Rural Electrification in Bangladesh: Overview, Challenges & Way Forward

Rural electrification, recognized as one of the key factors for overall infrastructural development by the national development plans of Bangladesh, can foster the country’s economic growth and alleviate poverty by improving general living standard of the citizens. Having a considerable proportion of the rural population without electricity, access is one of the foremost challenges for the Bangladesh power sector. Absence of a rural electrification facility has serious economic and social consequences for some of the poorest regions in the country.

According to the World Bank, Bangladesh holds a population of 164.7 million (or 33.3 million households) and 80% of them are concentrated in rural areas of the country. However, the national grid does not cover most of the rural areas, therefore, bringing the rural areas under electrification is the pressing need for Bangladesh.

Energy is one of the key driving forces for rural socioeconomic progress and for alleviating extreme poverty. The main objective of this article is to provide a brief overview of the rural electrification scenario, identify current and future challenges in Bangladesh, and outline possible policy recommendations to those challenges from the existing literature. This research, therefore, is exploratory in nature. To find out the current scenario of rural electrification in Bangladesh and possible policy recommendations, secondary data from government and non-government sources and peer-reviewed articles have been used.

Rural Electrification in Bangladesh: A Brief Overview

Rural electrification is a vital process for developing countries like Bangladesh to provide access to energy in rural areas. After the independence of Bangladesh in 1971, the first major initiative to extend grid electricity in rural areas was taken in 1975 under a scheme called ‘Total Electrification Programme’. Rural Electrification Program (REP) in Bangladesh began its journey in 1978, with the technical support and supervision from National Rural Electrification Cooperative Association (NRECA) of the USA in order to deliver the electricity to the rural people of Bangladesh. Bangladesh Rural Electrification Board (BREB) was established to implement the agenda for rural electrification in the country in 1977. Since then, BREB has been successfully delivering power service to rural consumers for over 38 years. BREB works through a program called ‘Palli Bidyut Samities (PBSs)’ which holds the concept of member-owned, similar to the rural electric cooperatives in the United States. The main purposes of the Rural Electrification Program focus on the electrification of dry season irrigation to enhance the rural agricultural sector of Bangladesh. However, the concentration of the operation has been transformed from meeting agricultural needs to targeting other sectors and industries in rural Bangladesh. Providing electricity to households and different industries is an important device for growth which facilitates required infrastructural improvement, promoting further economic activities and forming a suitable environment for realizing human competences.

According to the government schema, it has been planned to bring all the villages of Bangladesh under electrification provision by 2020. According to the National Household Income and Expenditure Survey, rural households in the divisions such as Barisal and Rangpur have the lowest percentage of electricity access, at 32% and 24%, respectively, having the utmost rate of poverty.

Although Rural Electrification Board (REB) was formed by the Government of Bangladesh to implement a rural electrification facility countrywide, it does not produce any electricity. The REB administers rural electric cooperatives known as Palli Bidyut Samity or PBS. The REB assembles necessary financing to build the infrastructures including distribution lines and then hands over the completed power distribution infrastructure to the cooperatives for running commercial activities (e.g., customer billing, tariff collection, and service maintenance).

However, the performances of PBSs are observed by the REB authorities by specifying certain performance targets. The following table presents the entities providing off-grid electricity services to the rural population of Bangladesh.

Off-Grid Rural Electrification in Bangladesh

Source: Renewable Energy Information Network, Bangladesh

Although rural cooperatives have stretched their services to many rural households, worries have been raised by relevant stakeholders with regards to the pace of expansion and the costs of rural grid electrification in remote areas. For example, Bangladesh has a moderate electrification rate of 76%. Out of the 21.8 million, 16 million are domestic connections (households), which would represent roughly 50% of all Bangladeshi households (30-40 million). Another 15% of the households have access to off-grid electricity. In addition, a huge proportion of the population under on-grid electric service is also facing significant daily power outages and load shedding.

Among many other development programs by the Bangladesh government, the supply of electricity services to the rural people is a noteworthy program seeking not only to stimulate the economic productivity but also to enhance the quality of life in rural communities. The greatest outcome of the rural electrification program in Bangladesh has been realized in the agricultural sector. The irrigation is needed in the dry seasons usually between January and April that uses electric pumps. This has transformed the food production scenario of the country. The production of Boro paddy in the dry season entirely depends on irrigated water either from the surface or underground.

