• Afghanistan
• Bangladesh
• Bhutan
• India
• Maldives
• Nepal
• Pakistan
• Sri Lanka

• In this section
• Structure of the Power Sector
• Reforms and Restructuring
• Fiscal Incentives (Appendix I)
• Year-wise Targets (Appendix II)
• Sari/Energy Reports, Studies and Presentations
• Useful Links

Bangladesh

Energy Sector Overview

At the time of partition of India in the year 1947, Power Generation and distribution of this part of the country (present Bangladesh) was in the hands of some private companies.
The power supply to 17 districts was within the township in a limited way. Power used to be supplied to most of the district during the night time only and the supply voltage was 400 volts. Only exception was Dhaka City where power used to be supplied by 2 Nos. of 1500 KW generators and the generation voltage was 6.6 KV and this was the highest distribution voltage.  Besides, power used to be generated by some industries and railway workshops. With all these the total power generation capacity in the country was 21 MW. The generation capacity of the power utility companies together was only 7 MW and there was no transmission system. 

Electricity Directorate was created in the year 1948 in order to plan and develop power supply situation of the country. After the creation of Water and Power Development Authority (WAPDA) in the year 1959 Electricity Directorate was merged with WAPDA in 1960. After that it started working as a statutory organization. During, the War of Liberation WAPDA was bifurcated into two autonomous Boards under an Ordinance (P.O. 59 of 1972). East Pakistan’s WAPDA was rechristened as Bangladesh Power Development Board (BPDB) and was solely entrusted with responsibility of Power Generation, Transmission and Distribution of electricity throughout the country. However, during the War of Liberation, power installations suffered extensive damage. As a result, at the worst case, peak demand dropped to 30 MW from the pre-liberation level of 225 MW. So, after independence the immediate problem facing Bangladesh was of rehabilitating the marginalized power supply.

By the end of 1972-73, a rehabilitation and development programme was undertaken in the First Five Year Plan. However, due to the shortage of funds the programme was carried over to the Two Year Plan. Several projects, initiated before the Liberation War was completed and a number of new projects were undertaken during this period. As a result, installed generation capacity increased to 822 MW from 545 MW, while the peak demand rose to 462 MW from 222 MW. However, during this period the power sector was marked with the operational issues, as a result the operational capacity remained much lower. (Source: http://www.sdnbd.org/)

Further, to reduce the gap between demand and generation capacity, the Second Plan undertook a rapid expansion programme. The most important achievement during this period was the construction of the East-West electrical inter-connector which enabled the transfer of gas-based low cost power from the east to the west. Five power generation plants having a total installed capacity of 330 MW were completed during this period. But generation capacity still lagged behind the demand. The main constraint to the expansion of power supply was shortfall of resources coupled with a huge system loss and a slow response to tariff adjustment against rising fuel cost. By the end of the Second Plan, the system loss stood at 37.5 per cent. An investment programme of Tk. 14,370 million at 1979/80 price was undertaken. The Second Plan also pursued a policy of substituting imported fuel by natural gas. A significant progress was made in this direction. By the end of 1984/85, total number of electricity consumers stood at about 964,000 compared with 522,000 in 1979/80. Table shows the progress of power development in the country during 1972-96.

Power sector development in Bangladesh from 1972-96

Ensuring supply ahead of demand is the ideal situation in case of electricity for meeting manufacturing, irrigation, commercial and domestic needs of any economy. However, it was not possible to do so in Bangladesh. Against a peak demand of 1640 MW in 1990/91 and 1970 MW in 1994/95, the installed capacity was only 2352 MW and 2908 MW respectively. The operational capacity (2133 MW) was again interrupted by occasional power outages owing to fluctuations in gas pressure, transmission and distribution faults. These caused enormous losses to industrial production and commercial activities. However, Irrigation suffered relatively less due to its use of diesel power and electricity supplied by REB in off-peak hours.

Electricity generation, transmission and distribution require large financial investment. Besides Bangladesh having considerable gas reserve and promising potentials, however due to high system loss, large account receivables, poor management, inability to rationalize tariff rate and delay in introduction of reforms the concessional loans for the power sector from the multilateral development partners was not made available in the Fourth Plan period.  The Fourth Plan was formulated with a public sector allocation of Tk. 64,500 million at 1989/90 prices for the power sector. This allocation was inadequate in relation to the physical targets set in the Plan document. Due to shortage of both local and external resources, the Plan allocation as well as Plan targets had to be revised. The revised allocation was Tk. 45,360 million at 1989/90 price level. Consequently, needed investments for generation, transmission and distribution of electricity could not be made during 1990-95. Hard term suppliers' credit and inadequate government resources made it possible to add only about 581 MW of generation capacity in the following power plants during the Fourth Plan Period.

1. Raozan (Chittagong Power Plant (1st Unit)    -  210 MW
2. Sylhet Combined Cycle Power Plant             -  90 MW
3. Baghabari Power Plant                                   -  71 MW
4. Ghorashal Power Plant (5th Unit)                   -  210 MW

However, due to non-completion of scheduled rehabilitation of some power stations, generation capability decreased by 271 MW and about 11 MW capability was retired during the period. The net capacity increase was thus 299 MW. In addition, reduced gas supply caused shut-down of some power stations resulting in lower operational supply of electricity.  Major targets as well as the achievements during the Plan period are shown in the table below.

Target and achievement of Fourth five year plan

Agency	Particulars	Actual	Fourth Plan	Achievement	Cumulative Position in (1994-95)
		Position in 1989/90	Target	New Addition during Fourth Plan (1990-95)
BPDB	Installed Capacity (MW) Capacity (MW) Transmission Line (km) 230 kv, 132kv & 66kv Grid Substation capacity (MVA) 230 kv, 132 kv & 66kv Distribution line km (33kv & below) Consumer connection (No.)	2352 1834 2503 4150 30256 (Excluding DESA) 850,438	2878 2743 3151 2621 36734   1,050,000	581 581 552 2369 4437   225,296	*2908 **2133 3055 6519 34693   1,075,734
REB	Distribution line km Electrified village (Number) Consumer connection (No.)	35333 8545 495,565	61188 14530 962,962	29853 7939 679,006	65186 16484 1,174571
DESA	Transmission line (km) 132 kv Grid Substation capacity	221 433	- -	104 874	325 1307

* 2352 MW + 581 MW new – 25 MW retired/standby = 2908 MW
** 1834 MW + 581 MW new – 11 MW retired – 271 MW derated/decrease for maintenance & rehabilitation = 2133 MW

During late 1990s reforms were initiated with organizational changes being made in the area of transmission and distribution of power in the country with Bangladesh Power Development Board (BPDB) being entrusted with generation, transmission and distribution in urban areas. Dhaka Electric Supply Authority (DESA) under the DESA Act as amended in 1998 was restructured into a corporate body with an independent Board of Directors. DESA was mandated with distribution of electricity in the Greater Dhaka area and Rural Electrification Board (REB) undertaking distribution in the rural areas. As a result outlaying areas outside metropolitan Dhaka with 4,100 km of assets was transferred to REB. This transfer resulted in an increase in demand of 8 Palli Bidyut Samities (PBSs) around Dhaka from 110 MW in FY 1997 to 575 MW in FY 2003 and also resulted in system loss reduction.

