USAID's Response: Energy

USAID assistance in the energy sector focuses on the establishment of an effective regulatory authority in the sector and strengthening the rural electrification program. USAID thus contributes towards creating a regulatory climate conducive to increased investment to boost supply and increase access to energy, particularly among the rural poor, to promote economic growth.

Independent Energy Regulatory Commission:

USAID works closely with other donors and the Government of Bangladesh (GoB) to make the Bangladesh Energy Regulatory Commission (BERC) a truly effective and an independent regulatory body for the energy sector. It provides the BERC with technical assistance to adopt and implement regulations that will bring about transparency, accountability and predictability in sector operations.  More importantly it will help establish a transparent energy regulatory climate that will protect the interest of consumers and investors and provide incentives for energy sector utilities to improve the efficiency of operations and the quality of service.

Rural Electrification:

USAID's most significant contribution to the energy sector in Bangladesh is in rural electrification. Working with the National Rural Electric Cooperative Association (NRECA), USAID pioneered the Rural Electrification Program. It now brings electricity to about 45 million people across rural Bangladesh. This program helped establish the Rural Electrification Board (REB) as a semi-autonomous agency under the Government of Bangladesh. With electricity, about 180,000 electric irrigation pumps can now provide low-cost irrigation to farmers during the dry season. As a result, farmers can increase their production to meet growing demand, at the same time providing more food for themselves and their families. In recent times the rural electric cooperatives’ (PBSs) capacity to deliver services have been impaired by a lack of generation capacity limiting their ability to meet demand.  There has been a growing concern among the donors because of a lack of reforms in REB/PBSs that are considered essential to further develop and sustain the program over the long-term.

Renewable Energy and Energy Efficiency:

In the coming years, USAID will engage more in the field of renewable energy and energy efficiency in order to help reduce greenhouse gases (GHG) emissions. Support will also be provided to Bangladesh to purse its economic development under a low emission trajectory under the Enhancing Capacity for Low Emission Development Strategy (EC-LEDS).

South Asia Regional Initiative on Energy (SARI/Energy):

Complementing these activities is USAID's South Asia Regional Initiative for Energy (SARI/Energy) program. The program promotes energy security in South Asia by facilitating more efficient regional energy resource utilization, increasing transparent and profitable energy practices, mitigating the environmental impacts of energy production, and increasing regional access to clean energy. The SARI/Energy program focuses on:

1. Cross border energy trade
2. Energy market formation
3. Regional clean energy development

Program Successes: Energy

USAID training enabled the BERC to issue a number of binding decision orders for retail tariffs  on electricity through transparent, interactive and open hearing processes and sound technical analysis. This is a shift from the arbitrary tariff decision-making by the GOB a few years ago. In 2010, USAID also provided training to the BERC and a number of Bangladeshi utilities to help establish a uniform system of accounts, adopt energy conservation and efficiency, and set standards for technical quality of service by the utilities. The training helped codify procedures and operations at the BERC that are essential for building investor confidence. In rural electrification, USAID helped develop a graduation policy for rural electric cooperatives (RECs). The program has identified three pilot cooperatives for increased support leading to accreditation based on a greater autonomy of operation that eventually will lead to financial sustainability. In addition, the USAID program established, as pilots, two Business Support Organizations (BSOs) within two selected RECs to provide business advisory services for rural economic development. The effort will help the RECs have a better customer mix for improved revenue generation.