Challenges of Rural Electrification in Bangladesh

The distribution coverage of rural electricity and improving its service quality poses daunting challenges. While some are unique, many are inherent to the rural environment. The government of Bangladesh plans to implement the rural electricity program with a view to keep pace with the commitment of ‘Vision 2021’ which assures electricity for all by 2021. With remarkable growth in the coverage and intricacy of the rural electrification in Bangladesh, BREB has severe limitations in both managerial and technical capacity to encounter forthcoming challenges for future development. Rural areas have a low level of population density with a substantial number of poor households. As a result, the high distribution cost of providing electricity services in low populated rural areas is a challenge for the rural electrification program in Bangladesh. Moreover, low rate of electricity consumption in rural areas makes the service more costly to deliver than that of urban schemes. Moreover, distribution loss and transformer threat due to system overload is a major problem for REB. Moreover, REB sometimes fails to deliver the required power on demand due to BPDB’s failure to provide the power on demand of REB.

Lack of manpower is another challenge for rural electrification. BREB has increased its operation to 77 PBSs from 36 PBSs in the beginning. Although it has expanded its coverage and operation, the number of employees is not adequate to control this huge distribution network. Most of the PBSs are financially insolvent due to high maintenance costs, low rate of energy consumption, and low consumer density. This often thwarts the progress of the rural electrification process. PBSs often fails to provide compatible salary and incentive benefits to its personnel compared to the power sector due to severe financial constraints. This causes consistent drain out of skilled and capable employees from PBSs to other utility service providers for higher compensations.

The Way Forward

To overcome the challenges, a well-thought-out and cohesive master plan for rural electrification is needed, incorporating power generation and distribution to boost operational expansion, service maintenance, and overall governance. Upgrading the distribution system and increasing REB manpower must be ensured by the government. BREB should adopt decentralization in its administration and overall monitoring. It can split its operations into several zonal offices for more efficient monitoring and supervision. More national budget allocation is necessary to implement the required system expansion for rural electricity. This allocation can create more economic opportunities for rural people, promoting new small and medium scale businesses. For instance, Bose et al. (2013) carried out a survey in two villages having electricity services in Paikgacha, Khulna to investigate the impact of electricity accessibility on the performance of SMEs in the rural areas of Bangladesh. The study found positive impacts on maximizing profits, modernization of business activities, women empowerment, and human capital development due to the electrification in the rural areas. REB should expand its operation step by step starting with prioritizing the most promising high population growth areas and then move on to more and more remote populations in Bangladesh. REB also should look into different ways to reduce construction and distribution costs for rural electrification. Moreover, rural electrification prices should be set at a realistic level which sometimes leads to energy costs savings for new customers, reducing their kerosene lighting costs. However, at the same time, it is also important to set tariff which ensures recovery of the basic operational costs to make the PBSs financially viable for sustainable rural energy supply. Finally, more professional and vibrant leadership with very devoted officers are needed at all stages of REB to meet its ultimate objectives.

Conclusion

South Asia, unfortunately, accounts for 42% of the population on earth without access to electricity. Although the extension of electricity in rural areas is an important public policy agenda for most of the developing nations, the existence of considerable corruption and loopholes has constrained the process. Likewise, Bangladesh still has not been successful in reaching its final goal to meet up the power crisis. As a developing country with inefficient power sector, Bangladesh has the potential to benefit largely from reform. However, the control of the interest groups benefiting from the status quo is an impediment to this reform. For instance, if major reform takes place then the customers who have illegal connections risk losing them. Moreover, the power sector requires large fixed investments especially in rural electricity generation and transmission. However, without trust between buyers and sellers of power, long-term investments are unlikely to take place. For example, if the power sector of Bangladesh is characterized by mistrust, private companies will not be interested to invest. These are among the many other reasons for which realizing reform has never been an easy task for rural electrification in Bangladesh. However, the government of Bangladesh has goals to provide access to electricity to all of its citizens in rural areas by 2021. Supporting investments in off-grid solar PV generation in rural areas can help achieve this goal, without the potential for grid connection. In this case, BREB should carry on its endeavor to overcome the limits and thrive for expansion, system modernization, and maintenance.

Riasat Noor;

Head of Research and Publications,

Institute for Policy, Advocacy, and Governance (IPAG)