Sixth Five Year Plan: Accelerating Growth and Reducing Poverty

Meta Data

Draft:

Revision of previous policy?:

Yes

Draft Year:

2011

Effective Start Year:

2011

Effective End Year:

2015

Scope:

National

Document Type:

Plan/Strategy

Economic Sector:

Energy, Power, Multi-Sector

Energy Types:

Coal, Power, Gas, Renewable, Hydropower

Issued by:

General Economics Division Planning Commission Ministry of Planning Government of the People’s Republic of Bangladesh

Notes:

See attached document for the full length text.

Source:

Planning Commission, Ministry of Planning, Bangladesh

File:

Sixth Five Year Plan: Accelerating Growth and Reducing Poverty

Overall Summary:

The adoption of the Sixth Five Year Plan: Accelerating Growth and Reducing Poverty, is part of the ambition of the Government to achieve solid development targets as part of the Vision 2021 and the associated Perspective Plan 2010-2021. Indeed, notwithstanding past progress, the Government recognizes that Bangladesh is still a low income country with substantial poverty, inequality and deprivation. The implementation of Vision 2021 will be done through two medium term development plans, with the first spanning FY11-15. The fifth plan is based on a balance between providing incentives to private sector and instituting regulatory policies for safeguarding public interests. In absolute terms, public investment would amount to 22.8%, whereas the Private Sector contribution would amount to 77.2% of total Plan investment. The Sixth Plan is divided into three parts. Part-1 addresses the Strategic Directions and Policy Framework; Part-2 explores Sectoral Strategies, Programmes and Policies and Part 3 provides for a Statistical Annex and Technical Framework.

Access

Energy access priorities:

Expanding access of the poor to primary and secondary energy sources through affordable pricing and targeted distribution. --- To improve the reliability and quality of electricity supply.

Energy access targets:

Access to electricity: 47% in 2010, 48.5% in 2011, 65% in 2015. --- Electricity coverage to be increased to 68 percent (FY11-FY15).

Clean cooking solutions:

Ban on the use of fuel wood in brick fields will continue and be made more effective and other modes of efficient use of energy will be promoted, e.g., improved cooking stove.

Consumer subsidies:

Social objectives like reaching out to the poor and rural community could be achieved through cross-subsidization as well as explicit budget subsidies.

Efficiency

EE priorities:

To increase the efficiency of energy use. --- GoB encourages increased energy and cost efficiency in the development and utilization of conventional energy.

EE targets:

To increase energy efficiency by 10%.

EE action plans:

To introduce ‘Energy Manager’ in energy consuming industries and ‘energy auditing system’ with a view to optimizing energy use.---Energy savings through demand side management i.e. shop closing times, staggering holiday in industries and shopping complex, replacing ‘incandescent lamp’ by CFL and reducing ‘air conditioning’ load.--- The Government is going to set up Sustainable Energy Development Authority (SEDA) to expand and develop renewable energy, to promote energy saving and energy efficiency and to create awareness among the users of electricity.--- BCSIR during the SFYP will centre on: Development of energy standard and ISO-17025 accredited instrumentation and calibration laboratories. --- Optimal utilization of natural resources such as gas and coal will be made for power generation along with measures to promote alternative sources of energy such as solar energy, generation of electricity from municipal refuse, biogas etc.

EE standards for appliances:

Standardization of energy saving electronic machineries.

EE labeling:

To introduce labeling system with a view to ensuring the use of energy efficient equipment.

EE public awareness/promotional programmes:

Create and disseminate e-Learning resources on Energy Efficiency, ISO competencies, Lean Six Sigma, advanced Production System, etc within the 1st year.

Renewable Energy

RE priorities:

Optimizing domestic production of primary energy resources including renewable energies. ---Emphasis is also given to the development of renewable energy, particularly solar homes and biogas plants so that the emission is as small as possible without jeopardizing the access to energy.--- Development of new and renewable sources of energy and their dissemination for the end users. --- Measures for improving investment climate will include ensuring more energy supply in the rural areas with emphasis on bio-fuel and solar energy use.---To reduce dependency on fossil fuel by promoting solar/green energy.--- Reduce the supply of natural gas to those sectors where alternative energy can be used and encourage them for using alternative energy.

RE targets:

To increase use of renewable energy by 5% of electricity demand by the Plan period.