Power generation and distribution was opened to both local and foreign private investments with the formulation of "The Private Sector Power Generation Policy" in 1996. A Rural Power Company (RPC) was set up for generation and supply of power exclusively to the REB.  Dhaka Electric Supply Company Limited (DESCO) was incorporated in November 1996 with ultimate objective of taking over all assets from DESA. DESCO commenced commercial operation from 1 September 1998 by taking over Mirpur area from DESA.  DESCO has a fully independent board and introduced commercially oriented business culture with new service rules. DESCO has succeeded in reducing system loss from 43% at the time of taking over to 19% in June 2003. Billing and collections have substantially improved.

Power Grid Company Limited of Bangladesh (PGCB) was incorporated on 21 November 1996 to take over entire transmission assets of BPDB and DESA by December 2002. PGCB has taken over 100 percent of transmission assets from BPDP. Transmission assets of DESA (other than those that form integral part of DESA operation) have also been handed over to PGCB by December 2002. PGCB is fully responsible for construction of all new transmission assets.

Power Division was established in 1998 under the Ministry of Power, Energy and Mineral Resources vide Cabinet Division Notification No. CD-4/1/94-Rules/23(100), dated 25 March 1998. It is entrusted with the responsibility of overall management of the power sector in Bangladesh. Further, ‘Power Cell’ has been created by the government under Power Division, Ministry of Power, and Energy & Mineral Resources under “TA for Implementation of Bangladesh power sector reform” project to carry forward the Power Sector reform activities of the government of Bangladesh.
Power Cell drafted Electricity Reform Bill with assistance from both World Bank and Asian Development Bank. The Cabinet approved draft of the bill in 2000, and again in 2002. Of late, the Government decided to enact a single bill entitled ‘Energy Regulatory Commission Bill’ to cover electricity, gas and oil sectors. Integrated bill was cleared by the parliament on 10 March 2003 and led to the formulation of Bangladesh Electricity Regulatory Commission.

In Bangladesh, 90 million of the population out of 140 million does not have direct access to electricity and remaining 50 million people have access but reliable and quality power is still beyond their reach. The installed generation capacity has grown to 5269 MW (as on June 2007) from a meager 88 MW in 1960. Electricity generation grew at about 7% p. a. during last fifteen years compared with average annual GDP growth rate of about 5.5%. Table below gives detail of net generation, sales, losses and customer number.

Trends in net generation, sales, losses and customer numbers (2002-2007)

Notwithstanding the progress made to date, Bangladesh's per capita electricity generation of 165 kWh p.a. is still among the lowest in the world. About 43% of the population has access to electricity, which is also low compared to many developing countries. This implies that there is scope for significant growth in power sector. Given the huge investment requirement for power development in the country, Bangladesh would be looking forward to various sources of finance. The table below depicts power sector at a glance.
Power Sector at a glance (As on June 2007)

 

Present Structure of the Power Sector

Owner
• Power Division, Ministry of Power, Energy and Mineral Resources
Generation
• Bangladesh Power Development Board (BPDB)
• Ashuganj Power Station Company, Ltd (APSCL)
• Electricity Generation Company of Bangladesh Ltd. (EGCBL)
• Rural Power Company Ltd. (RPCL)
• Independent Power Producers (IPPs)
Transmission
• Power Grid Company of Bangladesh Ltd. (PGCB)
Distribution
• Bangladesh Power Development Board (BPDB)
• Rural Electrification Board (REB)
• Dhaka Electric Supply Authority (DESA)
• Dhaka Electric Supply Company (DESCO)
• West Zone Power Distribution Co., Ltd. (WZPDCL)
Regulator
• Bangladesh Energy Regulatory Commission
The chart below represents the current Bangladesh power sector structure.

Bangladesh Power Sector: Current Structure

 

A. Power Division

 The Government has allocated the following business for the Power Division: -

1. All matters and policies relating to Power sector.
2. General policies relating to generation, transmission and distribution of electricity including thermal power, Hydro and Mini Hydro-Electricity etc.
3. Formulation and Application of National Power Policy.
4. Regulation and development of electrical energy/nuclear energy.
5. Acquisition and revocation of licenses for electrical undertaking.
6. Administration of Electricity act, rules made there under and allied matters.
7. Administration and Control of Bangladesh Power Development Board, Rural Electrification Board, Office of the Chief Electrical Inspector & Electrical Adviser.
8. Any other matters relating to : -
1. Bangladesh Power Development Board
2. Rural Electrification Board
3. Energy Monitoring Unit
4. Office of the Electrical Adviser & Chief Electric Inspector.
5. Power Cell.
6. Dhaka Electric Supply Authority (DESA).
7. Dhaka Electric Supply Company Ltd. (DESCO).
8. Power Grid Company of Bangladesh Ltd. (PGCB).
9. West Zone Power Distribution Co. Ltd.
10. Ashuganj Power Station Company Ltd.
11. Electricity Generation Company of Bangladesh Ltd.
12. Any other State-owned Agency/Company in the power sector.
9. All laws on subjects allotted to this Division.
10. Preparation of Budget, all administrative matters & control of financial matters of the Ministry and Subordinate Dept./Corporations/Companies/Offices etc.
11. Inquiries and statistics on any of the subjects allotted to this Division.
12. Fees in respect of the subjects allotted to this Division except fees taken in courts.
13. Liaison with international organizations and matters relating to treaties and agreement etc.

