1. 1 Bangladesh Development Forum-2004 Providing the Infrastructure to Support Growth and Development Presented by : Iqbal H. Mahmood, M.P. State Minister for Power Government of Bangladesh 10 May 2004

2. 2 Presentation Outline Introduction Power Sector Energy Sector Inland water transport, shipping and ports Telecommunications Rural infrastructure Conclusion

3. 3Introduction To achieve Millennium Development Goals (MDG’s) and poverty reduction, Bangladesh requires an economic growth rate of more than 7% Adequate infrastructure is a prerequisite for sustained high growth and development Government still plays predominant role Enhanced private sector participation is expected to boost infrastructure development

4. 4 Constraints to infrastructure development Poor management and inefficiency of the public sector infrastructure entities Inadequate resources, both financial and human Inadequate infrastructure coverage has constrained economic growth

5. 5 Sectoral share of GDP in FY 2003 Agricultural share is decreasing Industry and service sector is increasing Shares of other sectors remained relatively stable Infrastructure support is needed for faster growth in industry and service sector

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7. 7 Power Sector Electricity is a key infrastructure for economic and social development Power the most important pre-requisite for attracting both domestic and foreign investment GOB committed for providing affordable and reliable electricity to all citizens by 2020 Scarcity of resources hinders development of the sector

8. 8 GDP & Electricity Growth  For the last 10 years, electricity growth rate was 7.5% p.a in line with the GDP growth rate around 5%  To achieve more than 7% growth rate, availability and accessibility of electricity is the prime requirement

9. 9 Long Term Goals of Power Sector to promote and support Economic & Social Development To make electricity available for all by the year 2020 To make electricity available for all by the year 2020 To ensure reliable and quality supply of electricity To ensure reliable and quality supply of electricity To provide electricity at a reasonable and affordable price To provide electricity at a reasonable and affordable price Government Vision

10. 10 Generation capacity to be increased to 17,500 MW in 2020 Generation capacity to be increased to 17,500 MW in 2020 Gas, prime fuel for power generation provides a special window of opportunity Gas, prime fuel for power generation provides a special window of opportunity Policies and practices must ensure capital flow Policies and practices must ensure capital flow Mix of concessional capital and FDI Mix of concessional capital and FDI More private sector participation More private sector participation Reforms, restructuring and regulation for sector efficiency Reforms, restructuring and regulation for sector efficiency To materialize Vision

11. 11 Major Events in Power Sector Reform Policies National Energy Policy (NEP) in 1996 Private Sector Power Generation Policy in 1996 Policy Guidelines for Small Power Plants in Private Sector in 1998 Vision Statement and Policy Statement on Power Sector Reforms in 2000

12. 12 Major Events in Power Sector Reform contd. Sector Restructuring Through Unbundling Creation of PGCB in 1996 Creation of DESCO in 1996 Corparatization of Ashugonj Power Station in 2002 Creation of West Zone Power Distribution Company (WZPDC) in 2003 Energy Regulatory Commission Act in 2003 Cabinet approval to convert BPDB into a Holding Company 2004

13. 13 Past Reform Experience Reform result so far could not be achieved at a desired level due to absence of Efficient Management Commercial and corporate culture Financial and business plan Proper human resource development plan Authority and accountability Support service in initial period

14. 14 Lessons Learned and Future Strategy Comprehensive and Integrated reform program for successful implementation Management contract for new entities Strategic partner from local entrepreneurs for new entities Private participation through stock market Human Resource Development (HRD)

15. 15 Power Sector : Reform & Restructuring program Generation Bangladesh Power Development Board (BPDB) be converted into a holding company under companies Act The existing generating stations of BPDB be converted into a number of corporatized entities under BPDB holding company Direct Foreign Investment will be encouraged New power plants be setup under Joint Venture, Commercial Bank loan, Own financing and fund collection from Stock Exchange alongside IPPs.

