant under BPDB. In addition, total 11,327 Gwh of energy was purchased by BPDB from Independent Power Producers (IPP, SIPP & Rental) in the private sector. The maximum demand served during peak hours is 4698.5 MW in August 20, 2010. The transmission network is 8465 ckt km long comprising 230, 132 and 66 KV lines. The total numbers of grid sub-stations are 108 and the total capacity is 16,749 MVA as on June-2010 .

In FY 2010-11, BPDB had about 12,516 employees of which 2,362 were of supervisory level (holding positions of sub-assistant engineer or higher or equivalent ) as on 05/05/2011.

Vision Statement:

BPDB's vision is to provide quality and reliable electricity to the people of Bangladesh for desired economic, social and human development of the country undertaking institutional and structural reforms leading to the creation of a holding company.

Mission Statement:

To deliver quality electricity at reasonable and affordable prices with professional service excellence.

To make electricity available to all citizens on demand by the year 2020.

To provide specialized skilled services in Operation and Maintenance with outstanding performance in Generation, Transmission and

Distribution for promoting competition among various power sector entities.

To follow international standard and adopt modem technology and practices in power generation activities.

To ensure improved and satisfactory services to the consumers.

To develop new mindset for all of its employees congruent with the corporate culture.

To reach self sufficiency by increasing of its income and reduction of expenditure.

Page | 3

Product/Service Line:BPDB is responsible for distribution of electricity in most of urban areas in Bangladesh except Dhaka Metropolitan City and its adjoining areas under DESA and DESCO, areas under West Zone Power Distribution Company Limited (WZPDCL) and some of the rural areas under Rural Electrification Board (REB).

At present only 42.09% of the population is served with electricity and per capita electricity consumption is only 169.92 Kwh (FY -2006).

Presently BPDB's distribution network is comprising of 33 KV, 11 kV and 11/0.4 KV lines.Total distribution line in the country is about 2,09,932 km of which 46,599 km belongs to BPDB and total number of consumer of different category is about 15,18,891 at the end of FY 2006.

Followings of the Distribution Zones of BPDB:

Chittagong

Comilla

Sylhet

Mymenshing

Rajshahi

Rangpur

The Electricity Value Chain:

Page | 4

Management Overview:

The Board:

BPDB Structure:

Page | 5

Chairman A. S. M. Alamgir Kabir

Member (Generation) Md. Abul Qashem

Member(P & D)Tamal Chakraborty

Member

(Distribution)

Md.Abduhu Ruhullah

Member(Administration)Md. Humayun Kabir Khan

Member(Finance)MD. Fazlul Hoque

MemberAdministration

Member Finance: Page | 6

Strategy Analysis:

Average Cost of Power Generation :

The cost of power generation comprises the cost of

the three power station companies spun-off from BPDB: Ghorasal Power Station Company, EGCB; and BPDB Generation;

Ashuganj Power Station Company; and the various IPP’s (existing ones as well as additions).

The Single Buyer purchases the electricity from the various generators at the bulk generation tariff set out in power purchase agreements between the generation companies and the Single Buyer.

The projections show that the cost of net generation will have to increase by some 27% in nominal terms from the present level of TK 1.835 per kWh (not considering the cost of transmission losses) to TK 2.32 per kWh to reach a full cost recovering level. As shown in Figure

Page | 7

below, the specific net generation cost increase in nominal terms up to the projection year 2012 to a level of TK 3.13 per kWh. From then on they remain relatively constant for the coming years.

1.835

2.32

2.522.61

2.752.87

3.043.17 3.15 3.20

3.11

1.835

2.16 2.21 2.18 2.20 2.20 2.23 2.222.11 2.06

1.91

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

TK

/ k

Wh

Cost of net generation (nominal) Cost of net generation (real, 2005)

Total average end-use customer tariffs:

The present end-use customer tariffs are distorted and too low to provide a financially solid basis for commercially successful operation of the power sector.

As shown in Figure below the average end-use customer tariff needs to be increased from TK/kWh 3.43 by some TK/kWh 1.22 (or 35.6%) to TK/kWh 4.65 to achieve cost recovery across the power sector in the first projection period. In the following years up to 2012 a further increase to TK/kWh 5.81 is projected. After that the tariff will decrease slightly towards the end of the projection period.

Page | 8

3.43

4.654.94

5.155.40 5.54

5.73 5.81 5.69 5.665.43

3.43

4.33 4.33 4.30 4.32 4.24 4.19 4.073.82

3.633.34

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

TK

/ k

Wh

Average End-use CustomerTariff (nominal) Average End-use CustomerTariff (real)

Future 5 years strategic planning:

The Ministry of Power and Energy has been mobilizing Tk 40,000 crore ($5.88 billion) to generate 5,000 MW of electricity to reduce load shedding into a tolerable level within next four and half years during the term of the present government. The PDB would hire furnace-oil based 1,000MW of electricity from private sector from January to June 2010, the plan said. In 2011, the government would install furnace-oil based 800 MW capacity of power plant. The PDB officials would seek suitable place to establish the plant, a senior official of the PDB said. Besides the government would also hire another diesel or furnace oil based power plant having capacity of 700 MW in 2012 to keep load shedding into mild level, the official said. However, the government also contemplates to establish four coal-fired based power plants with capacity of producing 500 MW of electricity each with public and private partnership (PPP) in Rajshahi and Chittagong region. The government has initially tried to create fund of Tk 6,000 crore ($1 billion) to implement the plan. The power division has tried to utilize the government's budgetary allocation of Tk. 2000 crore for PPP in this regard. "If we can create the fund of Tk. 6,000 crore, it would be possible also to mobilize Tk 40,000 crore under ppp to produce 5,000 MW of electricity within four and half years," PDB chairman ASM Alamgir Kabir told the New Nation on 29 June 2009. During the meeting, Prime Minister Sheikh Hasina permitted the power division to implement the PDB plan to reduce load shedding up to a tolerable level.

