Bangladesh Energy Situation

1.1 General Poverty Situation in Rural Bangladesh

Bangladesh is one of the world’s poorest countries, ranking third after India and China in the ex-tent of poverty. The population is predominantly rural, with about 80 per cent of its 145 million people living in rural areas. Most of the country is made up of flood plain, and while the alluvial soil provides good arable land, large areas are at risk because of frequent floods and cyclones, which take lives and destroy crops, livestock and property.

Since the 1990s the country has made progress towards reducing the incidence of poverty, achieving a 1 per cent drop in the proportion of people living below the poverty line every year. Estimates of rural poverty rates now stand between 53 per cent and 44 per cent. While these fig-ures represent a considerable improvement over previous levels, it is still extremely high by inter-national standards and reflects the widespread and commonplace nature of poverty and vulner-ability.

About 20 per cent of rural households live in extreme poverty. Chronically poor people suffer per-sistent food insecurity, own no cultivable land or assets, are often illiterate and may also suffer serious illnesses or disabilities. Another 29 per cent of the rural population is considered moder-ately poor. They may own a small plot of land and some livestock, but while they generally have enough to eat, their diets lack protein and other nutritional elements. This segment of the rural population is at risk of sliding deeper into poverty as a result of external shocks, such as health problems or natural disasters.

Women are among the poorest of the rural poor, especially when they are the sole heads of their households, such as widows or wives of men who have migrated in search of employment. They suffer discrimination because of their gender, have scarce income-earning opportunities and their nutritional intake is often inadequate.

One of the main causes of rural poverty in Bangladesh is the erratic and extreme climate and the fact that a large proportion of the country is low-lying and vulnerable to flooding. After flooding, many people have to resort to moneylenders in order to rebuild their lives, which opens a vicious cycle of dept service and pushes them deeper into poverty. For large numbers of rural poor peo-ple whose subsistence depends on agriculture, income and food security are highly precarious. Many farmers eke out a livelihood on small and fragmented plots. For those who are landless or almost landless, the situation is even more severe. Almost half of the population falls into this category.

Another root cause of rural poverty has been the enormous population growth. The population density of Bangladesh is the highest among all territorial states worldwide. The pressure this has placed on the environment, unleashes problems such as erosion and flooding that in turn aggra-vates the situation of rural poor people.

Due to widespread corruption and bad governed administration, public services (e.g. health care, education) are inadequate. This particularly affects poorer parts of the population as they cannot afford private provision of these services.

Bangladesh has made progress in developing rural infrastructure, but much remains to be done. Many poor people living in remote areas lack services such as education, health clinics and ade-quate roads, particularly road links to markets. Only 22 per cent of rural households have electricity.

 1.2 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.

1.3 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 project, which provides participating organizations (mostly NGOs) with refinancing funds for micro-financing of SHSs. The concept comprises a buy-down grant and an institutional development 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.

1.4 The Role of Household Energy

In most Bangladeshi households in rural areas (99%) as well as urban areas (66%), biomass such as wood, cow dung, jute sticks or other agricultural wastes is employed for cooking. Ineffi-cient and poorly ventilated clay stoves produce fine particles, polycyclic aromatic hydrocarbons, carbon monoxide, dioxins and other carcinogens (ROUSE 2004). Housewives are exposed to high levels of these toxins between three and seven hours a day. Research revealed that this indoor air pollution (IAP) occurs not only in the kitchen but only slightly lower in the living area therewith affecting also other family members such as children. The World Health Organisation (WHO) has estimated that more than 46,000 women and children die each year as a direct result of exposure to indoor air pollution, while many more suffer from respiratory diseases, tuberculosis, asthma, cardiovascular disease, eye diseases, and lung cancer. Right behind unsafe water and inade-quate sanitation, indoor air pollution is the second biggest environmental contributor to illness worldwide (WHO 2007).

Due to inefficient burning of biomass for cooking purposes, biomass is becoming increasingly scarce and costly, putting pressure on the economic situation of biomass-purchasing households. Poor rural households have to spend a significant amount of time on biomass collection. Wastage of biomass is depriving the soil of nutrients, resulting in unsustainable low levels of organic matter in the soil.

Bangladesh’s reliance on biomass for cooking will continue for several decades; today only 40% of the Bangladesh population is connected to the electricity grid and in the rural areas, where 80% of the population lives, only 22% have electricity. A mere 6% of the entire population has access to natural gas, primarily in urban areas.