16. 16 Power Sector : Reform & Restructuring program Transmission PGCB will remain responsible for transmission business in the whole of BangladeshDistribution BPDB distribution segment be converted into a number of subsidiary companies under BPDB Holding Company DESA be converted into a corporatized entity Palli Bidyut Samities (PBSs) will mainly continue its business in the distribution areas but at the same time will have their own generation to meet growing demand under Rural Electrification Board (REB)

17. 17 Power Sector : Reform & Restructuring program Industry & Market Structure Power Sector will be fully restructured and commercialized Multiple/Competitive pool market structure will be established An Independent System Operator (ISO) will be established for economic/merit order dispatch of electricity

18. 18 Power Sector: Future Development Plan At a glance Description2003 200720122020 1. Installed Capacity (MW) 47106716984017500 2. Peak Demand (MW) 36225368788714600 3. Net Generation (MkWh)18458266513915779250 4. Transmission Line (km)38595966928113921 5. Grid Substation Capacity 230/132 kV (MVA) 370072701252021284 132/33 kV (MVA) 699591621271919078

19. 19 Power Sector: Future Development Plan Description2003 200720122020 6. Distribution Line (km)209932266962346173519259 7. Nos of Consumers (ml) 7.19.012.524.30 8. No. of Village Electrified 41814519006340084000 9. Per Capita Generation (kWh) 144190260470 10. Access to Electricity 32%47%65%100% 11. Investment Requirement- 3.604.507.00 (bl US$) (2004-07) ( 2008-12) (2013-20) (bl US$) (2004-07) ( 2008-12) (2013-20)

20. 20 Power Sector : Expected Source of Finance SourceShort Term upto 2007 (USD in Billion) Mid Term From 2008 to 2012 (USD in Billion) Long Term From 2013 to 2020 (USD in Billion) Total upto 2020 (USD in Billion) Govt. and Utilities 1.30.81.03.1 Private Sector 0.52.54.07.0 Development Partners 1.81.22.05.0 Total3.64.57.015.1

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22. 22 Energy Sector Growth

23. 23 Historical Gas Sales by Sector

24. 24 Strategy to meet gas demand IOCs for exploration and development Exploration and development through BAPEX using own resources Development of gas fields through public and private sector participation

25. 25 Investment Requirement during 2003/04 – 2007/08 (Short Term)

26. 26 Investment Requirement during 2008/09 – 2010/11 (Mid Term)

27. 27 Investment Requirement during 2011/12 – 2020/21 (Long Term)

28. 28 Diversification of Energy Development activities to reduce import dependence on oil Development of coal Extensive extraction of NGL and LPG NGL and LPG Plant in Private Sector Extensive development of CNG

29. 29 Reform measures Energy Regulatory Commission (ERC), already operative Gas sector companies under Petrobangla given full authority Key officials of three companies of Petrobangla appointed on market based package Petrobangla’s role is being redefining Approval and implementation procedure for self financed development projects have been simplified

30. 30 Privatisation CNG opened to private sector NGL plant is in the process of giving to private sector Offloading of shares through stock exchange are under process Private sector participation in Transmission and Distribution of gas is under process.

31. 31 Energy regulatory commission ERC already made functional Two commissioners recently appointed Chairman likely to be appointed very soon

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33. 33 Inland Water Transport Bangladesh is a riverine country located in between Himalayan range and Bay of Bengal Major rivers of Bangladesh originated in China, Nepal and India. In Bangladesh, there are 700 rivers including 4 major rivers Introduction

34. 34 Inland Water Transport Bangladesh Inland Water Transport Authority (BIWTA) maintains physical infrastructure 11 river ports and 230 passenger vessel routes About 14,000 km navigable waterways Only 6% water transport supported by BIWTC in public sector and 94% is supported by private sector. Major regulatory role played by BIWTA Present Scenario

35. 35 Constraints River ports suffer from non-availability of space Inadequate Passenger and cargo facilities Inadequate Rural landing facilities Inadequate container terminals facilities Inland Water Transport

36. 36 Inland Water Transport Government Policies Regarding Infrastructure development To develop a core network of main waterways as the life line for IWT To develop inland river ports and inland container terminals To develop appropriate rural landing stages by the public or the private sector Private sector participation in management, operation and maintenance of waterways will be encouraged

37. 37 Chittagong Port Introduction Chittagong Port Authority (CPA) is the major port of Bangladesh Handles almost 80% of sea-borne imports and 70% of exports and Mongla Port Authority (MPA) handles the rest The Port of Chittagong is committed to improve its efficiency and service through greater private sector participation

38. 38 Chittagong Port Constraints Inadequate capacity for carriage and operational inefficiency Siltation of the channels from anchorage to the port area, poses problems With the increased globalization of trade, port is facing more challenge to reduce its cost