RE action plans:

Install solar panel in public and private buildings where applicable in view of harnessing solar energy. --- The Government is going to set up Sustainable Energy Development Authority (SEDA) to expand and develop renewable energy, to promote energy saving and energy efficiency and to create awareness among the users of electricity. --- Setting up 14 thousand solar home system by REB. Setting up a solar panel having capacity of 21.2 kilowatt for Prime Minister’s Office Installation of around 5.30 lac solar home system in rural areas with the aid of IDCOL (Infrastructure Development Company Limited) through NGOs; Power generation by setting up wind-mill run power plants in coastal region of Kutubdia and Feni; Establishing of a wind-mill run power plant of 100 MW(off-shore) capacity in Anowara of Chittagong and 4 solar power plants of 10-15 MW capacity (connected to grid). --- The use of solar panel in all large public buildings to be made mandatory within 3 years.

Tradeable REC:

Currently Bangladesh has two Clean Development Mechanism (CDM) projects concerned with solar energy and waste management.

RE public awareness/promotional programmes:

Building public awareness through publicity in electronic and print media and introduce this issue in the Curriculum. --- Several government organizations (REB, BPDB, LGED and IDCOL) and NGOs (Grameen Shakti) have been engaged in popularizing and prorating renewable energy projects/programs in the rural areas.

Environment

Energy environmental priorities:

Environmental management objectives: To reduce dependency on fossil fuel by promoting solar/green energy. To improve air quality through clean fuel and vehicle. --- In the public sector efforts will continue to strengthen the Department of Environment and other ministries dealing with environment including Energy. --- The country wishes to play its part in reducing emissions now and in the future. GoB, therefore, encourages increased energy and cost efficiency in the development and utilization of conventional energy.

Pollution control action plans:

To establish Environment Management System (EMS) in Industries for pollution control.

Decarbonization strategy:

Improve railways and waterways as energy efficient multi-modal transport system to reduce carbon emission.

Pricing

Fossil fuel subsidies:

Social objectives like reaching out to the poor and rural community could be achieved through cross-subsidization as well as explicit budget subsidies.

Energy pricing:

The Government recognizes that electricity should be priced appropriately to both ensure that there is efficient use of electricity and the industry generates enough surpluses for reinvestment. --- A key policy reform for the Sixth Plan is to ensure proper pricing of power based on a review of good international practices. --- To raise price of gas, liquid fuel and electricity step by step compatible with international price. --- Consumer’s economic consideration is given priority over commercial interests in price setting of electricity, gas and other fuel oil. Proper pricing of primary fuel and electricity is important to conserve energy as well as to generate resources for future investments. Proper energy pricing is also critical to attract foreign and domestic private investment in the energy sector. Accordingly, setting of proper prices is a key element of the Sixth Plan energy strategy. The per unit production cost of electricity is expected to rise (50 percent-60 percent) in the upcoming 2-3 years due to the installation of high cost liquid fuel based peaking plants. Accordingly, the Energy Regulatory Commission may increase the tariff of power step by step. However, power tariff will likely come down after 2014 as the implementation of gas and coal based power plants will be completed that is expected to reduce generation costs.

Energy Supply and Infrastructure

Infrastructure development priorities:

To reduce dependency on fossil fuel by promoting solar/green energy.---Construction of 6.15km. long Padma Multipurpose Bridge at Mawa-Janjira; Construction of about 26 km. long Dhaka Elevated Expressway. --- Priority will be given to infrastructural needs of industrialization such as electricity, gas, port facilities, road and railway transportation, telecommunications etc. --- To develop facilities to enable import of LNG. --- Under the immediate plan, Quick Rental Power Plants will be installed using liquid fuels/gas and capable to produce electricity within 4-12 months. Total 1753 MW is planned to be generated from rental and quick rental power plants out of which 410 MW has already been commissioned. Another 1343 MW power plants is expected to be commissioned by June, 2011. Under the medium term plan, initiatives have been taken to set up power plants with a total generation capacity of 7919 MW that are implementable within 3 to 5 years time of which 2450 MW will be coal based. --- Setting up 14 thousand solar home system by REB. Setting up a solar panel having capacity of 21.2 kilowatt for Prime Minister’s Office Installation of around 5.30 lac solar home system in rural areas with the aid of IDCOL (Infrastructure Development Company Limited) through NGOs; Power generation by setting up wind-mill run power plants in coastal region of Kutubdia and Feni; Establishing of a wind-mill run power plant of 100 MW(off-shore) capacity in Anowara of Chittagong and 4 solar power plants of 10-15 MW capacity (connected to grid). --- The construction of a nuclear power plant (NPP) consisting of two reactor power units with a capacity 1000 MW each (total 2000 MW) at Rooppur Nuclear Power Project (RNPP) Site. --- To make the power sector more efficient in terms of generation, transmission and distribution.---Approval for importing liquefied natural gas by private sector as an alternative to natural gas and building necessary infrastructure.

