CASE STUDY

Total Marks: 100 Time: 4 Hours

1. Check that your question paper contains all the exhibits as mentioned in page 3. The
consecutive page numbering may be found under the base line at the foot of each page;

2. Use the answer script provided by the Institute. Write your name, roll no, registration no
and name of the subject on the upper portion of the cover page of the answer script.
Candidates are asked not to write any particulars of identification in any other place of
the answer script and additional pages if taken.

3. Questions must be answered in English.

4. The answer should be referenced to the relevant workings.

5. Answer script and additional page(s) taken to write answer, used or unused, must not be
removed or taken away from the Examination Hall.

1
Requirements & Marks Allocation

You are Muhaimin Ahmed, a senior articled student of MM Ahmed Chartered Accountants. The senior
partner of the firm, Tazrian Ahmed has given you an e-mail detailing of your assignment.

Requirements:

You are required to prepare a draft report to your partner Tazrian Ahmed.Your report should comprise
the following three elements:

 An executive summary
 Your responses to the detailed requirements set out in Exhibit -2.
 State clearly any assumptions that you make.

Marks Allocation:

All of the marks in the Case Study are awarded for the demonstration of professional skills, allocated
broadly as follows:

Assimilating and using information 20%

Structuring problems and solutions 30%
Applying judgement 25%
Drawing conclusions and making recommendations 20%
Demonstrating integrative and multidisciplinary skills 5%
-------------------
100%
===========

Approximately 15% of the marks are awarded for the executive summary and 10% for the appropriate
discussion of ethical issues within your answer to the requirements. Ethical issues may not form a
specific requirements but , within a requirement, may cover such topics as:

Lack of professional independence or objectivity

Conflict of interest among stakeholders
Doubtful accounting or commercial practice
Inappropriate pressure to achieve a reported result.

In planning your report, you should be aware that not attempting one of the requirements,
including an executive summary, will have a significantly detrimental effect on your chances of
success. In addition, as indicated above, all four skills areas will be assessed under each of the four
elements of your report.

You should be clear that marks are awarded for demonstrating your professional skills, not for
reproducing facts from the case. In order to be successful, you will need to:

Demonstrate your knowledge of the case material and make use of your analysis.
Carryout relevant analysis of the problems and structure your proposed solutions
Apply your judgment on the basis of the analysis that you have carried out
Draw conclusions from your analysis and judgment, and develop them into practical
commercial recommendations.

2
 LIST OF EXHIBITS

Exhibit Description Page

reference
1 About you (Muhaimin Ahmed), your employer (MM Ahmed, 4
Chartered Accountants) and your client (Bangladesh Power
Development Board)
2 Email from Tazrian Ahmed, Senior Partner, MM Ahmed 5 &6
Chartered Accountants.
3 Organization and business details of Bangladesh Power 7 to 11
Development Board (BPDB)
4 Financial Statements of Bangladesh Power Development 12 & 13
Board.
5 Development Plan and Strategy of Bangladesh Power 14 to 16
Development Board.

3
 EXHIBIT – 1

You are Muhaimin Ahmed, a senior articled student of MM Ahmed, Chartered Accountants. After
completion of BBA and MBA Major in Accounting and Information System, you have joined the firm on
1 January 2009. During the time, you have passed all the papers of Knowledge Level and Application
Level of the Chartered Accountancy Courses of the Institute of Chartered Accountants of Bangladesh
(ICAB).

MM Ahmed, Chartered Accountants is a partnership firm established in 2002. It has two partners.
Tazrian Ahmed, a fellow member of ICAB started professional practice in early 2002 and has vast
experience in merger accounting, reconstruction scheme, valuation of companies, project evaluation,
viability of existing project and investment in new project. She also poses expertise in mineral
resources particularly energy and gas fields. She is the consultants of the World Bank and ADB and
dealing with energy and Gas fields.

The Bangladesh Power Development Board (BPBD) is a publicly owned government agency
responsible for the planning, generation, transmissions and distribution of electricity in Bangladesh
power supply. The BPBD has installed capacity of 3719 megawatts (MW) from 50 Units which it owns
itself as well as purchasing and additional 2104 MW from private producers.

BPDB is responsible for distribution of electricity in most of the areas in Bangladesh except Dhaka
Metropolitan City and its adjoining areas under DESA and DESCO, areas under West Zone Power
Distribution Company Limited (WZPDCL) and some of the rural areas under Rural Electrification
Board (REB).

