Bangladesh Energy Situation

 1.1 Energy Sector

About 80% of the population of Bangladesh live in rural areas. The rural economy is characterized by slow growth, high unemployment, insufficient infrastructure and widespread poverty. Only one-third of the population has access to electricity; and access in the rural areas is lower (22%). The rural population depends mainly on biomass as a source of energy; over 70% of total primary energy consumption is covered by biomass, mainly agricultural waste and wood.
The government’s vision of electrifying the entire country by 2020 through grid expansion may not be realistic due to inaccessibility and low consumer density in many rural areas, as well as financial constraints. To reach the government’s vision of universal electrification, renewable energy sources, in particular solar energy will have to play a vital role for off-grid electrification.

1.2 Problem Situation

Dissemination of solar home systems (SHSs) is being promoted mainly by private sector companies and NGOs; presently, projects are mainly based on the direct-sale approach. This approach is successfully demonstrated by an IDA/GEF-supported pro¬ject, which provides participating organizations (mostly NGOs) with refinancing funds for micro-financing of SHSs. The concept comprises a buy-down grant and an institutional develop¬ment grant for the participating organizations to build capacities for promotion of SHSs in rural areas. The buy-down grant is on a sliding scale.
As financing of the project is coming to an end in August 2008, it is proposed to apply the experiences made to continue the route to commercialization of SHS dissemination. The existing financing structures provided by the Infrastructure Development Corporation Limited (IDCOL) will be used for provision and management of refinancing loans, and the micro-finance organizations (NGOs), which are already experienced in promoting and financing of SHSs, will be involved in promotion and selling of SHSs. Funds for refinancing will be provided by IDCOL, whereas the proposed partnership project will only provide the buy-down and the institutional development grants.