World Bank’s support to increase electricity access in rural Bangladesh

The World Bank recently approved a $130 million IDA credit toBangladesh, designed to increase access to electricity through theinstallation of affordable solar home systems in rural areas.

Thiscredit is additional financing for the Rural Electrification andRenewable Energy Development Credit, a project that since 2003 hasconnected 600,000 consumers to the electricity grid, constructed about8,500km of new distribution, and provided 320,000 consumers with solarhome systems.

Despite advances, access to electricity inBangladesh remains low, currently around 40 percent. Power shortagesand load shedding are severe, especially in rural areas, which hurteconomic growth and industrial development.

In addition,population growth, increased industrialization, additional connections,and rise in the use of modern, electrical appliances have boosteddemand for electricity, currently growing at a rate of over 500MW ayear.

“Investing in grid electricity alone will not realize theGovernment of Bangladesh’s goal of universal access to electricity by2020,” said Rob Floyd, Acting World Bank Country Director forBangladesh.

“This additional financing will be used to provideelectricity to 300,000 households through solar home systems. Many ofthese households in poor areas are too remote to connect to theelectricity grid and would never receive electricity throughconventional electrification methods.”

A part of the additionalfinancing will be used to purchase and install about 10 million energyefficient compact fluorescent lamps in densely populated areas in thecountry. These will replace an equivalent number of incandescent lamps.

“Lightingcoincides with the peak load hours and contributes over 20 percent ofthe demand,” said Raihan Elahi, Senior Energy Specialist and TaskLeader for the project. “Replacing these lamps, which will be free ofcharge for residential consumers, is expected to reduce the peak demandby about 360MW.”

The project will support an ongoing renovationof the electricity distribution network as well as provide financingfor renewable energy projects such as biomass and biogas power plants,solar water pump for irrigation, and solar mini grids.

Thecredit from the International Development Association (IDA), the WorldBank’s concessionary arm, has 40 years to maturity with a 10-year graceperiod; it carries a service charge of 0.75 percent.


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