BPDB’s study revealed that only 49% of the population is served with electricity and per capita
electricity consumption is only 236 Kwh in the year 2010-11. The board has improved its efficiency in
the year 2010-11 over the year 2009-10 in terms of per capita consumption of electricity and
coverage. Per capita average consumption of electricity was 156 Kwh in the year 2009-10 where 47%
population was covered with electricity. Distribution system loss has been reduced to 13.06% in
Financial year 2010-11 against 13.57% in the financial year 2009-10.

The government has made the most strategic and timely change in the power generation planning in
terms of fuel diversity. The change has been made considering existing gas supply shortage,
uncertainty of gas supply in future and analysing primary fuel supply scenarios for future power
generation. Efforts are under way to reduce dependence on natural gas for the sake of energy
security. Diverse fuel options like liquid fuel, imported and indigenous coal, liquefied natural gas
(LNG) renewable energy have been considered in power generation planning.

Presently BPDB's distribution network is comprising of 33 KV, 11 kV and 11/0.4 KV lines. Total
distribution line in the country is about 2, 09,932 km of which 29176 km belongs to BPDB and total
number of consumer of different category is about 19,22,361 at the end of FY 2010.

4
 EXHIBIT - 2

Email
From: Ahmed.Tazrian@mma.com

To: Ahmed.Muhaimin@mma.com

Re: Bangladesh Power Development Board

Date: 10 May 2012

Dear Muhaimin

I’m writing to give you details of your assignment. You will be working on our client Bangladesh Power
Development Board until further instruction. The Bangladesh Power Development Board (BPBD) is a
publicly owned government agency responsible for the planning, generation, transmissions and
distribution of electricity in Bangladesh power supply.

The BPBD has installed capacity of 3719 megawatts (MW) from 50 Units which it owns itself as well
as purchasing and additional 2104 MW from private producers. It has been struggling with power
generation and distribution in terms of country demand since long.

BPDB’s study revealed that only 49% of the population is served with electricity and per capita
electricity consumption is only 236 kilowatt hour (kwh) in the year 2010-11 (FY2011). The board has
improved its efficiency in the year 2010-11 over the year 2009-10 in terms of per capita consumption
of electricity and coverage. Per capita average consumption of electricity was 156 Kwh in the year
2009-10 where 47% population was covered with electricity.

In the Power System Master Plan (PSMP) -2010 study is now underway. The preliminary demand
forecast was made based on 7% GDP growth rate. The actual demand could not be supplied for the
last few years. The maximum demand served so far is 4699 MW (20.08.2011). The electricity
development is required to be accelerated to increase access and attain economic development. The
desirable economic growth rate would be about 7% p.a. Based upon this preliminary study the
anticipated peak demand would be about 10,283 MW in FY2015, 17,304 MW in FY2020 and 25,199
MW in 2025.

Different types of power plants generate electricity and synchronize it with the national grid. There are
some isolated diesel power stations at remote places and islands which are not connected with the
National Grid. Terminal voltage of different generators is 11 KV, 11.5 KV and 15.75 KV.

The Power generation is looked at from two zones. In the Eastern Zone (eastern side of river
Jamuna), electricity is generated from indigenous gas and a small percentage through hydro power.
In the Western Zone, Coal and imported liquid fuel is used for generation of electricity. The fuel cost
per unit generation in the Western Zone is much higher than that of the Eastern Zone. Therefore, as a
policy, low cost electricity generated in the Eastern Zone is transferred to the Western Zone through
the 230 kV East-West Inter connector transmission line.

Generation Planning is the most important part of the power system and the reliability of the whole
power system depends largely on the reliability of power generating system. The generation in the
system should be such that it can supply the demand at all times under the outage of normal
maintenance and forced outage. To develop generation addition sequence Power System Master
Plan of 2010 used PC-based WASP (Wien Automatic System Planning Package) and PDPAT
software. This software determines least-cost generation addition sequences based upon the load
characteristics, schedule maintenance, forced outage, and reliability level plant cost etc. The least
cost generation addition sequence includes peak and base load plants of optimum unit size. Since
then BPDB has been using PC-based WASP for generation planning. Annual LOLP (LOSS-OF LOAD
PROBABILITY) of 2% is being used as reliability criteria. The equivalent to about 8 days/year of LOLE
(LOSS-OF-LOAD-EXPECTATION).

5
BPDB has been suffering from net loss since long. As part of the Energy Reform Program,
Government wanted to make the organization more efficient in terms of power generation and
distribution and also profitability. We have been appointed as a consultant of BPDB and asked to
guide them in these regards. I am attaching following documents for your review.