i. Power Cell

Power Cell has been created by the government under Power Division, Ministry of Power, Energy and Mineral Resources under “TA for Implementation of Bangladesh power sector reform” project to carry forward the Power Sector reform activities of the government of Bangladesh. The objectives of the reform program can he stated as (not limited to):

1. To develop an implement able plan of reform program
2. To implement specific program to achieve desirable performance improvements, consumer satisfaction and viability of the sector
3. To help the utilities to achieve accelerated development of the sector with optimum utilization of resources,
4. To develop strategy for corporatization of different entities.
5. To structure financial & business plan of the existing & emerging entities
6. Io develop strategy for distribution area demarcation & rationalization of the utilities
7. To develop HR/D plan for the existing & emerging entities
8. To develop & Implement the centrally well designed MIS & IT system of power sector
9. To build in house capacity of system improvement & the sector's efficiency in formulating the tariff calculation and cash flow studies
10. To develop the power sector master plan incorporating the updated data.
11. To establish a communication system among the sectors utilities

B. Bangladesh Power Development Board (BPDB)

Bangladesh Power Development Board (BPDB), established in 1972, is the authority for planning, construction and operation of power generation and transmission facilities throughout Bangladesh and for distribution in urban areas except metropolitan city of Dhaka and its adjoining area.  Detail of installed electricity generation capacity has been given in the table below.

Total installed capacity of the BPDB (as on April 2007)

Zone	Description	Installed Capacity (MW)	Derated Capacity (MW)	Generation (MW) on
				Max.	Min.
				Gen. Day	Gen. Day
East Zone Total	Hydro	230	230	100	80
	ST (Steam Turbine)	2268	1935	1709	1244
	CC (Combined Cycle)	180	132	119	103
	CT (Combustion Turbine)	502	335	152	145
	D (Diesel)	0	0	0	0
	Private	1060	1060	999	995
	Total East Zone	4240	3692	3079	2567
West Zone Total	ST (Steam Turbine)	170	138	60	57
	CT (Combustion Turbine)	367	331	200	162
	D (Diesel)	18	9	7.8	6
	Coal	250	250	192	111
	Private	200	198	179	179
	Total West Zone	1005	926	638.8	514.4
System Total (East & West Zone combined)	Hydro	230	230	100	80
	ST (Steam Turbine)	2438	2073	1769	1301
	CC (Combined Cycle)	180	132	119	103
	CT (Combustion Turbine)	869	666	352	307
	D (Diesel)	18	9	7.8	6
	Coal	250	250	192	111
	Private	1260	1258	1178	1174
	Total System	5245	4618	3717.8	3081

C. Ashuganj Power Station Company Ltd

Ashuganj Power Station Company Ltd. (APSCL) owns the second largest power station in Bangladesh. The installed capacity by its 8 units is 724 MW and present de-rated capacity is 642 MW. Ashuganj Power Station fulfills about 15% of power requirements of the country.

Ashuganj Power Station was established in FY 1966, with the financial assistance of German Government. APSCL had two units, each of 64 MW (Unit 1 & Unit 2) and was commissioned in July 1970. To face the growing requirements for power in the country- Government of Bangladesh decided to setup another two units (Unit 3 & Unit 4) each of 150 MW capacities in Ashuganj. IDA, KfW (Germany), ADB, Kuwait and OPEC provided the financial assistance for this project. After the agreements signing with the contractors, government found that another unit of 150 MW can be established from the left over funds by the donors. With the consent from the donors, Government decided to setup another 150 MW unit (Unit 5).

The work for installation of Unit 3 & 4 was started in 1984 and Unit 5 in 1985. Unit 3, Unit 4 and Unit 5 were commissioned in December 1986, May 1987 and March 1988 respectively. During the planning of installation of Unit 3 & 4 it was decided to install a Combined Cycle Power Plant by financial assistance of British Government. According to that decision, works of two gas turbine units (GT1 & GT2) of 56 MW each and one steam turbine unit (ST1) of capacity 34 MW (with waste heat recovery Boiler) had been started. GT1, GT2 and CCST were commissioned in 1982, 1984 and 1986 respectively.

As a part of the Power Sector Development & Reform Program of Government of Bangladesh (GOB), APSCL has been incorporated under the Companies Act 1994. According to the Articles of Association of the company, 51% of total shares are held by BPDB and the rest 49% is distributed among Ministry of Finance, Ministry of Planning, Power Division, MOPEMR & Energy Division, MOPEMR of GOB.

D. Electricity Generation Company of Bangladesh Ltd

BPDB has also established a new company, Electricity Generation Company of Bangladesh Ltd (EGCB) to own the Siddhirganj power station (3x120MW). The plant is to be constructed with ADB and WB funding. A coal fired power station (250MW) at Barapukuria, in the north of the country, which is currently under construction.

E. Private Power Generation

 GOB amended its industrial policy to enable private investment in the power sector. In this regard Private Sector Power Generation Policy was framed in 1996 for promoting private sector participation in the generation of electricity to bridge the gap of competing demands on government resources and declining levels of external assistance from multilateral/bilateral donor agencies.

Power Cell, created under Power Division of Ministry of Power, Energy & Mineral Resources, got the mandate to lead private power development. The Government is strongly committed to attract private investment for installing new power generation capacity on build-own-operate (BOO) basis. Numbers of Fiscal Incentives are provided in the Policy for the private power companies.  (A detailed list of the Fiscal and other incentive has been provided in the Appendix I) Under the Private Sector Power Generation Policy, so far 1290 MW power plants have been established and under operation. Moreover 1590 MW plants are planned to be established in near future. List of existing IPPs are stated bellow:
List of existing IPPs

Sl. No.	Name of Power Plant	Fuel Type	Installed Capacity (MW)	Generation Capacity (MW)	Date of Com. Opn.	Contracted Levelized Tariff (US cents/kWh)
1	Khulna Power Company Ltd. (KPCL), Engine Generator	F. Oil	110	110	12/10/1998	5.83 (For liquid fuel) 4.40 (For gas)
2	Baghabari, WESTMONT, GT	Gas	90	90	26/06/1999	4.31
3	NEPC Consortium, Gas Generator	Gas	110	110	30/06/1999	4.41
4	Rural Power Co. Ltd. (RPCL), GT	Gas	140	140	14/04/2001	4.3
5	AES, Haripur CC	Gas	360	360	03-06-2001 (SC) 01-12-2001 (CC)	2.73 *
6	AES, Meghnaghat CC	Gas	450	450	26/11/2002	2.79 *
7	Summit Power Co. Ltd.	Gas	30	30	01/10/2003
	Total		1290	1290

Based on indicative Gas price: 2.40 US$/GJ.

