RURAL ELECTRIFICATION IN BANGLADESHRURAL ELECTRIFICATION IN BANGLADESH

ANDAND

TARIFFS-ITS IMPORTANCE ON TARIFFS-ITS IMPORTANCE ON

SUSTAINABILITY OF POWER SECTORSUSTAINABILITY OF POWER SECTOR

SHAH ZULFIQAR HAIDER, PEng General Manager, Noakhali PBS

Email. szhaider123@hotmail.com

Cell. +880-1552-307218 23 January, 2008

PRESENTATIONON

BRIEF INTRODUCTION OF RESOURCE PERSON General Manager in Rural Electric Societies since 1989

Garrison Engineer/Staff Officer-Military Engineer Services

Expert-Energy, Infrastructure, Engineering, EE,RE, TQM etc

Training- O&M of Utilities from USA & TQM in Japan

Facilitator/Member-Nepal, India, China, Bangladesh etc

Publications at International level

Member:

Guide Point Global Advisors, USA

American Council for an Energy Efficiency & Economy

International Association of Engineers

Global Village Energy Partnership (GVEP), UK

Infrastructure-India network, etc.

OBJECTIVE OF THIS SESSIONOBJECTIVE OF THIS SESSION

1.1. To have an idea about Rural To have an idea about Rural Electrification programme of BangladeshElectrification programme of Bangladesh

2.2. Importance of Tariff Importance of Tariff

3.3. How to minimize Cost of electricityHow to minimize Cost of electricity

4.4. Tariffs for sustainable Power sectorTariffs for sustainable Power sector

RURAL ELECTRIFICATION IN BANGLADESHRURAL ELECTRIFICATION IN BANGLADESH

Bangladesh once Least developed country

Provision of electricity constitutional right

Electricity distribution was by state

How to provide electricity to rural masses?

Through Rural Electric Societies (RES)or Palli Bidyut Samities (PBS)

Rural Electrification turned it to a developing country.

HOW IT STARTED . . .

Rural Electrification Board (REB) formed

REB helped form RES or PBS

To provide electricity to rural mass:• No-loss-no-profit basis• Sound financial basis & lowest cost• Area Coverage Rural Electrification• Poverty alleviation & minimizing disparityAchieved through…Efficient Management, TQM, Service/Training etc

WHAT IS RURAL ELECTRIFICATION PROGRAM?

RURAL ELECTRIFICATION IN BANGLADESHRURAL ELECTRIFICATION IN BANGLADESH

HOW IT STARTED...(continued)

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CONSUMER SERVICETOP MOST PRIORITYTOP MOST PRIORITY

CONSUMER – the only & main source of Incomeonly & main source of Income

Consumers GOOD LUCKGOOD LUCK for the organization

One Point Service (OPS) for the Consumers

The consumer submits his problem

OPS staff moves & gives solution to consumer.

PERFORMANCE TARGET AGREEMENT (PTA)PERFORMANCE TARGET AGREEMENT (PTA)

PTA executed between REB & RES

Rewards & Financial Penalty

Competition developed

The PTA Targets are . . .The PTA Targets are . . .

1. System Loss

2. Accounts Receivable & Payable

3. Debt Service Coverage

4. Equity status

5. Annual Load Factor

6. Revenue per Km of line, etc.

OTHER FACTORS FOR SUCCESS OFOTHER FACTORS FOR SUCCESS OFRE PROGRAMMERE PROGRAMME

1. DEDICATION

2. MOTIVATION

3. VILLAGE ADVISORS

4. DELEGATION OF AUTHORITY

5. JOB DESCRIPTION

6. THE RES (PBS) BOARD

CONSUMERS’ PARTICIPATION IN PBS ACTIVITIESCONSUMERS’ PARTICIPATION IN PBS ACTIVITIES

CONSUMER

BOARD DIRECTOR

RES (PBS)

VILLAGE ELECTRICIAN

CONSUMER

CONSUMER VILLAGE ADVISOR

CONSUMER

CONSUMER PARTICIPATION-BOARDCONSUMER PARTICIPATION-BOARD

RES (PBS) DEMOCTARIC INSTITUTION

1. The RES/PBS divided in Areas-Elaka

2. Max 15 Board Directors

3. Selection through democratic process

4. Consumers Annual General Meeting (AGM)

5. Financial Balance Sheet and Accounts

6. Executive Committee

7. Lady Directors selection

No-loss-no-profit & Sound financial basisNo-loss-no-profit & Sound financial basis