Organization and business details of BPDB in Exhibit - 3

Financial Statements of Bangladesh Power Development Board in Exhibit - 4
Development Plan and Strategy of Bangladesh Power Development Board in Exhibit -5.

Parliamentary Standing Committee for Ministry of Energy and Mineral Resources has decided to
make BPDB efficient in terms of power generation (using existing and alternative fuel sources) and
distribution resulting to make it profitable venture in next 5 years. Accordingly BPDB agreed to reform
its activities e.g. decrease subsidy in power generation and distribution, reducing system loss in
distribution and transmission process, taking drastic action against illegal connection, uses of low cost
sources for power generation etc.

We have been asked by the management of BPDB to carry out a review of BPDB’s financial
statements, electricity generation and distribution plan and its efficiency towards generation and
distribution of electricity. They also need an analysis of their strength, weaknesses, opportunities and
threats (SWOT) to enhance power generation using existing and alternative sources of producing
energy.

I would like you to prepare a draft report to the BPDB, in which you should:

1. Review BPDB’s operational performance and overall efficiency based on accounts and other
information contained herewith. You may take other published information into consideration
while preparing the report.

2. State the probable ways to make BPDB profitable by meeting electricity demand with new
generation of electricity using alternative sources. The sources may be solar, bagasse, wind
mills and coal based power plant. Please include argument with proper action plan for
implementation of the recommendation.

3. State the social cost and benefits and ethical issues which can assist BPDB to attain their
goal in next 5 years.

Thanking you for your professional services all the times and looking forward to seeing a draft report
by 17 June 2012

Best regards

Tazrian Ahmed FCA

Partner.

6
 EXHIBIT - 3

Organization and business details of Bangladesh Power Development Board (BPDB)

Introduction

The Bangladesh Power Development Board (BPBD) is a publicly owned government agency
responsible for the planning, generation, transmissions and distribution of electricity in Bangladesh
power supply. The BPBD has installed capacity of 3719 megawatts (MW) from 50 Units which it owns
itself as well as purchasing and additional 2104 MW from private producers. It has been struggling
with power production and distribution since long. Only 49% of the population is served with electricity
and per capita electricity consumption is only 236 Kwh (FY 2010-11).

Bangladesh Power Development Board (BPDB) is located in Dhaka and it was established as a
statutory body in 01 May 1972 by Presidential Order no. 59 after bifurcation of erstwhile Bangladesh
Water and Power Development Authority. The Government at that time had determined that the
provision of the utility services of electricity generation and distribution should be managed directly by
boards which were accountable directly to Government. In theory, nationalised industries should be
run efficiently, on behalf of the public, without the need to provide any form of risk-related return to the
funding providers. In other words, BPDB, along with other nationalised industries is a non-profit
making organisation. This, the Government claimed at the time, would enable prices charged to the
final consumer to be kept low.

Industry structure

BPDB operates 50 power stations across the country and transmits electricity through an integrated
national grid system which it manages and controls. It is organised into two regions, Western Zone
and Eastern Zone. These two zones generate electricity and BPDB purchases from IPP, public plant
and rental plant. The summarized electricity generation is shown in Table A for 2009-10 and 2010-11:

Table -A Figure in million Kwh

Particulars 2010-11 2009-10 Increase /decrease
Mkwh % Mkwh % Mkwh %

BPDB's Generation 10,488.32 38.24 10,513.00 41.03 -24.68 -0.24

Purchase from IPP 8,368.97 30.51 8,832.00 34.47 -463.03 -5.24
Purchase from Rental 2,976.31 10.85 1,342.00 5.24 1634.31 121.78
Purchase from Public 5,597.17 20.40 4,934.00 19.26 663.17 13.44
Plant
Total 27,430.77 100.00 25,621.00 100.00 1,809.77 7.06

State owned ‘Power Grid Company of Bangladesh (PGCB)’ is responsible for transmission only and
electricity generation and distribution activities are opened to private, public and foreign involvement ,
although Government owned bodies are still dominating. An autonomous body named ’Energy
Regulatory Commission’ with the authority to issue licenses, ensure compliance with license
conditions and set tariffs was established in 2003. BPDB sold electricity to Dhaka Power Distribution
Company (DPDC), Dhaka electric Supply Company (DESCO), West Zone Power Distribution
Company Ltd. (WZPDCL) and Rural Electrification Board (REB) which are BPDB's only customers.
These organizations and BPDB are the suppliers of electricity to final users including households and
industry in the country. They are completely independent companies owned by shareholders. The
three BPDB regions transmit the electricity they generate into the national grid system. A shortage of
electricity generation in one region can be made up by taking from the national grid.