F. Power Grid Company of Bangladesh

Power Grid Company of Bangladesh (PGCB) was created under the restructuring process of Power Sector in Bangladesh with the objective of bringing about commercial environment including increase in efficiency, establishment of accountability and dynamism. PGCB was incorporated in November 1996 with an authorized capital of Tk.10 billion. It was entrusted with the responsibility to own the national power grid and to operate and expand the same with efficiency. Pursuant to Government decision to transfer of transmission assets to PGCB from Bangladesh Power Development Board (BPDB) and Dhaka Electric Supply Authority (DESA), PGCB has completed taking over of all the transmission assets on 31.12.2003 and operating them.

Earlier generated power of different power plants all over the country was transmitted through PGCB's integrated grid system through 230 kV and 132 kV transmission lines and substations. In 1996 when PGCB was formed, the total length of 230 kV and 132 kV line were 838 ckt km and 4755 ckt km respectively which increases to 1144 ckt km and 4962 ckt km respectively in 2000-01 fiscal year. At present there are 2314.5 ckt km of 230 kV line and 5533.6 ckt km of 132 kV line throughout Bangladesh under PGCB. PGCB has been implementing optical fiber network, that is OPGW parallel to its over head transmission lines to establish digital communication system to improve the control and monitoring of the transmission system. As by product this optical fiber network will be utilized for the telecommunication and IT network of the country and generate huge income for PGCB.

Government of Bangladesh decided to offload 25% of its shares i.e. a total of 91,08,940 Nos. of shares (Tk.100 each) through the Stock Exchanges under Direct Listing in order to bring public participation and more accountability on the company’s activities and to strengthen the capital market of the country. Accordingly PGCB was listed on October’ 2006 at Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE). Offloading of shares started on October’ 2006. The Shares of the company has been trading in both Stock Exchanges since then.

ADB has provided financing for Meghnaghat Power Station Associated 230 kV Transmission Lines Project under the Ninth Power Project Loan. ADB has also provided another loan to PGCB under their Dhaka Power System Upgrade Project for construction of 50 km 230 kV transmission line and associated substation in the western part of Dhaka city, which enabled completion of a transmission line ring around Dhaka city. ADB has provided a separate loan to PGCB under their West Zone Power System Development Project for implementation of about 332 km long transmission lines and associated substations for improvement of transmission network in western grid. ADB has also financed the National Loan Despatch Centre Project.

However, later ADB has reallocated the savings from West Zone Power System Development Project to finance the project titled Shunt Compensation by capacitor Bank (Phase-1) and construction of a GIS Substation at Gallamari, Khulna. Very recently ADB has signed loan agreement to finance three new Transmission Projects of PGCB under their Sustainable Power Sector Development Program. 

In addition to above, the other two projects titled “Bogra-Barapukuria 230 kV transmission line” and “Ishurdi-Baghabari 230 kV transmission line” are being constructed by CCC, China & Tata Power, India respectively under Supplier’s Credit Program. World Bank has expressed their willingness to finance a new project titled “Construction of Siddhirganj-Maniknagar 230 kV Transmission Line and associated substations”. The transmission structure of PGCB up to June-07 is as follows:

1. 230 kV Line 1466.5 ckt km
2. 132 kV Line 5577.6 ckt km
3. 66 kV Line 167 km
4. 230/132 kV Substation 10 Nos. 5175 MVA
5. 132/33 kV Substation 70 Nos, 7219 MVA
6. 66/33/11 kV Substation 2 Nos, 25.6 MVA

G. DESA and DESCO

In 1990, an ordinance was issued, which was subsequently enacted as an Act transferring the 132 kv, 33 kv Transmission and distribution system in the Greater Dhaka Area including the Metropolitan City to a newly created Government agency called the Dhaka Electric supply Authority (DESA). This was done to lessen the administrative burden on BPDB,s management by relieving it of the burden of managing about 50 percent of the energy distribution in the entire country.

Further, As part of the "Reforms-Funding" linkage agreed between the donor partners and the Government, a large part to the funding was linked to redefining the franchise area of DESA and handing over of distribution networks outside Metropolitan Dhaka City to PBSs under REB, and formation of a corporatized Dhaka Electric Supply company (DESCO) which will initially take over part of the distribution network of DESA and ultimately take over all its assets.  The formation of this company was seen as an essential step towards ‘corporatization and commercialization’ of the sector and to reduce the excessive inefficiency in the distribution network. Especially, The Dhaka area is the largest single distribution territory consuming about 50 percent of the total electricity sold in Bangladesh. DESA, which is the distribution agency for the Dhaka area has a poor performance record with respect to system losses and accounts receivables. Although the performance has improved considerable since 1992 on account of intensive monitoring, there is a limit to the gains that can be made and it is felt that further progress can be achieved on a sustainable basis only if there is a change in the business environment, both external and internal to the organization, which will enable introduction of more sophisticated control and management systems, and also organizational accountability.

The new company (DESCO) is being created as a public sector company, incorporated under the Companies Act 1994 as a subsidiary of DESA. However, in the future, shares of the company will be offered to the private sector, other power sector entities and the general public to make the DESCO's management more responsive to its consumers. DESCO incorporated under the Companies Act 1994 with its own Memorandum and Articles of Association. The company as a whole owned by Government of Bangladesh and DESA representing government by acquiring 100% shares. DESCO managed by a part time Board of Directors appointed by its shareholders, they are responsible for policy decisions. The Board of Directors appointed managing Director and two full time Directors and they were also members of the Board Directors after appointment.

H. Rural Electricity Board

The Bangladesh Rural Electrification (RE) Program was founded with a Presidential Ordinance in October 1977 that established the Rural Electrification Board (REB) as the semi-autonomous government agency reporting to the Ministry of Power Energy and Minerals Resources, which was responsible for electrifying rural Bangladesh. Since its inception, the purpose of the program has been to use electricity as a means of creating opportunities for improving agricultural production and enhancing socio-economic development in rural areas, whereby there would be improvements in the standard of living and quality of life for the rural people

Today there are 70 operating rural electric cooperatives called Palli Bidyuit Samity (PBS), which bring service to approximately 72,00,000 new connection being made and more than 14,000 kms of line being constructed each year. REB started functioning in early 1978 and conceived 1st project containing 13 PBS. After twenty eight years, the number of PBS now stands at 70. The followings table depicts the main features of rural electrification in Bangladesh as on April, 2008.