Regional integration priorities:

Bangladesh will actively participate in concerned international and regional/sub-regional fora aimed at increasing Bangladesh’s access to international export markets, easing and eventually eliminating any non-trade barriers to Bangladeshi exports, encourage investments, increase trade in services including energy.

Trade

Energy trade priorities:

More aggressive efforts for energy trade with neighbours, ensuring the efficiency of electricity production and distribution, and ensuring the financial viability of the electricity industry. --- Energy options from domestic sources needs to be complemented with possible options for energy trade. --- In the short-to medium term 250 MW of power flow through Bheramara-Bahrampur grid connectivity is envisaged. Over the longer-term, this could move up to 1000MW of power imports. Importantly, grid connectivity with India opens up possibility for power trade with Nepal and Bhutan. --- Increase of power generation to reduce demand-supply gap (...) through power imports from neighbors.

Investment

Energy sector investment priorities:

[T]he longer term strategy embedded in the SFYP power sector plan is to use budgetary allocations to promote low-cost, sustainable expansion of power generation, transmission, and distribution capacity.---Sectoral Public Investment Allocation for Energy in Crore Taka: [...] Total SFYP:45656: % of total: 17.3.---The Government is keen to encourage private investments in energy and power.

Financial incentives for energy infrastructure:

Provision for fiscal incentives for setting up new power plants as per the Industrial Policy 2010. --- Increasing financial capacity of BAPEX by forming Gas Development Fund.

Tax and duty exemptions for energy equipment:

Provision for cheap imports of machineries for power plants as per the Industrial Policy 2010.

Independent power producers:

Efforts will be made to exploit all possible sources of primary energy (hydro-power, gas, coal and solar energy). This will be pursued in some combination of public investment, PPP, and pure private investment. --- The energy sector will be further liberalized for improving its service delivery to consumers. --- Actions are underway to implement a pilot IPP project to produce power from waste.--- Approval for importing liquefied natural gas by private sector as an alternative to natural gas and building necessary infrastructure.

Project permitting:

Speedy processing of tenders and signing agreements for offshore blocks.

Investment climate development:

Provision for incentives for FDI into the power sector as per the Industrial Policy 2010.--- [O]pening up of power trade will facilitate new investments from India’s private sector into Bangladesh for power as well as primary fuel.---Measures for improving investment climate will include ensuring more energy supply in the rural areas with emphasis on bio-fuel and solar energy use.---The Government is keen to encourage private investments in energy and power.---Attracting investments from the private sector to increase the generation capacity of the country and maintain an adequate and reliable power supply.

Public Private Partnerships:

Huge primary asset accumulation and procurement are required for investment in the power and energy sector. Strategies have been made to meet this need by involving private sector with Government. --- The possibility of establishing private electricity distribution companies will be explored. --- Efforts will be made to exploit all possible sources of primary energy (hydro-power, gas, coal and solar energy). This will be pursued in some combination of public investment, PPP, and pure private investment. --- Mobilization of funds for electricity generation projects through private sector participation in the form of public-private/private (national)– private (international)/private (national/international). --- Increase of power generation to reduce demand-supply gap through public-private partnerships and through power imports from neighbors. --- Addressing the power shortages as a matter of urgency through a combination of investments from the private sector and the public sector. --- Organize public information campaign about the merits and benefits of privatization.

Governance

Energy management principles:

Organize public information campaign about the merits and benefits of privatization. --- To consider gender dimension in policies, programs/projects in the energy sector. --- Encourage women participation in the energy sector. --- Establishing transparent corporate governance and a regulatory regime to provide performance-based incentives to sector entities. --- Adoption of time based action plan for discovering new gas fields. --- Changing the prevailing culture of electricity pilferage and nonpayment of electricity bills in collusion with utility employees. Establishing the performance-driven and accountable corporate culture in the newly established companies.

National policy structure:

Finalizing National Energy Policy and Coal policy to create opportunity for using energy from multiple sources. --- Formulate and revisit privatization policies from time to time and advise the government with regard to private sector development, investment and participation in previously reserved sectors such as energy and power.

Energy institutional structures:

The Government is going to set up Sustainable Energy Development Authority (SEDA) to expand and develop renewable energy, to promote energy saving and energy efficiency and to create awareness among the users of electricity. --- Bangladesh Atomic Energy Commission BAEC, deals with research and development in peaceful application of atomic energy, generation of electricity and promotion of international relations congenial to implementation of its programs and projects.

Technology

Natural gas transportation technology:

To develop facilities to enable import of LNG.