This is particularly important when there is a national emergency, such as exceptional weather
conditions. However, there have been times when BPDB has not been able to fully satisfy demand
and this has led to power cuts. The charges for electricity generated by BPDB are regulated by the
Government. BPDB sells the electricity it generates to the 4 distribution companies at a uniform price.
The 4 distribution companies then sell the electricity they purchase from BPDB to the final customer.
The Government requires BPDB to maintain electricity generation at all times and has in the past
guaranteed that its costs will be met in full by the Government treasury.

7
Financing of BPDB

The Government uses its own cash-based accounting system for all the nationalised industries, BPDB
included. BPDB draws funding directly from the Government on a regular basis to cover its cash
requirements for its capital needs and any shortfall in its operating costs. The Government does not
operate an accruals-based accounting system for the nationalised industries. When BPDB was
formed, a large amount of Government cash funding was required initially to give it financial stability.
The model of financing which emerged for BPDB was one that resulted in its costs being guaranteed.
As BPDB manages electricity in the country with Power Cell of the Ministry of Energy & Mineral
Resources, it charges the price approved by the Energy Regulatory Commission to the 4 electricity
distribution companies. Any overall financial deficit BPDB incurs is made up through additional
Government funding. In practice, BPDB continues to be a large cash consumer of Government funds.
While recognising that it provides funds for capital equipment and renewals, the Government’s aim is
that BPDB should at least cover its operating costs from revenue earned from the 04 electricity
distribution companies.

The funding of BPDB sourced from sale of electricity to retail customers and 4 electricity distribution
companies and funds provided directly from the Government. BPDB made investments and provided
other services e.g. renewals of lines etc. The Government however, has now instituted a loan system
to cover expenditure when BPDB needs more cash than it collects in revenue. The argument is that
the Government cannot simply provide unlimited funds for BPDB. Any further demands for cash by
BPDB beyond what it collects in revenue can only be met by loans from the Government. No funding
can be obtained from any other source.

The loan facilities have been established to emphasise the principle that any additional funding from
the Government is a liability to BPDB and that it must pay interest on the loan and eventually pay
back the capital sum. This principle was established by the Government in a drive to introduce a more
commercial basis to BPDB’s financing. Government loans have no fixed repayment dates and are
made to BPDB at a preferential rate of interest, fixed at 2% below the Government-set bank rate.

Introduction of BAS based accounting practices at BPDB

At the request of the Minister of Energy, a pro forma set of accounts incorporating an income
statement, balance sheet have been produced for 2009-10 and 2010-11. The purpose of these
accounts is to illustrate how BPDB's financial position would appear in a commercial environment.
Extracts from this set of pro forma accounts are shown in Exhibit -4. Within these pro forma accounts
some of BPDB's loans have been "notionally" converted by the Government into ordinary shares in a
further attempt to illustrate how BPDB's financial reports would appear using the accepted format of
commercial accounting principles. Financing costs are only payable on the Government loans as
shown in the balance sheet. The pro forma accounts show a loss for the year ended 30 June 2010
and 2011. Being a nationalised industry and effectively the first set of "commercially based" accounts,
there are no retained earnings brought forward into 2010/11. The "Other reserves" is a sum which
was vested in BPDB when it was first nationalised.

Governance of BPDB

The Chairman of the Management Board of BPDB reports to senior civil servants in the Ministry of
Energy & Mineral Resources. The ministry controls this industry through Power Division and Power
Cell, which were established in 1998 to regulate, manage and to lead the electricity supply industry
reform programs. There are no shareholders and ownership of the BPDB entirely with the
Government. There is a formal annual meeting with senior Government officials at which the financial
accounts of BPDB are approved. Beyond this there are occasional informal meetings between
members of the Board and Government officials, particularly when the State Minister of Energy is
required to present information relating to electricity generation to the country’s Parliament.

8
Structure of BPDB

All the staffs employed by BPDB are Government employees. The structure of BPDB comprises a
hierarchy of many levels of management authority. BPDB is managed by the Management Board
which comprises the Chairman and 6 members. With the exception of Member- administration and
Member -Finance, all the Management Board members are qualified electrical engineers.

Within the structure of BPDB’s, there are six support functions; administration, finance, distribution,
planning & development, transmission & system operations generation, each with its own chief
officers. Members of six support functions are directly report to the Chairman. The number of
professional engineering and operational staff has increased over the last 10 years in a period when
demand for electricity has been increasing. The increase in operational employees has led to an
increase in managerial and administrative staff at BPDB. At BPDB headquarters the management
and administrative staff head count has increased to three times its level of a decade ago. In total, the
number of staff employed by BPDB at 30 June 2011 was 20,430.