Main features of rural electrification in Bangladesh

 

 

I. Bangladesh Energy Regulatory Commission (BERC)

Electricity Regulatory Commission Act 2003 (Act No. 13 of 2003) was passed in the parliament in March 2003 for the establishment of as independent and impartial regulatory commission to regulate Electricity, gas and petroleum sector.

In April 2004, Regulatory Commission was established and started functioning. The mandate of the commission includes framing rules and regulation to ensure transparency in the management, operation and tariff determination in Electricity, gas and petroleum sector. The commission will protect consumer and industry interest and promote competitive market. Major functions of BERC are as follows:

1. Issue, cancel, amend and determine conditions of licensees
2. Determine tariff safety enhancement
3. Frame codes and standards and make enforcement of those to ensuring quality of service
4. Resolves dispute between licensees and between licensees and consumer and refer those to arbitration if necessary.
5. Advice to the Government regarding electricity generation, transmission, marketing, supply distribution and storage of energy.

Apart for this the BERC has enacted the Licensing regulation for generation in 2006 and BERC is in the final phase of enacting Electricity Transmission Regulation, 2008 and Electricity Distribution Regulation, 2008.

Milestones of Electricity Supply in Bangladesh

Year	Description
1948	Electricity Directorate created in order to plan and develop power supply situation of the country.
1959	Water and Power Development Authority (WAPDA) was created.
1960	Electricity Directorate was merged with Water and Power Development Authority.
1966	Ashuganj Power Station (724MW), the second largest power station in Bangladesh, established with the financial assistance of German Government.
1972	WAPDA was bifurcated into two autonomous Boards under an Ordinance (P.O. 59 of 1972).
1972-73	A rehabilitation and development programme was undertaken in the First Five Year Plan
1972	Bangladesh Power Development Board, established as the authority for planning, construction and operation of power generation and transmission facilities throughout Bangladesh and for distribution in urban areas except metropolitan city of Dhaka and its adjoining area.
October 1977	The Bangladesh Rural Electrification (RE) Program was founded with a Presidential Ordinance that established the Rural Electrification Board (REB) as the semi-autonomous government agency reporting to the Ministry of Power Energy and Minerals Resources. This marked the start of Power sector reforms.
Early 1978	REB started functioning and conceived 1st project containing 13 Palli Bidyut Samities (PBS)
1991	Dhaka Electricity State Authority created.
1993	A high power inter-ministerial Committee on 'Power Sector Reform` was constituted in 1993.
1995	Power Cell, created under Ministry of Energy & Mineral Resources in 1995 to drive power sector reforms and to promote private power development.
1996	Power generation and distribution was opened to both local and foreign private investments with the formulation of "The Private Sector Power Generation Policy" in 1996.
1996	The National Energy Policy adopted in 1996.
November 1996	Dhaka Electric Supply Company Limited (DESCO) was incorporated in November 1996 with ultimate objective of taking over all assets from DESA.
November 21, 1996	Power Grid Company Limited of Bangladesh (PGCB) was incorporated on 21 November 1996 to take over entire transmission assets of BPDB and DESA by December 2002.
March 25, 1998	Power Division was established in 1998 under the Ministry of Power, Energy and Mineral Resources vide Cabinet Division Notification No. CD-4/1/94-Rules/23(100), dated 25 March 1998
1998	Dhaka Electric Supply Authority (DESA) under the DESA Act as amended in 1998 was restructured into a corporate body with an independent Board of Directors.
September 1, 1998	DESCO commenced commercial operation from 1 September 1998 by taking over Mirpur area from DESA.
1998	GOB approved “Policy Guideline for Small Power Plant (SPP) in Private Sector” in 1998
June 2000	Vision Statement and Policy Statement on Power Sector Reforms released.
December 2002	Transmission assets of DESA (other than those that form integral part of DESA operation) handed over to PGCB.
March 10, 2003	Integrated bill cleared by the parliament on 10 March 2003 which led to the formulation of Bangladesh Electricity Regulatory Commission.
April 2004	Regulatory Commission was established and started functioning.
December 31, 2003	PGCB completed taking over of all the transmission assets and operating them.
January 2004	GOB approved conversion of BPDB into a holding company.
October 2006	PGCB was listed on October’ 2006 at Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE).
2006	BERC enacted the Licensing regulation for generation.

Reforms and Restructuring: Measures Undertaken
 
The foremost priority in the Power sector reform agenda of the Government is to establish a legal frame-work for enabling business transaction in the new environment. The roles of owners and operators is being delegated to evolving functional entities according to the structural needs of reformed power sector under the supervision of the Energy Regulatory Commission. Government shall, however, issue policy directives on matters concerning electricity including on measures which are considered necessary for the overall planning and coordination for the development of the electricity sector.

In fact power sector reforms started in late '70s through the creation of Rural Electrification Board (REB). However as part of reform programs following activities have been done so far:

1. Power Sector Reform started in 1977 through creation of Rural Electrification Board
2. Success of RE program
3. 67 Nos. Palli Bidyut Samities (PBSs) established and 3 more PBSs organized
4. Area coverage increased
5. Supplying electricity to 5.4 million consumers out of country's about 8 million consumers
6. Poverty alleviation
7. DESA created in 1991. However its performance is not satisfactory
8. A high power inter-ministerial Committee on 'Power Sector Reform` was constituted in 1993. The committee's recommendation included :
1. Corporatization and commercialization of emerging power sector entities.
2. Establishment of an independent Regulatory Commission
9. Power Cell, created under Ministry of Energy & Mineral Resources in 1995 to drive power sector reforms and to promote private power development
10. The National Energy Policy adopted in 1996 which recommended among others:-
1. Sector unbundling-segregation of power generation, transmission and distribution functions into separate services.
2. Private sector participation in power generation and distribution.
3. Establishment of an Energy Regulatory Commission
11. GOB approved conversion of BPDB into a holding company in January 2004 under the Companies Act, 1994.
12. Introduction of cost reflective tariff for financial viability of the utilities and promoting efficient use of electricity.
13. Development of demand side management including energy efficiency measures to conserve energy.
14. Development of alternative/renewable energy sources.
15. Vision Statement and Policy Statement on Power Sector Reforms was released in June 2000
16. An independent Bangladesh Energy Regulatory Commission (BERC) has been established and has started functioning in January 2004, under Energy Regulatory Commission Act 2003. It will be regulating the Electricity, Gas and Petroleum sector

