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Poor response from donors for power distribution projects

By Sharier Khan
Government efforts for securing project financing for the power distribution system received poor response from the donors over the last seven years.
Officials sources said that because of this, the government could not undertake any major development work in power distribution networks in greater Khulna, greater Chittagong, greater Rajshahi and even in greater Dhaka in recent years.
As a result, power distribution system in the country which badly needs improvement, is now in bad shape, the sources noted.
However, the Asian Development Bank, which pushed the
government to decide raising Eower tariff on a continuous asis. has agreed to give the government some 62 million US dollars to implement the 300 million-dollar-9th Power Project.
The government contribution for the project is about 100 million dollars and it has been trying for over a year to arrange the remaining 138 million dollars.
The 9th Power Project aims at improving the power distribution and monitoring system. Under it, the capacity of power distribution network in tne city will be enhanced by 400 MW.
Currently, the city's power distribution system is over-
loaded by 50 to 60 MW, resulting in lower voltage or power disruption. The total demand for power in Dhaka zone is now about 950 MW, which is nearly half the country's total demand of 2150 MW.
The sources said that to satisfy the donors, the government had formed Dhaka Electric Supply Authority (DESA) in 1991 by separating a component of Bangladesh Power Development Board, taken a series of measures under the power sector reform programme to cut down system loss, initiated the process of setting up private power plants by creating the Power Cell, Initiated privatisatlon process of DESA by creating Dhaka Electric Supply Company (DESCO), private power distribution authorities. Power Transmission Limited Company (PLTC) and Power Grid Company and re adjusted power tariff, as per formula agreed between the two sides.
Besides, the government has in principle agreed with the donors to gradually reduce the functions of the Power Development Board (PDB) to allow continued expansion of private sector in the energy sector.
"Despite all these efforts, the energy sector is still not in the goodIbook of donors, specially that of World Bank," an official said.
He. however, said that pleased at the creation of DESCO and power grid company, the WB had unofficially informed the Energy Ministry that a team would come to Dhaka next month to negotiate granting of new loans.
"Unless the World Bank agrees to finance our power sector, the other donor agencies and countries will not spontaneously finance our projects." noted an official of the Energy Ministry.
Currently the only projects being undertaken with foreign financing are the Greater Khulna Power Distribution Project (partially financed by India) and a 132 kv transmission line between the national grid and Chittagong (financed by Germany).