Power generation

BPDB operates 50 power stations across the country of which majority plats are run on natural gas.
Earlier it has hydropower plant and then established coal based power plant. Since the supply of coal
and coal exploration is very much expensive, government has moved to gas based power plant. The
government has made the most strategic and timely change in the power generation planning in
terms of fuel diversity. The change has been made considering existing gas supply shortage,
uncertainty of gas supply in future and analysing primary fuel supply scenarios for future power
generation. Efforts are under way to reduce dependence on natural gas for the sake of energy
security. Diverse fuel options like liquid fuel, imported and indigenous coal, liquefied natural gas
(LNG) renewable energy have been considered in power generation planning.

The Ministry of Energy & Mineral Resources has stated that the country should progress towards
more efficient and renewable forms of power generation methods. This followed an announcement by
the Prime Minister that the country needed to review how it could provide secure energy supplies and
also reduce its impact on global warming. Below table shows energy generration for last 3 years. It is
expected that BPDB and other private plants as a whole would be able to meet the electricty
demands stated in Exihibit - 5

Energy Generation (GWH)

Year Gross energy generation by BPDB Net Total private Total

BPDB generation generation incl. REB

EAST WEST
ZONE ZONE Total
2008-9 13,397 2,758 16,155 15,167 9,779 24,946
2009-10 13,627 2,803 16,430 15,449 11,084 26,533
2010-11 14,735 2,329 17,064 16,072 13,175 29,247

BPDB generates electricity using mainly gas fired power stations. The Chairman of BPDB is very
much enthusiastic about other methods of electricity generation and has publicly stated their
opposition to nuclear power. Their main concern has been on the grounds of public safety and the
safe disposal of spent nuclear fuel. Quite apart from the very large capital investment which would be
needed to establish nuclear power stations, they claim that the case for nuclear fuelled electricity
production has not yet been proved. In particular, they argue that the cost of decommissioning a
nuclear power station is very high. Little research has been undertaken by BPDB into alternative
methods of power generation or the impact on the environment of continuing to use coal for fuel. The
only research that has been done in the past was on ways of generating greater power yields from
coal fuel sources. Other alternative sources of fuel for power generation are stated in Exhibit -5.

9
According to the 2010 BP Statistical Energy Survey, coal consumption of 0.35 million tonnes oil
equivalent in 2010. Substantial reserves of coal, estimated at 1,000 Mt, are known to exist in the
Jamalganj and Rajshahi areas, but they lie at a depth in excess of 900 m, making exploitation both
difficult and expensive. As a result, the country has to import about 60,000 tons of coal from China,
India and Indonesia. Coal was first discovered at Phulbari in north-west Bangladesh during surveying
and drilling between 1994 -1997 by the Australian mining company BHP, which entered into licensing
and investment agreements with the Government of Bangladesh. These agreements were acquired
by Asia Energy Corporation Bangladesh Pty Ltd in 1998 and were in turn taken over by Asia Energy
PLC in 2003.

The following are problems and prospects of coal mine industry of the country.

Since 2005, there have been a series of fatal and near-fatal accidents, including the death of a British
mining expert caused by inhaling poisonous gases, a gas leakage accident in 2005 that required the
closing and sealing off a portion of the mine, and a roof cave-in on May 11, 2010 that killed one
worker and wounded 19 people. Engineers report that government policy makers have failed to heed
their warnings about inadequate health, safety and environmental provisions in the Barapukuria mine,
with some stating that standard safety procedures are virtually non-existent at the mine.

The 2,500 - acre underground mine includes 650 acres of agricultural land on the surface. The
International Accountability Project reports that mining operations at Barapukuria have destroyed
roughly 300 acres of land, impacting about 2,500 people in seven villages, as land subsidence of over
one meter in depth has destroyed crops and lands and damaged homes. People in 15 villages have
also reportedly lost their access to water, as huge quantities of water pumped out for the Barapukuria
mine caused a rapid drop in water levels.