Generation:

1. “Private Sector Power Generation Policy” developed and adopted in 1996
2. Under the policy 1290 MW private power is contracted which is under operation
3. Another 1140 MW Private Power is under process of implementation
4. GOB approved “Policy Guideline for Small Power Plant (SPP) in Private Sector” in 1998
5. Licenses have been issued to five Small Power Plants having total capacity of 90 MW.
6. Establishment of another seven Small Power Plants is under process
7. Ashuganj Power Station is converted into a corporatized entity and management has been appointed
8. Electricity Generation Company of Bangladesh (EGCB) established to implement, own and operate the proposed 3x120 MW peaking power plants at Siddhirgonj
9. Haripur 100 MW and Baghabari 170 MW Power Station are converted into SBU
10. Steps taken to install new power plants under various mode of financing
11. Private sector participation as IPP
12. Financing be arranged by borrowing commercial bank loan
13. Own financing fund be arranged through Stock Market
14. Suppliers credit are also being sought
15. GOB funding is also being mobilized

 
Transmission:

1. Power Grid Company of Bangladesh Limited (PGCB) has been created in 1996. All the transmission assets (100%) including Load Dispatch Center (LDC) have been transferred from BPDB to PGCB.

Distribution:

1. DESCO was established in 1996 and is now functioning at Mirpur, Gulshan, Baridhara and Uttara area of Dhaka
2. Corporatization of Dhaka Electricity Supply Authority (DESA) is under process
3. West Zone Power Distribution System of BPDB has been corporatised and management appointed.
4. Corporatisation of North West Zone Power Distribution system of BPDB is under process
5. Corporatisation of South Zone Power Distribution system of BPDB is under process
6. Programmes taken to introduce pre-paid metering system at Chittagong, Sylhet, Shirajgong and Bogra under BPDB and at Lalbag under DESA to increase revenue collection. ATM Card introduced for payment of Electricity Bill in Dhaka and Chittagong
7. Steps taken to bring the people of remote areas of the country under electricity system through Remote Area Power Supply System (RAPSS)” programme
8. Distributed generations with distribution franchise for a certain period
9. Development Service Agreement (DSA signed with the IIFC to conduct the feasibility study in 4 areas
10. Program be implemented in the private sector
11. SBU activities adopted in 47 Nos. distribution divisions of BPDB and DESA
12. Performance Target Achievement (PTA) Scheme would be introduced and contract has been signed with 12 distribution circles.

 
Renewable Energy Development:

1. A draft Renewable Energy Policy has been prepared which is under process of approval by the Govt.
2. Renewable Energy (solar home system) program is being implemented by both REB and private sector with the World Bank assistance
3. Chairman and two members have already been appointed and the Commission has started functioning
4. Preparatory works relating to functioning of Regulatory Commission such as drafts codes & standards, license, customer service charter, job specification etc. have been prepared with ADB's assistance.

 
Tariff

1. Power Pricing Framework has been approved by the Government.

 

A. Road Map for Institutional reform: 2008-2010

The 3-year Road Map (2008-2010) including the time-bound action plan has been envisaged in line with Poverty reduction Strategy Paper (PRSP) for realization of the vision of reaching electricity to all by 2020. Six monthly rolling goals for the next three years were also prepared (Annexure - II).

During this period, electricity demand is expected to grow at the rate of 8-10% per annum. As such, the demand is expected to rise to about 6,608 MW by 2010. Therefore for reliable supply of power, the generation capacity will be required to be raised to at least 8,000 MW which will facilitate raising the per capita consumption to 172 KWh and access to electricity to 60%. Thus about 2,800 MW of new generation capacity will be needed to ensure adequate supply of electricity. Simultaneously, about 2200 circuit km (100 km 400 kV, 1500 km 230 kV and 600 km 132 kV) of transmission line and about 50,000 km of distribution line will have to be constructed for evacuation and distribution of power.

Together with institutional reform and prudent investment program ensuring least cost solution can provide quantity and quality power to the consumers at an affordable price for sustainable economic and social development of the country. However, in order to redress the sufferings of the consumers due to acute power shortage in the shortest possible time, the Government has, as an interim measure, contracted with private power companies for generation and supply of electricity to BPDB on rental basis for 3 years. These rental power plants (about 300 MW) are expected to be commissioned within 4 months of signing of contract i.e., by May 2008. It is expected that within next 3-4 years, the power plants planned for implementation according to least cost plan will come on line, when these rental power plants will not be required. In response to overall gas situation, particularly transmission and distribution constraints new base load, small IPPs and rental power plants are being set up in and around areas where reliable gas supply is available.

The primary objective of the 3-year institutional reform programme is to create an institutional foundation on which to ramp, in a sustainable manner, the substantial investments needed for the sector to properly support economic growth and reduce poverty. This will require the sector to be restructured to improve its efficiency, transparency and overall governance, facilitate effective and independent regulation, expand competition, and begin to improve the quality of electricity services.

Experience gained from the reform attempts has been considered in preparing the road map. Creation of DESA as a separate authority, without introducing new management & corporate culture and without sufficient autonomy & incentive, did not yield good results. Again creation of Ashuganj Power Station Company Ltd (APSCL) and WZPDC without sufficient preparatory works and addressing governance & employee issues properly created mismanagement in the business. Implementation of road map in future will be based on in-depth study.

