Example Of Bangladesh Essay

‘Subject’

Bangladesh - The Private Sector Role in Development
1) Is the private sector present in the electric sector? If so, since when? If not, was it ever present? Until when? What happened?
Bangladesh is considered to be one of the most energy-poor nations, with almost 38% of the nation’s population not having access to electricity. It is able to only partially meet the energy demands of the country, and since 2013, has been importing electricity from countries like India. The frequent power outages that occur in the country are blamed on the old grid infrastructure and poor administration.Electricity production and distribution in Bangladesh is controlled by a Government body called Bangladesh Power Development Board (BPDB).
The BPDB was created as a public sector organization in the year 1972, right after the Bangladesh war of independence. Public ownership and state control has been the traditional model for managing electricity in Bangladesh. Since 1999, the Bangladesh government allows private participants in the electric sector as Independent Power Producers (IPP), working under government control, to boost the power sector. Structural changes are taking place in the Power sector but the operations are only partially privatized.
As of January 2015, Installed Generation Capacity of the public sector plants was 5,880 MW and the private sector was 4937 MW. Thus, the private sector produces almost 46% of the total 10,817 MW. The private sector production comes from small independent power producers from whom the government buys at a constant price. However, the administration of the power distribution in the country is fully managed by the government through the BPDB.
The government offers various incentives to attract foreign and domestic investors by giving tax exemptions and other fiscal incentives. The government in the long run is planning towards increasing private participation to meet the huge energy demands of the country. The government plans to drastically increase its power generation capacity by the year 2021 and priority is given to attracting foreign investment. At present, however, only half the population has access to electricity that too with periodical power outages.
2. Has there been a privatization process? Was it successful? What lessons learned, if any?
Bangladesh is one of the pioneers in public sector privatizations among the Asian countries. It has been pursuing privatizations for more than two decades. The monumental losses suffered by the public enterprises and corruption, forced the government to hand over many key sectors to private players. The privatization process begun as early as 1974, following the great famine, but it gained momentum only during 1993.
The New Industrial Policy (NIP) of 1982 was a milestone in Bangladesh’s privatization exercise, as it introduced some fundamental changes in the industrial policy environment. A large number of jute and cotton textile mills were returned to its owners, during this period. After that, hundreds of state-owned industries were put up for sale. Although privatizations started early in Bangladesh, the progress has been much slower than the other Asian nations.
The Privatization Commission set up in 1993, is responsible for privatizing State-Owned Enterprises. As with any developing country privatization is a topic of debate in Bangladesh. There have been many problems with regard to privatization, like many private companies borrow from state-owned Nationalized Commercial Banks for investment in new projects, but fail to repay the state banks. The privatized firms effectively continue to rely on state-owned banks. Other problems in the previous privatizations in Bangladesh include corruption, misdirected credit, inefficiency and misallocation of resources.
These problems are particularly severe in incomplete privatizations such as power sector. Thus, to increase efficiency and to meet the growing power demand in Bangladesh, power sector should be completely privatized. The government role should be limited in power sector, and the government should play regulatory role only in areas such as consumer protection, support for oil/gas and monopoly prevention. Government policy should support free market economy. Small market operators would not possess the capital and technical knowhow to eradicate the power problems plaguing the country, and only a full-fledged privatization can attract big investors capable enough to revamp the struggling electric sector of Bangladesh.

Bibliography

Akram, Tanweer. "A Theory of Ineffective Privatization: The Case of Bangladesh – Part I." Problems and Perspectives in Management, 1/2004, 2004: 20-30.
Associated Press. Nationwide blackout in Bangladesh ends . November 2, 2014. http://www.latimes.com/world/asia/la-fg-nationwide-blackout-in-bangladesh-ends-20141102-story.html (accessed February 28, 2015).
Board of Investment – Prime Minister’s Office. Power Industry in recent times. 2015. http://www.boi.gov.bd/index.php/potential-sector/power-industrry (accessed February 28, 2015).
Momen, Nurul. "Implementation of Privatization Policy: Lessons from Bangladesh." The Innovation Journal: The Public Sector Innovation Journal, Volume 12(2), 2007: 1-14.
The Bangladesh Power Development Board . Present Installed Generation Capacity (MW) as on January, 2015. January 2015. http://www.bpdb.gov.bd/bpdb/index.php?option=com_content&view=article&id=5&Itemid=6 (accessed February 28, 2015).