Tariffs to support these concepts Tariffs to support these concepts

Electric Extension on Revenue criteriaElectric Extension on Revenue criteria

Line extension on Area Coverage basisLine extension on Area Coverage basis

Power purchase rate=Actual cost of PowerPower purchase rate=Actual cost of Power

Revenue from Electricity sale-main incomeRevenue from Electricity sale-main income

Financial picture of RES- Form 550Financial picture of RES- Form 550

TARIFF IN R.E PROGRAMMETARIFF IN R.E PROGRAMME

The concepts of R.E program are in conflictThe concepts of R.E program are in conflict

Free Electricity (!)Free Electricity (!)

Who will pay?Who will pay?

Lower Domestic vs. Higher Industrial TariffLower Domestic vs. Higher Industrial Tariff

Profit by Industrial based cooperativesProfit by Industrial based cooperatives

What happens to Industries?What happens to Industries?

IS OUR TARIFF RATIONAL?IS OUR TARIFF RATIONAL?

SUBSIDIESSUBSIDIES

Rich countries provide subsidyRich countries provide subsidy

Developing countries discouragedDeveloping countries discouraged

Subsidies:Subsidies:

a.a. Lower electric bill- 50 to 100 KWH usage Lower electric bill- 50 to 100 KWH usage

b. Irrigation consumers b. Irrigation consumers

c. Subsidy to the Utilitiesc. Subsidy to the Utilities

How long?How long?

Who will payWho will pay??

Cost & Tariff not in harmony

Cost of Electricity may be higher:

Higher Plant & equipment cost

Lack of expertise - Inefficient procurement

Improper planning, No Master plan

Inadequate remuneration

In efficient management, Lack of commitment

High losses & pilferage

Transparency & Accountability

COST OF ELECTRICITY

HOW TO LOWER COST OF ELECTRICITY-1HOW TO LOWER COST OF ELECTRICITY-1

Energy Efficiency (EE)& Energy AuditEnergy Efficiency (EE)& Energy Audit

Lower Generation cost & Improve TransmissionLower Generation cost & Improve Transmission

Plant Factor & Load FactorPlant Factor & Load Factor

Power Factor- Consumer to Generation pointPower Factor- Consumer to Generation point

Load managementLoad management

Administrative cost & losses-reduceAdministrative cost & losses-reduce

Technical & Managerial skillsTechnical & Managerial skills

Reduction of Technical/Non Technical losses.Reduction of Technical/Non Technical losses.

HOW TO LOWER COST OF ELECTRICITY-2HOW TO LOWER COST OF ELECTRICITY-2

Reward, punishmentReward, punishment

Transparency & AccountabilityTransparency & Accountability

Minimum Political interferenceMinimum Political interference

Consumer awareness-misuse reduce & EEConsumer awareness-misuse reduce & EE

Minimum Disconnected consumersMinimum Disconnected consumers

Minimum illegal consumersMinimum illegal consumers

Maximum New connection in existing facilityMaximum New connection in existing facility

POWER QUALITY IMPROVEMENTPOWER QUALITY IMPROVEMENT

Electricity - Service & again GoodsElectricity - Service & again Goods

Just in Time ProductJust in Time Product

Improve Power Factor, minimum 95%Improve Power Factor, minimum 95%

Intelligent Power Factor controllerIntelligent Power Factor controller

Minimize Total HarmonicsMinimize Total Harmonics

Standardize Electrical productsStandardize Electrical products

Minimize GHG emissionMinimize GHG emission

Phase balance, Voltage improve & Lines ClearPhase balance, Voltage improve & Lines Clear

Adequate groundingAdequate grounding

POWER SUPPLY RELIABILITYEurope - 99.95+% supply efficiencyEurope - 99.95+% supply efficiency

Load ManagementLoad Management

Market closure - eveningMarket closure - evening

Industries holiday staggeringIndustries holiday staggering

Peak hour heavy use restrictionPeak hour heavy use restriction

Multi Tariff/TOU/Prepaid meterMulti Tariff/TOU/Prepaid meter

Consumer education & motivationConsumer education & motivation

Demand side managementDemand side management

Energy saving lamp & Electronic ballastEnergy saving lamp & Electronic ballast

Efficient equipment & Variable speed motorEfficient equipment & Variable speed motor

