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Energy Procedia 110 (2017) 611 – 618

1st International Conference on Energy and Power, ICEP2016, 14-16 December 2016, RMIT
University, Melbourne, Australia

A review of energy sector of Bangladesh

Saiful Islam*, Md. Ziaur Rahman Khan
Bangladesh University of Engineering and Technology, Dhaka 1000, Bangladesh

Abstract

A brief overview of current electricity generation status and energy scenarios in Bangladesh has been presented in this paper. Being
a developing country, the electric energy demand in Bangladesh has been increasing at a significantly high rate. This demand is
fuelled by the sustained growth in GDP in recent years. Bangladesh Government has undertaken various projects to meet this
rapidly growing demand. New policies have been drafted to cope with the challenges in the energy sector. These policies are also
briefly discussed in this paper. The energy pricing issues are also touched. These policies will play a major role in ensuring energy
security and in turn sustainable development of the country.

©©2017
2017TheTheAuthors. Published
Authors. by Elsevier
Published Ltd. This
by Elsevier Ltd. is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the organizing committee of the 1st International Conference on Energy and Power.
Peer-review under responsibility of the organizing committee of the 1st International Conference on Energy and Power.
Keywords: Electricity, Energy; Energy policy; pricing; demand growth.

1. Introduction

With a population of 160 million, Bangladesh is one of the world's most populated countries. Agriculture used to
be the main source of income for the people of this country. However the Gross Domestic Product (GDP) in
Bangladesh was 7.05% percent in 2016. Bangladesh Bank forecasts that on 2017 the economic growth will be more
than 7% [1]. Rapid urbanization fueled by stable economic growth has created a huge demand of energy.
It is well known that energy plays a vital role in poverty eradication, economic growth, sustainable infrastructure
development and security of any country. In Bangladesh, electricity is the most widely used form of energy. So, future
economic growth significantly depends on the availability of electricity. Bangladesh Government should ensure

* Corresponding author.
E-mail address: sislamk@yahoo.com

1876-6102 © 2017 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of the organizing committee of the 1st International Conference on Energy and Power.
doi:10.1016/j.egypro.2017.03.193
612 Saiful Islam and Md. Ziaur Rahman Khan / Energy Procedia 110 (2017) 611 – 618

affordable and environmentally friendly source of electrical energy for the people. However, since its independence
from Pakistan in 1971, the country has struggled to generate adequate electricity to meet the demand. The state-owned
electricity utilities suffer from large energy shortages. Moreover, due to poor pricing policies and other bottlenecks,
the energy sector has also failed to attract adequate private investments in power business. This shortage of investment
is a contributing factor toward energy crisis.
The present government is committed to ensuring access to affordable and reliable electricity for all citizens by
2021[2]. At present, only about half of the population has access to electricity. The supply is also not adequately
reliable. The per capita energy consumption in Bangladesh is one of the lowest (311 kWh in 2014) in the world [3].
To improve the situation, the Government has adopted a comprehensive energy development strategy to explore
supply-side options along with demand management that conserves energy and discourages inefficient use [4]. The
key facts and reform in the energy sector of Bangladesh is explained here. Section 2 provides a history of the electricity
generation and growth in Bangladesh. Section 3 elaborates the country’s electricity sector plans, energy pricing policy
and other issues. Finally, Section 4 provides conclusions and recommendations.

2. Electricity Generation

Electrification of the capital city Dhaka began in 1901, only 19 years after New York and 13 years after London,
by the then Nawab Khwaja Ahsanullah [5]. Later, an Electricity Directorate was established in East Pakistan in 1948.
There were few Steam Turbines in Siddhirganj (maximum size 10MW), Chittagong and Khulna area at that time.
In 1962, 40 MW Kaptai hydro-electric project was installed a 132kV transmission line between Dhaka and
Chittagong was commissioned. In 1971, after the independence of Bangladesh only 3% of the population had access
to electricity. It has been increased to 59.6% in 2012 [6]. However, 79 % percent of the connected consumers suffer
from load-shedding, and 60% of the consumers face low voltage supply [7].
15
Capacity in GW

10

0
1995 2000 2005 2010 2015
Financial Year

Fig.1. Installed power generation capacity [10]

2.1. Installed Capacity in Bangladesh

The present installed electricity generation capacity in the country is just meeting the demand which is in ever
growing mode. This has happened after the strong efforts of the Government to raise the generation capacity through
installing new power stations through both public and private sectors.
In 1974-75, the installed electricity generation capacity was 667 MW [8] whereas in August 2016 it was 12780
MW including the 600 MW power import from India [9]. Fig. 1 shows the increase in installed capacity from 1990-
91 to 2015-16. It is evident from the figure that the capacity has grown rapidly over the last few years. Favorable
Government policies have attracted private investment and Independent Power Producers (IPP). They are now
producing 46% of total power in Bangladesh [10]. The country is also importing power from India.
 Saiful Islam and Md. Ziaur Rahman Khan / Energy Procedia 110 (2017) 611 – 618 613

On top of this, 2,650 MW, 2,027 MW, 2,763 MW, 2,811 MW and 3,812 MW power plants are expected to be
synchronized with the national grid by the end of 2017, 2018, 2019, 2020 and 2021, respectively. Major portion of
this power will be generated from coal based power stations. Unfortunately, the production cost could not be kept low
after the initiatives taken to quickly raise the capacity.