Page | 9

Nuclear Power Generation:

Nuclear power is produced by controlled (i.e., non-explosive) nuclear reactions inside are a reactor in a process called fission. Commercial and utility plants currently use nuclear fission reactions to heat water to produce steam, which is then used to generate electricity. The government of Bangladesh’s wants to set up a nuclear power plant to meet Bangladesh’s escalating demand for electricity to maintain her Socio-Economic Development. The Government of Bangladesh has already got the permission from IAEA, and has acquired land in Rooppur and hopes to finish construction on the first unit by 2015. Bangladesh Atomic Energy Commission’s activities are now limited in research activities. If we can complete this project it will be possible for us to overcome our constant power crisis (also known popularly as “load shedding”)

Distribution Planning:

For the development of distribution system in the urban areas, BPDB takes different Town Distribution Projects. Before taking any Town Distribution Project, a study is conducted to asses different types of works required for the development. Similarly Rural Electrification Board develops distribution system in the rural areas through different Rural Electrification Program.

The objective of distribution planning is to assure that the growing demand for electricity in terms of increasing growth rate and high load density can be satisfied in an optimum way.

Distribution planning starts at customer level. The demand, type, load factor and customer load characteristics dictate the type of distribution system required. The most important considerations for short term planning are:

Minimizing the cost of laterals, feeders, sub-transmission systems, substations, equipment required for control and protection and cost of losses while respecting the limits set by permissible voltage values, voltage dips and flicker

Maintaining service continuity, reliability and security of the system

Taking into account factors like transformer impedance, insulation levels, availability of spare transformers and mobile substations, dispatch of generation and rates that are charged to customers

For long term planning, the factors that are to be considered are:

The timing, location and type of energy demand

The duration and frequency of outage of equipment

Page | 10

Labor and money

Increasing fuel costs

Increasing or decreasing prices of alternative energy sources

Changing socio-economic conditions

Regulations of Federal and State governments

Distribution planning involves various activities like load forecasting (type, location and amount), electrical and mechanical design, economic and other considerations in planning. Automation has also become important in distribution planning.

Indicative Operational Performance Targets:

Indicative Financial Performance Targets:

Page | 11

Environmental Consideration:

Due consideration is given to the basic environmental requirements of the overall planning methodology of BPDB. Principal considerations are the amount of stack gas and cooling water emissions from thermal plants, and it is ensured that transmission line corridors do not infringe on any known protected areas. However, the non-mechanized farming practices in Bangladesh are generally such that once line construction is completed, active farming resumes directly under the lines, and often between the legs of individual towers. Recognizing also that there is a growing shortage of farmland in Bangladesh, an effort is made to redevelop existing sites wherever possible.

Lessons I have learned while preparing the report:

The lack of capital investment is a symptom of more fundamental problems within the sector. Specifically, tariffs and Government subsidies are inadequate to recover the cost of supply, and the overall cost of supply itself is high due to excessive losses and other inefficiencies. The current situation is summarized in Exhibit below:

Page | 12

Unless the government improves gas supply to the existing and emerging power plants, load-shedding scenario will turn worse throughout this year. The total gas shortfall in the power sector will be 340 million cubic feet per day (mmcfd) this year. If this gas could be ensured, the Power Development Board (PDB) would be able to generate and supply around 4,900 megawatt (mw) power and keep another 600MW under maintenance, enough to make the country happy. But that is not happening.

Nuclear power station is very efficient but their initial building cost is very high and their fuel is not available in Bangladesh. The fuel of this power station has to import from abroad. The most concerning of this power station is the safety. That is, before building this power station we have to ensure 100% safety because if any accident occurs, its effect exists for long time. Radioactive dust is very harmful for human being and also for other animals.

Short-term quick solution for power crisis may be installing "genuine" rental power plants without patronizing any business groups.

Conclusion:

Constant power crisis is one of the main problems for Bangladesh to attain the projected goals of its socio-economic development. But due to limited indigenous energy sources it is not

Page | 13

possible to increase electricity production. The Government is trying to improve the current power shortage but have not been successful in this endeavor as we are also facing a shortage in the supply of natural gas which is the key element in fuelling our power stations. Moreover, a lot of the power from the cities is being diverted to the villages where the rice plantations need constant irrigation by means of water pumps. This is also very important if we are to have some semblance of food security. This is why the Government of Bangladesh are seriously considering the issue of procuring civilian nuclear technology in order to provide the nation with a nuclear power generation plant for consistent electricity supply. To strive to fulfill this dream of a nuclear power plant, over the last four decades our scientists in the nuclear energy field have been working to overcome the crisis of electricity. But limited strategic resources and financial constraints are the major obstacles in the way of nuclear energy for Bangladesh.

However the overall power crisis situation and the constant efforts to the scientist has compelled the government of Bangladesh to take a decision of establishing a nuclear power plant in the country. A feasibility study has been made which has clearly identified the nuclear option as appropriate and viable for the country. A site at Rooppur has already been selected for the establishment of first nuclear power plant.

Page | 14