Bangladesh - Independent Evaluation Group - World Bank

created an environment that was difficult for the Bank to operate in, although other donors
continued to work with RHD.
4.20 IEG questions whether disengagement from RHD was the best option for the Bank.
The decision to disengage was taken by senior management and not by the Bank team or
Country Director. Although a strong signal was sent regarding the Bank’s zero tolerance for
corruption, the Bank now has little leverage in a sector that is a binding constraint to
economic development and poverty reduction. There is discussion of sectoral reengagement
in FY15, but this would create a gap of more than eight years between projects and would
require substantial investments in client relations and analytical work.
4.21 Power. Energy prices have been increased, but without automatic pricing adjustment
mechanisms. The Bangladesh Energy Regulatory Commission was strengthened by the
appointment of a full board and complementary staffing. The average bulk supply tariff was
increased by 10 percent and the retail tariff by 5 percent. The commission also carried out
public hearings on retail price increases and issued operating licenses to six distribution
companies. However, many challenges remain. Powertek and Siemens submitted the only
qualified bid for the Bibiyana Independent Power Producer (IPP) contract, leading to a
retendering process that is still ongoing. Moreover, the current government has changed the
leadership and staffing of the Bangladesh Energy Regulatory Commission, leading to a loss
of independence and effectiveness. In addition, the goal of installing meters for 35 percent of
all customers has not been reached, nor has the contract for the supply and installation of
meters been awarded.
4.22 The Investment Promotion and Financing Facility project supported IPPs (11 to 44
megawatts) that have added 178 megawatts of electricity generation capacity to the national
grid and to two special economic zones—the Dhaka Export Processing Zone, and the
Chittagong Export Processing Zone—increasing national electricity generation capacity by
about 5 percent.
4.23 The overall effectiveness of GAC in the power sector is rated as moderate. There has
been progress in corporatizing utilities. For example, the Dhaka Electric Supply Company,
Ltd., initially wholly owned by the Dhaka Electric Supply Authority, known as the Dhaka
Power Distribution Company since 2006, is now one-quarter privately owned and is listed on
the Dhaka and Chittagong stock exchanges. Although the initial public offering was
reportedly tainted by corruption, the Dhaka Electric Supply Company is viewed as far less
corrupt than the Dhaka Power Distribution Company. Reasons include successful
management of its outsourcing contracts, accountability to private shareholders, and low
tolerance by Dhaka’s elite customers for poor service. The BPDB has never missed a
payment to an IPP, although payments are sometimes late. It covers the difference between
the cost and price received for electricity through loans from the government, making it
technically insolvent. Discussions are underway on recapitalizing BPDB, corporatizing its
business units, and converting it into a holding company, but the outcome of these efforts is
uncertain.
4.24 Despite these and many other achievements, the World Bank Group has not
successfully resolved the electric power challenges facing businesses. For example, although
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