12

Demand in GW
8

0
1998 2002 2006 2010 2014
Financial Year

Fig. 2. Maximum Power demand in Bangladesh. [10]

2.2. Maximum Demand in Bangladesh

The maximum power demand in the country has always been increasing and the rate has increased over the past
couple of years. About one third of the total population still do not have access to electricity. The quality of power
cannot be maintained because of the shortage of generation and insufficient capacity and low quality of transmission
and distribution networks. The growth in maximum demand from 1994-95 to 2014-15 is shown in Fig 2. It is clear
from the figure that the demand increased rapidly after 2010. This is due to the fact that this demand actually represents
the demand of connected loads of the grid. The installed capacity also has similar trend in terms of increase.
The chance in percentage of energy consumption by different sectors from 2001 to 2015 is shown in Fig. 3.
Interestingly the domestic sector is the major consumer of electricity in recent time whereas the industrial sector used
to be major consumer in early part of this century. The Government efforts to improve the energy access results in
increase in energy consumption in for domestic sector.
60
Pencentage of Total Consumption

Domestic
Industrial

50

40

30
2005 2010 2015
Year

Fig. 3. Energy consumption [11]

614 Saiful Islam and Md. Ziaur Rahman Khan / Energy Procedia 110 (2017) 611 – 618

2.3. Distribution System Loss

System loss in a distribution system refers to both technical loss and non-technical/distribution loss which is
constituted by different process and forms. Distribution loss was 35.79% in 1990-91 which has been decreased to
11.17% in FY 2014-15. The above mentioned losses vary from entity to entity. This decrease in system loss happened
after the Government started to take various reform programs in power sectors over the last few decades. The
government is also planning to introduce regular third party performance audit to point out the deficiencies in the
system.

2.4. Existing Power Plants

Existing power plants of Bangladesh are mostly gas and oil fired types. Required oil has been imported from outside
countries. Gas has been taken from internal resources. At the moment, it is no longer possible to feed further Gas fired
power plants with the available gas. Apart from this, the Government understanding is to reduce dependency on these
two primary fuels and to go for alternate fuels.

2.5. Nuclear Power Plant

To meet the ever increasing demand of electrical energy in Bangladesh it has become essential to think about
Nuclear power plants (NPP). An Inter-Governmental Agreement (IGA) has been signed by Bangladesh and Russia in
2011 to install two units of 1200 MW each VVER nuclear power plant at Rooppur, Pabna. These units will be
manufactured and installed complying with all the post Fukushima safety features. In December 2015, a general
contract has been signed with EPC contractor to start the physical construction work. Rooppur NPP will be expected
to be commissioned by the year 2024. The life of the two new generation nuclear power plants will be 60 years. With
these features and with stable low cost fuel availability, it is expected that the cost of electricity will be competitive
though initial investment is very high. As nuclear power plant has no emission, it will help building low carbon society.

2.6. Coal Based Power Plant

The international price of coal is relatively more stable and has lower volatility compared with oil and natural gas.
Coal also has wider availability throughout the world and can provide a more diversified and stable supply. With this
understanding the Government has planned to set up coal based large base-load power plants. The plan is to produce
about 7,500 MW from coal based power plant by 2021.

2.7. Renewable Energy programs

Bangladesh Government has given strong drive to boost renewable electrical energy production. The government
has established Sustainable and Renewable Energy Development Authority (SREDA) to promote renewable energy
and energy efficiency in 2014. To strengthen international cooperation, Bangladesh became one of the initial members
of the International Renewable Energy Agency (IRENA), the only inter-governmental agency working exclusively on
renewable energy.
Currently renewable energy sources have a very low share of the total generation (<2%). The government of
Bangladesh is trying to encourage the use of renewable energy sources and formulated a renewable energy policy [12].
One of the main focuses of this policy is to scale up contributions of renewable energy to electricity production. The
initial goal was to generate 5% power from renewable energy sources by 2015 and 10% by 2020.
Because of the geographical characteristics of the country, most of the renewable energy projects are based on solar
PV technology. A state-owned development financial institution dedicated to promote/finance infrastructure and
renewable energy projects in Bangladesh named ‘Infrastructure Development Company Limited (IDCOL)’ has started
the solar home system (SHS) program in 2003 to ensure access to clean electricity for the electricity starved off-grid
rural areas of Bangladesh. The program supplements the Government’s vision of ensuring ‘Access to Electricity for
All’ by 2021. About 4 million SHSs have already been installed under the program in the off-grid rural areas of
 Saiful Islam and Md. Ziaur Rahman Khan / Energy Procedia 110 (2017) 611 – 618 615

