Power Industry in Bangladesh

 

Power Industry in Bangladesh

Why Bangladesh:

  • Bangladesh has initiated a Power and Energy Sector Development Roadmap (2010-2021) which targeted to produce 8,500 MW by 2013, 11,500 MW by 2015 and 20,000 MW by 2021.
  • Only 47% of the total population of Bangladesh is enjoying the electric facilities.  
  • Per capita generation is 220 KW hr which is comparatively lower than other developed countries in the world
  • Public and private sector produces 63% and 37% of electricity respectively.
  • Govt. encourages Foreign Investors in this sector  with different  incentives.

Fiscal incentives for private power companies

A number of fiscal incentives are provided to the private power companies. Some of them are as follows:
  • Exemption from corporate income tax for a period of 15 years.
  • Allowed to import plant and equipment and spare parts up to a maximum of ten percent (10%) of the original value of total plant and equipment within a period of twelve (12) years of commercial operation without payment of customs duties, VAT and any other surcharges as well as import permit fee except for indigenously produced equipment manufactured according to international standards.
  • Repatriation of equity along with dividends allowed freely.
  • Exemption from income tax for foreign lenders to such companies.
  • The foreign investors will be free to enter into joint ventures but this is optional and not mandatory.

Source: Private Sector Power generation Policy of Bangladesh, Ministry of Power, Energy and Mineral Resources

Facilities and incentives for foreign investors

There are number of facilities and incentives would be provided to the foreign investors. Some of them as follow:
  • Tax exemption on royalties, technical know-how and technical assistance fees, and facilities for their repatriation.
  • Tax exemption on interest on foreign loans.
  • Tax exemption on capital gains from transfer of shares by the investing company.
  • Avoidance of double taxation case of foreign investors on the basis of bilateral agreements.
  • Exemption of income tax for upto three years for the expatriate personnel employed under the approved industry.
  • Remittance of up to 50% of salary of the foreigners employed in Bangladesh and facilities for repatriation of their savings and retirement benefits at the time of their return.
  • No restrictions on issuance of work permits to project related foreign nationals and employees.
  • Facilities for repatriation of invested capital, profits and dividends.

Source: Private Sector Power generation Policy of Bangladesh, Ministry of Power, Energy and Mineral Resources


Power industry development plan

In order to realize the government’s vision to provide electricity to most of the population at a reasonable price and to achieve overall socio-economic development of the country, the government of Bangladesh has initiated a Power and Energy Sector Development Roadmap (2010-2021) which targeted to produce 8,500 MW by 2013, 11,500 MW by 2015 and 20,000 MW by 2021. However, to ensure overall and balanced development of this sector government has taken immediate plan (2010), short-term plan (2011), medium-term plan (2012-2015) and a long-term development plan (2016-2021). The plans have been developed based on a techno-economic analysis and a least-cost option. These plans include balanced development in generation, transmission and the distribution system to achieve a desired level of reliability of supply. A summary of the development plan is given as follows:


Immediate plan (2010)

According to the immediate plan, short term implementable (six to twelve months) liquid fuel based quick rental power stations will be established through private sector. In the first phase, 3 power plants with a capacity of 360 MW each are implementing in different places of the country and are expected to initiate by 2010. However, capacity of 1,000-1,200 MW quick rental power stations will be expected to establish  by 2010 and by early 2011. Meanwhile, power plant with a capacity of 432 MW is implementing privately.


Short term plan (2011)

According to the short-term plan, liquid fuel based 12-24 months of implementable power stations will be established. However, government has initiated to implement a power station with a capacity of 920 MW.


Midterm plan (2012-2015)

Under this plan, government has taken into account to establish 3 to 5 years of implementable coil based power stations with a capacity of 2,600 MW to the total capacity of 7,714 MW.


Long term plan

As of the Power and Energy Development Roadmap (2010-2021), government expects to meet the desire destination (20,000 MW by the year 2021) through the increment of 10% production per year towards reaching the per capita consumption to 600 Kw.
Source: Board of Investment, Bangladesh.
Bangladesh is steadily climbing up the development ladder. Energy and power needs to act as a key catalyst in helping Bangladesh in this endeavor. Industries are being automated and the country is gradually moving from a labor-intensive economy to a capital intensive one. Electricity and power are vital to the nation at such a stage. Bangladesh has a vast market as far as power and electricity is concerned and good prospects for constructing power generation plants exist in the country in terms of resources available and government policies.