The main outcomes being sought over the next 3-years is further unbundling of electricity supply into an economically viable number of separate generation and distribution companies, and a single transmission company. These operating companies will act as subsidiaries of BPDB holding company. Technical co-ordination of power system operation will be enhanced through implementation of National Load Dispatch Centre (NLDC) project linking generation and grid substations. A strong planning and power trading department for bulk power management will be organized under the BPDB holding company. The indicative milestones for the institutional reforms of the power sector for the next 3 years are summarized below:

i. Generation:
i.a. Existing Generation:
1.1. All the existing power stations in the public sector will be converted into profit centres for eventual conversion to a corporatized entity individually or on cluster basis which will be retained by BPDB holding company.
1.2. All commercial issues related to asset transfer and valuation will be completed.
1.3. The business and financial plans will be developed.
1.4. All works related to employee issues including payment of service benefits will be completed as per guidelines provided in the Policy Statement on power sector reforms. Employment of all employees to the corporatized entities shall be governed by the latter’s service rules.
1.5. All efforts will be undertaken by GOB so that the emerging entities can start functioning commercially.
1.6. Special plans will be developed to enhance technical and managerial efficiencies and establishing good governance.
1.7. Special attention will be given to Human Resources Development (HRD) program.
1.8. To improve technical and management capability and to establish accountability, special organizational activities like TQM will be introduced.

ii.b. New Generation:
New generation projects will be taken up to achieve the desired security of supply at generation level to be met at least cost and generation capacity will be sought through a mix of sources i.e. public, private, and public-private joint ventures. Employment of Private Sector resources in new generation will be encouraged. For public sector new generation, special attention will be given to good governance, efficient O&M and establishing commercial environment.

ii. Transmission:
1. PGCB will continue to operate as a wheeler of electricity.
2. Special attention will be given to Human Resources Development (HRD) program.
3. Demarcation of functional area of generation, transmission and distribution will be finalized and installation of system metering will be completed to establish commercial arrangement among the sector entities.

iii. Distribution:
It is realized that main problem lies in the distribution segment. Therefore the success of the reform programmes can not be sustained until commercial environment is established in this segment.

iii.a. BPDB:
1. BPDB distribution segment will be converted into a number of distribution companies under BPDB holding company. All works towards corporatization of BPDB distribution will be completed.
2. All commercial issues related to asset transfer and valuation will be completed.
3. Business and financial plans will be developed.
4. All works related to employee issues including payment of service benefits will be completed as per guidelines provided in the Policy Statement on power sector reforms. Employment of all employees to the corporatized entities shall be governed by the latter’s service rules.
5. All efforts will be undertaken to complete computerization of commercial functions to boost revenue collection and establishing transparent transaction.
6. Special attention will be given to Human Resources Development (HRD) program.

iii.b.  DESA/DPDC:
1. DPDC will be fully functional with employees recruited through a process approved by the company.
2. All commercial issues related to asset transfer and valuation will be completed.
3. Business and financial plans will be developed.
4. All works related to employee issues including payment of service benefits will be completed as per guidelines provided in the Policy Statement on power sector reforms. Employment of all employees to the corporatized entities shall be governed by the latter’s service rules.
5. All commercial functions will be computerized to boost revenue collection and improve transparency.
6. Special attention will be given to Human Resources Development (HRD) program.

iii.c. REB:
1. Steps will be taken to improve REB’s performance based on reorganization study.
2. Steps will be taken to improve network expansion planning process using advanced tools (software) for least cost option in line with GOB’s vision to provide access to electricity to people at an affordable cost.

iv. Sector Regulation:
The Bangladesh Energy Regulatory Commission Act was enacted in March 2003 and
Bangladesh Energy Regulatory Commission has been made functional since April 2004. The Commission has mandate to regulate the electricity, gas and petroleum sector. The Commission already issued ‘generation licensing regulation’ in 2006. Government recently approved service regulations of BERC staff. The Commission will be fully functional by the year 2008, with appointment of qualified staffs pursuant to the approved BERC organogram.
v. Power Market Structure:
At present BPDB is functioning as Single Buyer and it will continue functioning except for some direct power purchase from small power producers by the utility. Multi buyer/Competitive pool may be adopted when the market becomes mature and stable.

vi. Implementation and Monitoring Approach of Reform Program:
Implementation of the reform program is a very complicated and difficult task and requires well-organized, integrated and comprehensive plan and actions. It will require close co-ordination, interaction and strong commitment of the Government, and other stakeholders.  A high level National Steering Committee has been formed. A Task Force has also been established and a Working Group has been formed in each utility to implement and monitor the power sector reform programs in a coordinated and comprehensive manner.

 

B. Development Plan unto 2020 and going forward

The Government is giving its best effort to reach the goal of providing electricity service to all the people by the year 2020. Along with the reform program, Government has taken a number of time bound development plan. By the year 2020, installed capacity has been planned to increase to 17,765 MW. On the other hand, as per this plan transmission line will be increased to 8,396 KM and distribution line will be extended to 4,77,558 KM. In order to implement this plan investment required is 3 billion US$ upto the year 2007 and 4.5 billion US$ and 7.0 billion US$ during 2007-2012 and 2012-2020 time period respectively. Along with the own financing of the Government, assistance from the development partners and private investors are required to bear this huge expense. A summary of the development plan is given below:

Power System Development Plan up to 2020

Sl. No.	Item	Year				New Addition
		2004	2007	2012	2020
1	Installed Capacity, MW	4,710	6,441	9,666	17,765	14,525
2	Peak Demand, MW	3,622	5,368	7,887	14,600	10,978
3	Net Generation, MKWh	20,302	26,651	39,157	76,545	56,243
4	Transmission Line, Km	3,919	4,898	7,180	8,396	4,477
5	Capacity of Grid S/S,MVA
	(a) 230/132 kV	3,700	5,950	11,575	19,075	15,375
	(b) 132/33 kV	7,084	9,642	17,920	27,367	20,283
6	Distribution Line, Km	2,26,232	2,66,375	3,45,530	4,77,558	2,51,326
7	Nos. of Consumers, Lac	79.6	90.36	127.55	207.67	128.07
8	Nos. of Village Electrified	44,546	52,071	69,571	84,000	39,454
9	Per Capita Generation, kWh	155	190	260	450	295
10	Access to Electricity	35%	47%	65%	100%	65%
11	Investment Requirement, (10 US$)		3.0 (upto 2007)	4.5 (1207-2012)	7.0 (2012-2020)

 

i. Future Reform Program

Government is committed for providing affordable and reliable electricity to all citizens by 2020 for economic and social development. To materialize this vision, power sector reform, restructuring and private sector participation is utmost important for introducing competition, performance improvement and growth. A number of steps have been identified in generation, transmission and distribution sub-sector for structural reform and competitive energy market which have been mentioned below. 
Generation:

1. Bangladesh Power Development Board (BPDB) will be converted into a Holding Company under the Companies Act, 1994.
2. All the BPDB's existing generating stations will be corporatized & operated under BPDB Holding Company.
3. New Power Plants will be set up under joint venture, Bank loan, own financing, funds raised from the capital market and foreign direct investment as merchant plant along side IPPs.
4. Direct foreign investment will be encouraged.
5. Corporatization of North Zone and South Zone of BPDB distribution is under process

Transmission:

1. PGCB will carry out the transmission business in the whole of Bangladesh.

Distribution:

1. The distribution segment of BPDB and DESA will be corporatized into a number of subsidiary companies under BPDB Holding Company Network business and Commercial function will be separated through contracting out to the private sector.
2. DESA be converted into corporatized entity.
3. Private participation will be introduced by off-loading shares.
4. Additional funds will be raised from the capital market through issuing shares.
5. Palli Bidyut Samities (PBSs) will mainly continue its business in the distribution areas but at the same time will have their own generation to meet growing demand under Rural Electrification Board (REB).

