Power System Expansion and Efficiency Improvement Investment Program (RRP BAN 42378)

DEVELOPMENT COORDINATION

A. Major Development Partners: Strategic Foci and Key Activities

1. Multilateral development partners in the energy sector in are the Asian Development Bank (ADB), Islamic Development Bank, and World Bank. In addition, bilateral aid is provided by France, Germany, Japan, Kuwait, Norway, the Russian Federation, the United Kingdom, and the United States. A number of areas receive support, including power generation, transmission and distribution upgrading, energy sector reforms, assistance to the regulatory commission, energy efficiency, rural electrification, power plant upgrading capacity addition, capacity building, and planning. Financing by other development partners is listed in the table.

Major Development PartnersDevelopment Amount Partner Project Name Duration (million) ADB, KfW Development of new 132/33 kV and 33/11 kV 2006–2012 $53.00 substation under DESA Project ADB, IDB Construction of Ashuganj 450 MW Combined Cycle 2011–2015 $365.4 Power Plant (North) ADB, JBIC Construction and Expansion of Grid Substation with 2005–2012 $94.0 Distribution Line (Phase 1) CIS, Russia Rehabilitation and Modernization of Ghorashal 1997–2012 $30.8 Thermal Power Station Unit 1 and 2 IDA Construction of Siddhirganj 335 MW Peaking 2009–2015 $253.4 Combined Cycle Power Plant IDA Efficient Lighting Initiative for Bangladesh Part 1 and 2009–2012 $34.10 Part 2 IDA TA for Implementation of Bangladesh Power Sector 2011–2015 $16.62 Reform (Phase 2) JICA Bheramara Combined Cycle Plant Development (360 2010–2014 $504.9 MW) JICA Construction of Haripur 360 MW Combined Cycle 2009–2012 $427.7 Power Plant and Associated Substation JICA Bangladesh Central Zone Power Distribution Project 2009–2013 $119.4 JICA Rural Electrification Upgradation Project (, 2010–2015 $161.24 Rangpur, , and division) EDCF Rural Electrifications Expansion – 2010–2014 $60.71 Division Programme 1 KOICA Solar Power Run Irrigation Pump and Solar Home 2011–2013 $3.27 System KOICA Solar Power Systems in Bangladesh Parliament 2011–2012 $1.1 Kuwait Fund Greater Chittagong Power Distribution Project 2009–2013 $12.22 DFID Increasing Palli Bidyut Samiti’s customers by 1 million 2006–2013 $42.41 under its distribution system KfW Rehabilitation and Modernization of Ashuganj Power 2000–2011 $125.0 Station Unit 3, 4, and 5 (revised) EDCF Bibiana–Kaliakoir 400 kV and Fenchuganj–Bibiana 2010–2013 $209.86 230 kV Distribution Line Germany, BMZ Sustainable Energy for Development 2009–2011 $10.62 KfW Sustainable Power Sector Development 2007–2012 €23.0 KfW Transmission Efficiency Improvement through 2008–2012 $26.64 Reactive Power Compensation at Grid Substation and Reinforcement of Goalpara Substation NDF Power Sector Development 2003–2011 €8.30 NORAD Power Sector Development 2003–2011 $10.0 USAID Improved Capacity for Energy Access (focus on the 2008–2011 $7.7 Bangladesh Electricity Regulatory Commission and 2

Major Development PartnersDevelopment Amount Partner Project Name Duration (million) Rural Electrification) World Bank Power Sector Development (focus on Bangladesh 2004–2011 $15.5 Electricity Regulatory Commission, Petrobangla, and Power Division) World Bank Siddhirganj Peaking Power Plant Project and the 2008–2016 $350.0 Bahrabad–Siddhirganj Pipeline World Bank Design of Project Management System Framework 2008–2010 $0.75 (focus on power and gas companies) World Bank Sigddhirganj–Maniknagar 230 kV Distribution Line 2009–2011 $ 47.77 Construction ADB = Asian Development Bank, BMZ = Federal Ministry of Economic Cooperation and Development, CIS= Commonwealth of Independent States, DESA = Electricity Supply Agency, DFID = Department for International Development, EDCF = Economic Development Cooperation Fund, IDA =International Development Association, KfW = Kreditanstalt für Wiederaufbau, JBIC = Japan Bank of International Cooperation, JICA = Japan International Cooperation Agency, KOICA = Korean International Cooperation Agency, kV = kilovolt, MW = megawatt, NDF = Nordic Development Fund, NORAD = Norwegian Agency for Development Cooperation, TA = technical assistance, USAID = United States Agency for International Development. Source: Planning Commission Revised Annual Development Programme, May 2012.

B. International Arrangements and Processes for Development Cooperation

2. Coordination of major development partner assistance is carried out by the Economic Relations Division of the Ministry of Finance, and coordination within the energy sector is carried out by the Ministry of Power, Energy, and Mineral Resources. Coordination among development partners and the exchange of information are carried out through a local coordination group, which consists of committees for each core area of assistance. ADB, as the leading development partner in the energy sector, chairs the committee on energy.

C. Achievements and Issues

3. ADB has coordinated development partner interactions and helped bilateral sources to channel their assistance, minimizing the potential for overlapping assistance and conflicting policy advice. As a result, development partners and ADB in particular have delivered high- quality assistance by way of appropriate policy dialogue, structured lending and nonlending programs, and significant financial assistance.

D. Summary and Recommendations

4. ADB's energy sector program has been rated successful by the Independent Evaluation Department. However, issues remain and problems persist. The government needs to approve the power system master plan already developed, channel investments in the various sectors, ensure the regulatory commission is fully operational, address tariff reforms and cost-recovery issues, and encourage energy efficiency and the diversification of energy sources. Substantial, focused investments will be required, and development partners are well placed to provide continued lending and nonlending support, especially to encourage private sector participation, regional cooperation, and renewable energy development.