Those affected by land subsidence are seeking compensation and repair of their homes. The Daily
Star reports that the mine’s operator, Barapukuria Coal Mine Company Ltd, has proposed building
and resettling them in eight to ten “tin sheds”. Faced with resistance by people in Barapukuria, Towfiq-
e-Elahi Chowdhury, the energy adviser to the prime minister, announced that the government was
considering plans to establish a "Coal City" near Barapukuria, which would provide housing and new
sources of livelihood for victims of land subsidence. According to Towfiq-e-Elahi Chowdhury, the
resettlement of people whose homes have been destroyed is to be carried out in phases. The Coal
City would initially be designed to provide homes and livelihoods for 10,000 families, but may
ultimately expand to 100,000 families.

Barapukuria's contract with a Chinese company, Peabody, expired in 2011. Peabody has expressed
interest in continuing mining the area. In March 2011, Barapukuria had a proven reserve of around
389 million tons of coal, and the company expects to extract 10 to 20 per cent of the total reserves
through underground mining within the next 30 years. The government has so far extracted less than
four million tons of coal from the mine. Peabody operates worldwide including the U.S., United
Kingdom, Australia, Mongolia, China, Singapore and Indonesia.

On May 5, 2011, locals blocked railways and a highway protesting the government's plan for open pit
mining at the Barapukuria Coal Mine. The demonstrators - under the banner of National Committee to
Protect Oil, Gas, Minerals Resources, Power and Port - numbered in the thousands, and demanded
compensation for loss of aman crops and postponement of the ongoing land survey. Hundreds of
people from Chowhaati, Durgapur, Shahgram, Rambhadrapur, Yousufpur and Bagra villages attacked
the 'National Committee' members. At least five people were injured during the ten-minute-long clash.

The researcher in the country stated that solar power is not realistic as their development was not
going to be speedy enough to replace existing power generation methods and meet the ever
increasing demands for electricity. They did however acknowledge the potential benefit of using wind
turbines as a means of environmentally friendly power generation.

10
Price charged by BPDB for electricity generated and BPDB’s cost structure

A kilowatt (kW) is a unit of energy, representing the rate at which energy is used or produced. BPDB,
in line with most electricity generators and suppliers in other countries, charges its customers by the
kilowatt hour (kWh). A kWh is a unit of energy and represents one hour of electricity consumption. For
example an electric fire rated at 1 kWh will consume 1 kW of electricity in one hour. The Government
approved price charged by BPDB for retail consumers Tk. 3.60 per KWh during the year 2010/11
which was Tk. 3.54 per KWh in 2009/10. The average bulk tariff rate was Tk.2.54 per kWh. In total, in
the financial year 2010/11 BPDB generated and sold 25774 GWh which is 7.55% increase over the
previous financial year. The following operating costs were incurred by BPDB in 2010/11 compared
with 2009-10:
2010/11 2009/10
Tk. million Tk. million
Fuel costs 16,364 18,233
Electricity purchase from IPP 25,280 23,849
Electricity purchase from Rental 9,638 6,979
Electricity purchase from Public plant 7,896 5,990
Depreciation 7,467 7,379
Repair & Maintenance 2,039 1,956
Personnel expenses 4,369 3,680
Office and administrative expenses 929 772
Transmission charge paid to PGCB 1,140 1,312
Total Operating expenses 75,122 70,150

Electricity Generation cost 2010/11 2009-10

BPDB electricity generation cost/ KWh BDT 2.50 BDT 2.53

Price and supply of generated electricity

The objective of the Government is to keep electricity prices as low as possible. Each of the two
divisions of BPDB now publishes on a daily basis the quantity of electricity it plans to generate each
day and the price at which it will sell it to the electricity distribution companies. This means that price
and supply from the two divisions may fluctuate on a daily basis and consequently supply may be
controlled by the divisions to affect price.

BPDB investment proposal

BPDB implement investment and development plan through Annual Development Program.
Government has also taken initiative to increase share of power generation from renewable sources.
BPDB is planning to increase solar based power supply in the country. It is also the owner of first grid
connected wind power project in Bangladesh. As per government’s directive, incorporation of solar
power system at BPDB offices is under process. Procurement process for implementation of 100MW
grid connected wind power project and 10-15 MW grid connected solar power projects are also
initiated. The projected investment costs are as follows:
Taka in lakh
Sub Sector Investment made in FY 2011 ADP Size FY 2012
Total Local Foreign Total Local Foreign
Generation 59,962 53,838 6,124 179,886 171,996 7,890
Transmission 0 0 0 0 0 0
Distribution 6,892 6,892 0 11,500 11,500 0
Two -Axis Pneumatic
Pick-up (TAPP) 69 1 68 87 1 86
Total 66,923 60,731 6,192 191,473 183,497 7,976