Bangladesh till April 2016. As a result, almost 18 million beneficiaries are getting solar electricity which is around
11% of the total population of Bangladesh [13]. Solar PV based mini-grid projects are installed in remote areas of the
country where possibility of grid expansion is remote in near future. These projects provide grid quality electricity to
households and small commercial users and thereby encourage commercial activities in the project areas. So far,
IDCOL have approved 16 Solar Mini-Grid Projects, among which 7 are operational while the rest are under
construction. The mini-grid project has successfully created access to low- emission electricity for almost 5000 rural
households in Bangladesh. IDCOL has additional targets to install 50 solar mini-grid by 2018. IDCOL has approved
459 solar irrigation pumps of which 324 are already in operation [14]. The remaining pumps are expected to come
into operation shortly. IDCOL has financed solar powered solution for 138 telecom base transceiver stations (BTS) in
off-grid areas [13]. Fig. 4 shows a minigrid project funded by IDCOL.

Fig. 4. IDCOL Solar mini-grid project.

Bangladesh Power Development Board (BPDB) has also been installing solar based power plants in different areas
of the country. BPDB installed 900 KW capacity grid connected Wind Plant at Muhuri Dam area of Sonagazi in Feni.
Another project of 1000 KW Wind Battery Hybrid Power Plant at Kutubdia Island was completed in 2008 which
consists of 50 Wind Turbines of 20 kW capacity each. BPDB has plans to setup 7.5 MW off Grid Wind-Solar Hybrid
System with HFO/Diesel Based Engine Driven Generator in Hatiya Island, Noakhali [14]. Apart from that, IDCOL
has financed 9 bio-gas based power plants, having total capacity of 618 KW and two rice-husk based power plants
having total capacity of 650 KW in the country [13].

Table 1. Primary energy projection [15]

616 Saiful Islam and Md. Ziaur Rahman Khan / Energy Procedia 110 (2017) 611 – 618

2.8. Energy Sources

To combat the rapid growth in electricity demand, the government adopted a phased approach to power generation.
A 6-12 months program to generate electricity through liquid fuel based rental and quick rental power plants was
followed by a short term (18-24 months) option of liquid fuel based peaking plants. The role played in the short term
by small IPPs, contingency plants, and quick rental plants gave necessary relief for the interim period of three to five
years until large base-load projects and major plants can be installed and become operational.
Natural gas is the main energy source of Bangladesh and the power generation sector is heavily dependent on that.
In 2014 FY, 8,340 MW were generated using 337.4 BCF natural gas [16]. According to the Power System Master
Plan 2016, the gas production from the domestic gas field will reach its peak in 2017. The Government is trying to
meet the growing demand of natural gas by importing LNGs. The projection of primary energy for Bangladesh is
shown in Table 1.As can be seen from the table that coal will be used extensively for power generation in future.

3. Energy Policy and Pricing

3.1. Electricity Price and Subsidies

Proper price is essential for ensuring the uninterrupted quality supply of any product. This is especially true for
energy sector. But the higher energy price increases the living cost which is also important in a country like
Bangladesh. Because of that the Government provides subsidies in the energy sector. The subsidizing energy is
intended to support energy access for the poor. Energy subsidies are also considered important for key production
sectors, such as agriculture.
In Bangladesh, there are two types of electricity subsidies. The first type of subsidy is provided for the fuel in
electricity generation. This reduces the production cost of power. Subsidy is also provided by offering electricity tariffs
that are lower than production costs.
Low electricity cost has played a critical role in growth and development of the Bangladesh economy. Although
the per-unit supply cost of electricity has risen over time, the rate of increase is rather small. However, BPDB has
recently taken steps to install new power plants and to purchase electricity from independent power producers to meet
the growing demand of electricity. This results in an increase in the cost of electricity production.
Fig 5 shows the rise in electricity production cost in recent years. The cost has doubled in a 7-year time. Considering
the rising supply cost of electricity, the bulk electricity tariff rate has recently increased from 2.50Tk in 2007 to 3.8
Tk in 2015 to reduce BPDB‘s losses [17]. The Government has also introduced slabs in energy pricing so that the
subsidies can be reduced for the high end customers. If the system loss can be reduced to a lower value, the subsidies
can be reduced further. Optimization in generation, transmission and distribution System, transparency of the system
and proper training of the existing manpower is essential for reducing loss to the minimum.
7