39. 39 Vision by 2020 Serve as regional hub Development of port facilities on both banks of the river Karnaphuli Commercial activities will be unbundled in phased manner Play the role of facilitator and act as regulator Expansion of port facilities in new area Establishment of one deep draft port Chittagong Port

40. 40 Future Plan Construction of new ICD with the Joint collaboration of Bangladesh Railway Construction of one river based container terminal at Pangaon with BIWTA Capital dredging of the Karnaphuli River Introduction of Vassel Traffic Management Information System (VTIMS) in port Chittagong Port

41. 41 Chittagong Port Private Sector Involvement and Its Prospect More private sector participation in its operation is needed Creation of additional facilities will require huge investment New projects to be developed under Joint venture (preferably with local entrepreneur) or BOT or BOO

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43. 43Telecommunication Extremely low tele-density (only 20 per 1000 population) and tele-reach less than 10% of population BTTB is sole operator in land phone business with nearly 1 million customer Four mobile phone operators are working with more than 2.3 million customer Government is committed to expand telecom facilities by creating a competitive environment to overcome the ‘Digital Divide’ Introduction

44. 44 BTTB has joined SEA-ME-WE-4 consortium Bangladesh Telecom Regulatory Commission (BTRC) established in February 2002 Expansion of digital exchanges and Internet service to all districts. BTTB built 1375 km Optical Fiber Network in the last three years. Connection and call charge reduced significantly. Recent achievement Telecommunication

45. 45 Constraints Policy implementation is slow Tariff is still high Shortage of BTTB network capacity Official policy thrust on IT, without suitable telecom infrastructure to support itTelecommunication

46. 46 Why Demonopolize BTTB ? To increase capital investment for network expansion To create competitive environment under regulatory regime To streamline and fast decision making by the new operators To maximize Tele-Reach

47. 47 Short and Medium Term program An alternate optical fiber network for the country that includes the existing optical fiber facilities belonging to the Power Development Board (BPDB) and Grameen Phone Setting up Internet Exchange and VSAT hub within the country National Long Distance (NLD) and overseas communication be opened to the private sector BTTB’s network and services arms be separated and restructured Demonopolize BTTB : Maximizing Tele-Reach

48. 48 The telecom services arm of BTTB be privatized Tariff reforms, tariff rebalancing and unbundling of local loop Introduction of innovative applications of high speed telecom and IT Long Term program Demonopolize BTTB : Maximizing Tele-Reach

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50. 50 Rural Infrastructure Infrastructure development in rural areas contributes to poverty reduction both directly and indirectly Main elements of rural infrastructure are :  Road  Markets/Growth Centers  Housing  Irrigation  Electricity

51. 51 Rural Infrastructure : Roads, Markets and Irrigation The rural areas are being served by metal and semi-metal road of 218 thousand km length About 2,100 markets are being developed as growth centers Most of the rural roads are built by LGED BWDB and LGED built barrages and small water structure for irrigation

52. 52 Rural Infrastructure : Roads and Markets  Quality of service is not satisfactory Reasons: Poor maintenance due to fund constraints inadequate drainage structure large number of gaps due to absence of bridges and culvert

53. 53 Rural Infrastructure : Roads and Markets Government has taken initiative to maintain and upgrade the existing network and undertake selective expansion to fill critical gaps to ensure rural-urban linkage

54. 54 Rural Infrastructure : Electricity Present Status Rural electrification is being implemented under the supervision of Rural Electrification Board (REB) through 67 rural electric co- operatives called Palli Bidyut Samities (PBSs) Presently, number of rural consumer is 4.7 ml (out of 7.1 ml) Number of village electrified is 41,418 (out of 84,000)

55. 55 Rural Infrastructure : Electricity Impact Poverty alleviation Poverty alleviation Irrigation development Irrigation development health care and family planning improvement health care and family planning improvement Education enhancement Education enhancement women empowerment women empowerment Rural Industry development Rural Industry development

56. 56 Continue rural electrification through REB/PBSs RAPSS program has been taken to provide electricity to the remote area RAPPS will cover the area where grid interconnection is not possible or too costly. Renewable Energy Solution will be given preference in RAPSS program. Rural Infrastructure : Electricity Future Program

57. 57  One of the major objectives of this Government is infrastructure development through sectoral reforms and increased public-private partnership  Government is committed to poverty reduction by undertaking development policies and programs that is both sustainable and gender sensitive  Efforts towards good governance and pro poor growth strategy shall continue

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