Industrial cooling, Technical losses reduce etcIndustrial cooling, Technical losses reduce etc

METERINGMETERING Cash Box Cash Box

Meters always best qualityMeters always best quality

Meters should read at lowest wattageMeters should read at lowest wattage

3 phase meters - 3 element 3 phase meters - 3 element

System adequately groundedSystem adequately grounded

Multiple Tariff Meter - Demand managementMultiple Tariff Meter - Demand management

Prepaid MetersPrepaid Meters

Tariffs vary for each cooperativeTariffs vary for each cooperative

Tariff on geo - economic condition Tariff on geo - economic condition

No-loss-no-profit concept for tariffNo-loss-no-profit concept for tariff

Renewable energy expensive than Fossil fuel

It should be cost effective & competitive

Higher tariff will discourage it

One time subsidy

No alternate to expansion of R E

Minimize GHG emission

RENEWABLE ENERGY

PRIVATIZATION OF POWER SECTORPRIVATIZATION OF POWER SECTOR

Why privatization?Why privatization?

Government owned Utilities inefficiencyGovernment owned Utilities inefficiency

Huge lossesHuge losses

Lack of accountabilityLack of accountability

Lack of commitmentLack of commitment

Privatization with sufficient protective rulesPrivatization with sufficient protective rules

Privatization is not transfer of Government Privatization is not transfer of Government

losses to private entitylosses to private entity

Sl. Category KWH Slab US Cent Euro cent

1 Domestic 000-100 4.0 2.78

2 Domestic 101-300 4.1 2.85

3 Domestic 301-500 5.8 4.04

4 Domestic Above 500 8.4 5.85

5 Commercial 7.3 5.08

6. Irrigation 4.1 2.85

7. Industry 5.7 3.97

8. Large Industry 5.6 3.90

9. Other 4.7 3.26

10 Cost of Electricity 5.5 3.83

NOAKHALI RES TARIFFNOAKHALI RES TARIFF

NOAKHALI RES EXPENSES (%)NOAKHALI RES EXPENSES (%)

Depreciation 12.90

Administra-tive 3.84

Consumer Selling

7.71

Power Purchase

62.64Operation & Maintenace

4.72

Interest on loan7.77

Tax0.42

CATEGORY WISE CONSUMPTION (%)CATEGORY WISE CONSUMPTION (%)

Others2

Domestic72

Irrigation3Industry

11

Commercial12

INFRASRTUCTURE AND ENERGYINFRASRTUCTURE AND ENERGY

InfrastructureInfrastructure::

Electricity-Generation-Transmission-DistributionElectricity-Generation-Transmission-Distribution

Energy- Conventional, Renewable, Gas etc.Energy- Conventional, Renewable, Gas etc.

Communication-Road, River, Train and AirCommunication-Road, River, Train and Air

Telecommunication & InternetTelecommunication & Internet

Water supplyWater supply

Rural Infrastructure.Rural Infrastructure.

(Accountability and Transparency)(Accountability and Transparency)

Analyze cost

Consumer mix and consumption.

Formulate Tariff “No-loss-no-profit basis”

If Losses exist, enhance Tariff or Subsidy.

Analyze economic effect due to electricity

If losses continue, analyze the whole system

COST AFTER MANAGEMENTCOST AFTER MANAGEMENT

Cost of electricity up to consumer-Minimum

Use Superior quality products

Renewable, One time subsidy

Human Resources Development

Adequate remuneration

Reward and Punishment

Power Factor improvement

Load & Demand Side Management

Energy efficiency & Energy Audit

CONCLUSIONCONCLUSION

Reduction of losses

Extensive motivation

Minimum Political interference or influence

Consumer education

Pilferage proof good quality meters

Infrastructure, Energy master plan

Accountability and transparency

Cost analysis for tariff fixation

Subsidy as required

CONCLUSION … continuedCONCLUSION … continued

SHAH ZULFIQAR HAIDER, PEngszhaider123@hotmail.com

General Manager, Noakhali PBS

THANK YOUFOR ATTENDING THE SESSION

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