11
 EXHIBIT – 4

Financial Statements of Bangladesh Power Development Board

Income Statements
Amount in Million Taka
2010-11 2009-10 2008-99
Activity level (mega Watt) 3373 3321 3314
Operating Revenue
Electricity sales 68,424 61,519 53,927
Other operating income 2,734 2,113 2,016
Total operating income 71,158 63,632 55,943

Operating Expenses
Fuel costs 16,364 18,233 16,954
Electricity purchase from IPP 25,280 23,849 28,181
Electricity purchase from Rental 9,638 6,979 -
Electricity purchase from public plant 7,896 5,990 -
Depreciation 7,467 7,379 7,214
Repair & maintenance 2,039 1,956 2,243
Personnel expenses 4,369 3,680 5,723
Office and administrative expenses 929 772 922
Transmission charge paid to PGCB 1,140 1,312 1,273
Total Operating expenses 75,122 70,150 62,510
Operating income/(loss) (3,964) (6,518) (6,567)

Non-operating expenses
Assets insurance fund 15 15 15
Interest on Loans 2,283 2,087 2,223
Loss due to exchange rate fluctuation 96 (335) 1,016
Net non-operating expenses 2,394 1,767 3,254
Net income/(loss) (6,358) (8,285) (9,821)

Balance Sheet
Amount in Million Taka
2010-11 2009-10
Property & assets
Utility Plant in service 308,259 305,640
Less: Accumulated depreciation 146,762 139,296
Written down value 161,497 166,344
Projects in progress 25,707 20,262
Total Fixed Assets 187,204 186,606
Investments 33,570 19,297
Current assets
Cash in hand and at bank 19,277 22,215
Accounts Receivable – Trade 47,954 47,031
Accounts Receivable – others 10,538 9,616
Receivable – REB 1,632 1,632
Provisions for Bad and doubtful debts (569) (536)
Advance to contractors and suppliers 2,288 2,440
Advance to employees 1,338 1,313
Stocks & stores 8,269 8,321
Deposits & prepaid expenses 730 109
Total current assets 91,457 92,141
Total Property & assets 312,231 298,674

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Capital & Liabilities
Capital & Revenue
Paid up capital 96,468 92,965
Ne Surplus/(Deficit) (111,241) (100,781)
Appraisal Surplus 117,058 117,058
Grants 4,850 4,810
Deposit work fund 1,471 1,298
Liquidity damage reserve 72 72
Total capital & reserve 108,678 115,422
Lon-term liabilities
Govt. Loan 34,258 33,373
Budgetary Support as subsidy from govt. 29,005 19,404
Foreign Loan 17,061 20,645
Total Long-term liabilities 80,324 73,422
Medium term liabilities
Security deposit – Consumer 2,889 2,703
GPE & CPE 2,691 2,406
Gratuity & pension Fund 8,179 969
13,759 6,078

Current Liabilities
Accounts Payable 9,956 8,486
Security deposit 544 522
Assets insurance Fund 255 240
Current portion of long-term liabilities 5,102 4,786
Debt servicing liabilities (Principal) 48,190 43,604
Reimbursable Project Aid 762 762
Debt servicing liabilities (interest) 43,324 41,888
Other liabilities 1,313 234
109,446 100,522
Clearing account 24 3,567
Total capital and liabilities 312,231 298,674

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 EXHIBIT – 5
Development Plan and Strategy of
Bangladesh Power Development Board

Demand Forecast

In the Power System Master Plan (PSMP) -2010 study demand forecast was made based on 7 %
GDP growth rate. The actual demand could not be supplied for the last few years. The maximum
demand served so far is 4699 MW (20.08.2011). The electricity development is required to be
accelerated to increase access and attain economic development. The desirable economic growth
rate would be about 7% p.a. Based upon this study the anticipated peak demand would be about
10,283 MW in FY2015, 17,304 MW in FY2020 and 25,199 MW in 2025. According to PSMP- 2010
Study year-wise peak demand forecast is given below.

Financial year Peak Demand (MW) Financial year Peak Demand (MW)
2010 6,454 2020 17,304
2011 6,765 2021 18,838
2012 7,518 2022 20,443
2013 8,349 2023 21,993
2014 9,268 2024 23,581
2015 10,283 2025 25,199
2016 11,405 2026 26,838
2017 12,644 2027 28,487
2018 14,014 2028 30,134
2019 16,527 2029 31,873
2030 33,708

Generation of Electricity

Different types of power plants generate electricity and synchronize it with the national grid. There are
some isolated diesel power stations at remote places and islands which are not connected with the
National Grid. Terminal voltage of different generators are 11 KV, 11.5 KV and 15.75 KV. In the
Eastern Zone (eastern side of river Jamuna), electricity is generated from indigenous gas and a small
percentage through hydro power. In the Western Zone, Coal and imported liquid fuel is used for
generation of electricity. The fuel cost per unit generation in the Western Zone is much higher than
that of the Eastern Zone. Therefore, as a policy, low cost electricity generated in the Eastern Zone is
transferred to the Western Zone through the 230 kV East-West Inter connector transmission line.