6
Unit Proce (Taka)

2
2009 2011 2013 2015
Financial Year

Fig. 5. Power generation cost. [BPDB]

 Saiful Islam and Md. Ziaur Rahman Khan / Energy Procedia 110 (2017) 611 – 618 617

3.2. Energy Policies

Bangladesh has one of the lowest per capita energy consumption for the same per capita GDP of developed
countries. Table 2 shows the comparison of per capita power consumption with the GDP with some developing
countries. It can be seen that Bangladesh is producing more with less energy compared to these higher income
countries. So Bangladesh has the potential do better and achieve higher economic growth if the energy supply can be
ensured. Energy policies for the country plays an important role in this development. The Strategic Policies in the
energy sector are:
i. Fuel Diversification
ii. Private Sector Participation
iii. Harnessing Renewable Energy Resources
iv. Energy Efficiency & Conservation (EE&C)
v. Tariff Rationalization
vi. Regional Co-operation on Cross Border Power Trade

Table 2. Per capita energy consumption [16]

Bangladesh Government has planned to develop a deep-sea coal terminal at Moheshkhali / Materbari area for
handling large volume of imported coal for low cost power generation. Coal Trans-shipment Terminal (CTT) project
is also planned to supply coal to other imported coal based power projects, which are located near the load centres and
far from deep-sea coal terminal. The new coal based power plants will have super critical technology for improved
efficiency, reduce emission and less consumption of fossil fuel. The establishment of LNG terminal (Floating Storage
Re-gasification Unit (FSRU) / Land Based terminal subject to technical and economic feasibility) at Moheshkhali-
Materbari area is also planned to supplement gas supply to the gas based and dual fuel power plants. As cost of LNG
is high compare to coal, nuclear, it would be economical and prudent to use in the peaking power plants (simple cycle
gas turbine or gas engines) rather than combined cycle power plants, where overall gas consumption is high.
Bangladesh Government is also trying to follow ‘Private Sector Power Generation Policy of Bangladesh’ for
attracting private investment and ensure competitive price for power generation projects. A comprehensive road map
for harnessing renewable energy in Bangladesh is also planned to focus solar projects as cost of such is coming down
with time. Considering land scarcity in Bangladesh, rooftop solar PV projects might be attractive at the initial stage.
Large grid tied solar projects (more than 30MW) are also sectioned by BPDB to encourage the use of solar power. But
land scarcity and grid stability issues should be considered carefully before connecting such systems to the national
grid.
Energy efficiency and conservation are very important for sustainable development in the country. The government
has drafted an energy efficiency and conservation master plan up to 2030. It is expected that if 20% energy efficiency
improvement is achieved by 2030, the electricity demand will be reduced by 8GW compared to base value. This will
result in reducing fuel imports for power generation which means a saving of 2.3 trillion BDT between 2015 and 2030.
The yearly saving will be around 135 billion taka which is 15 of the GDP (2013) [18].
Cross Border Power Trade with neighboring countries can play an important role for ensuring energy security and
to meet future electricity demand in Bangladesh. At present, Bangladesh imports 600MW of electricity from India.
About 350MW is coming from the India's public sector while the remaining from the private sector. India is developing
a cross-border trade policy that will allow Bangladesh Power Development Board to have access to electricity from
618 Saiful Islam and Md. Ziaur Rahman Khan / Energy Procedia 110 (2017) 611 – 618

any Indian company in real time. The Government is also planning to import the unutilized hydropower resources in
Bhutan and Nepal.

4. Energy Research

Research and development in energy and power sectors is essential for sustainable development of the country. The
Government has established Bangladesh Energy and Power Research Council (BEPRC) to conduct the coordination,
monitoring and evaluation of research work in these sectors, Apart from that several departments and Energy center
of Bangladesh University of Engineering & Technology (BUET) and Energy Institute of Dhaka University are
involved in research related to Energy and Power in Bangladesh. The research areas include power system planning,
grid stability analysis, waster heat recovery, energy efficiency and renewable system design. Centre for Energy
Research of United International University is involved in research related to the Solar Photovoltaic systems. These
Universities are also involved in energy policy formulation and adaptation.

5. Conclusions

A brief review of the energy sector of Bangladesh is presented in this paper. Previous and current pictures of power
generation, electricity demand and fuel mix has been highlighted. Energy polices and subsidies are briefly presented
highlighting the future plans of the Government of Bangladesh. Bangladesh has attained development with a relatively
low per capita energy consumption compared to many other countries. Further Energy availability will be very
important for attaining Millennium Development Goals (MDGs).

References

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[6] M.Zakir Hossian Khan and M. Rasheduzzman, "Performance of the Power Sector of Bangladesh: Governance Failures and Remedial Measures"
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