Industry & Market Structure:

1. Power Sector will be fully restructured and commercialized
2. Market imperfection will be removed
3. Fully competitive market will be established
4. Initially Single Buyer Market Structure will be followed.
5. Multiple Buyers/Sellers and competitive pool market structure will be established
6. Private sector participation will be dominant
7. Utilities will be self-sustained
8. ERC will be fully functional and establish a competitive power market
9. An Independent System Operator (ISO) will be established for economic/merit order dispatch of electricity

Appendix I

Fiscal incentives

1. The private power companies shall be exempt from corporate income tax for a period of 15 years.
2. The companies will be allowed to import plant and equipment and spare parts up to a maximum of ten percent (10%) of the original value of total plant and equipment within a period of twelve (12) years of Commercial Operation without payment of customs duties, VAT (Value Added Tax) and any other surcharges as well as import permit fee except for indigenously produced equipment manufactured according to international standards.
3. Repatriation of equity along with dividends will be allowed freely.
4. Exemption from income tax in Bangladesh for foreign lenders to such companies.
5. The foreign investors will be free to enter into joint ventures but this is optional and not mandatory.
6. The companies will be exempted from the requirements of obtaining insurance/reinsurance only from the National Insurance Company, namely Sadharan Bima Corporation (SBC). Private power companies will be allowed to buy insurance of their choice as per requirements of the lenders and the utilities.
7. The Instruments and Deeds required to be registered under local regulations will be exempted from stamp duty payments.
8. Power generation has been declared as an industry and the companies are eligible for all other concessions which are available to industrial projects.
9. The private parties may raise local and foreign finance in accordance with regulations applicable to industrial projects as defined by the Board of Investment (BOI).
10. Local engineering and manufacturing companies shall be encouraged to provide indigenously manufactured equipment of international standard to private power plants.

Other facilities and incentives for foreign investors

1. Tax exemption on royalties, technical know-how and technical assistance fees, and facilities for their repatriation.
2. Tax exemption on interest on foreign loans.
3. Tax exemption on capital gains from transfer of shares by the investing company.
4. Avoidance of double taxation in case of foreign investors on the basis of bilateral agreements.
5. Exemption of income tax for upto three years for the expatriate personnel employed under the approved industry.
6. Remittance of upto 50% of salary of the foreigners employed in Bangladesh and facilities for repatriation of their savings and retirement benefits at the time of their return.
7. No restrictions on issuance of work permits to project related foreign nationals and employees.
8. Facilities for repatriation of invested capital, profits and dividends.
9. Provision of transfer of shares held by foreign shareholders to local shareholders/ investors.
10. TAKA, the national currency, would be convertible for international payments in current account.
11. Re-investment of remittable dividend to be treated as new foreign investment.
12. Foreign owned companies duly registered in Bangladesh will be on the same footing as locally owned companies with regard to borrowing facilities.

Appendix II

Year wise Targets

Year 2008 (January to December)

1. Study for conversion of BPDB into a holding company will be completed. The study will address corporate and organizational structure of proposed holding company, governance issues, relationship between holding company and subsidiaries, employee issues, institutional development and capacity building etc. Incorporation of BPDB holding company will be completed.
2. Corporatization of DESA will be completed and efforts will be made to improve performance including collection of revenues. All works related to appointment of employees, payment of service benefits etc. will be completed. Employment of all employees of the corporatized entity shall be governed by the company’s service rules. All assets from DESA will be transferred to DPDC.
3. West Zone Power Distribution Company will be fully functional.
4. Management and staff appointment of North West Zone Power Distribution Company will be completed. New organizational structure will be prepared and starts functioning with a well-prepared business plan.
5. Study for institutional development of EGCB will be completed which includes addressing governance issues, preparation of business plan, drafting power purchase agreement (PPA) and Gas Supply Agreement (GSA) etc. O&M contractor will be appointed.
6. South Zone Power Distribution Company (SZPDC) will be incorporated. Board of Directors and top management will be appointed. Procurement process for large customer metering will be completed and installation of meter, CT, PT etc will start.
7. Central Zone Power Distribution Company (CZPDC) will be incorporated. Board of Directors will be constituted and top management will be appointed.
8. Power Sector Financial Restructuring and Recovery plan will be implemented.
9. Board of Directors for NWPGC will appointed. Qualified staffs will be recruited.
10. Installation of system metering for establishing commercial arrangement among the sector entities will start
11. ‘Generation support framework and financing strategy’ will be approved.
12. Energy Policy incorporating renewable energy will be updated and approved by the Government
13. Study on REB’s Institutional Development will start.
14. Service regulations and organogram of BERC are approved and all Commissioners appointed.

Year 2009 (January to December)

1. Board of Directors of BPDB holding company and top management will be appointed. All works related to employee issues including payment of service benefits will be completed. Organization of Holding Company will start.
2. DPDC with new structure will be fully functional.
3. North West Zone Power Distribution Company will be operational.
4. Corporatization of SZPDC and CZPDC will be completed.
5. Business plan for NWPGC will be prepared.
6. Installation of system metering will be completed.
7. Study on REB’s Institutional Development will be completed.
8. Corporatization of BPDB’s remaining power plants into a number of generation companies under BPDB holding company will start.
9. Establishment of an independent entity to act as Single Buyer will be examined.

Year 2010 (January to December)

1. BPDB holding company with new structure will be fully functional.
2. Corporatization of BPDB’s distribution segment into a number of distribution companies under BPDB holding company will be completed.
3. SZPDC and CZPDC will be fully functional.
4. Corporatization of BPDB’s remaining power plants into a number of generation companies under BPDB holding company will continue.
5. An entity to act as a Single Buyer will be established.