October 27, 2008
Bangladesh needs to immediately solve persistent and widening electricity shortages to achieve a key millennium development goal (MDG) of halving poverty by 2015, a World Bank report said.
 | No PowerA woman lies ill in a Dhaka refugee camp after electricity supply was cut off. (Photo: Reuters) |
More than 40 percent of Bangladesh's nearly 150 million people are poor, or living on less than 1 dollar per day, it said. "Electricity persists as a major barrier for the business community and electricity supply has struggled to keep up with demand spurred by solid economic growth," the report said.
Per capita electricity generation in Bangladesh increased to 155 KWh in 2007 from 143 KWh in 2004, yet it has remained among the lowest levels of power generation in the world, the report said.
"Pervasive power outages rob the country of 2 percentage points of national growth... Firms in metropolitan areas estimated that they lost 11.7 percent of sales value due to electricity outages, up from 3.4 percent in 2002." While overall capacity in the country amounts to 5,300 MW, only about 4,400 MW of that can be used. Since peak demand consistently exceeds 5,000 MW, there are pervasive power cuts and surges.
The World Bank in association with state-run Board of Investment (BOI) prepared the report on Bangladesh's investment climate. It identified political instability, weak governance and access to lands and finance as top investment constraints.
The lack of a stable power system has caused a boom in generator sales in the past three years. Firms estimate they have to rely on their own generators for about 28 percent of the electricity they consume.
Generators represent a considerable investments, at 5.3 percent of a firm's total fixed assets at book value on average. "For continued growth and prosperity, Bangladesh must focus on issues such as adequate electricity supply...," said Zafrul Islam, acting country director of the World Bank in Bangladesh.
Bangladesh's economy has grown around 6 percent in the last five years. Kamal Uddin Ahmed, the chief of BOI, said that if they could ensure a reliable power supply then investment growth in the private sector could rise to 25 percent from nearly 17 percent now and help promote economic growth rates of 7 percent to 8 percent, a target set by the MDG.
editor: Reuters
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