Indigenous natural gas, coal, nuclear, cross-border trade and hydro resources are mainly considered
for generation planning as fuel. In case of generation plant sitting regional balance in generation is
being given due importance. Other factors such as availability of fuel, cooling water, transportation of
heavy equipment, proximately to grid network & load center etc. are also considered for plant sitting.

Distribution Plan:

For the development of distribution system in the urban areas, BPDB takes different Town Distribution
Projects. Before taking any Town Distribution Project, a study is conducted to asses different types of
works required for the development. Similarly Rural Electrification Board develops distribution system
in the rural areas through different Rural Electrification Program.

The objective of distribution planning is to assure that the growing demand for electricity in terms of
increasing growth rate and high load density can be satisfied in an optimum way. Distribution system
loss is targeted to reduce by 5% over the year in next 5 years. In Financial year 2010-2011 it was
13.06% against 13.57% in the financial year 2009-10.

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Distribution planning starts at customer level. The demand, type, load factor and customer load
characteristics dictate the type of distribution system required. The most important considerations for
short term planning are:

Minimizing the cost of laterals, feeders, sub-transmission systems, substations, equipment

required for control and protection and cost of losses while respecting the limits set by
permissible voltage values, voltage dips and flicker
Maintaining service continuity, reliability and security of the system taking into account,
factors like transformer impedance, insulation levels, availability of spare transformers and
mobile substations, dispatch of generation and rates that are charged to customers. For long
term planning, the factors that are to be considered are:
The timing, location and type of energy demand
The duration and frequency of outage of equipment
Labor and money
Increasing fuel costs
Increasing or decreasing prices of alternative energy sources
Changing socio-economic conditions
Regulations of Governments

Distribution planning involves various activities like load forecasting (type, location and amount),
electrical and mechanical design, economic and other considerations in planning. Automation has
also become important in distribution planning.

Alternative sources of fuel for Power Generation:

Solar Energy Development & Energy Efficiency

Bangladesh Government has taken a solar energy development programme in the Chittagong hill
tracts area. These projects are being financed by the fund allocated from the hill tracts ministry. The
project is constituted by 2(two) phases. The first phase has already been completed in Juraichhri area
of Rangamati district. As many as 400 nos of solar panels have been installed there. Installation work
of the 2nd phase has also been taken up in Thanchi Upozila of Rangamati district. About 400 nos of
panel has been installed there within last 6 months. The total project includes, 600 Solar Home
Systems of 120 Wp each, 20 sets Solar PV Street Light Systems of 75 Wp each, 2 set Solar PV
Submersible Water Pumps of 50,000 liters per day lifting capacity of each pump of 1800
WP(15X120Wp) each, 6 Sets of Solar PV Vaccine Refrigerators for the Health Care Centers of 360
Wp(3X120Wp) each 1 Sets of 10 KW Centralized AC Market Electrification Systems for the
electrification.

Another Solar Electrification project is going on at Thanchi Upozila at Rangamati district. It consists
600 Sets Solar Home system of 120 Mp each, 2 Sets of Solar PV Vaccine Refrigerators for the Health
Care Centers of 360 Wp(3X120Wp) each , 10 sets Solar PV Street Light Systems of 75 Wp each, 1
set Solar PV Submersible Water Pumps of 50,000 liters per day lifting capacity of each pump of 1800
WP(15X120Wp) each.

Wind Energy Program Taken Up By BPDB

Bangladesh Government has taken up a project for installation of 8 x 225 KW wind mills in different
places of coastal area. Before installation of wind mills a wind profile survey program was taken up in
the financial year 2003-04. The source of fund was from GOB own won resource. Although a fund of
about 1.9 crore has been allocated by the government for the installation of wind measuring towers
and wind study, no such fund was allocated for installation of wind mills. Bangladesh power
Development Board has taken up a pilot project for installation of 4x225 KW wind energy power
station at Muhuri Dam area of feni district from its own source of revenue fund. The machines have
already been installed there. Provisional test run shows satisfactory performance of the mills. These
machines were hooked up with nearby REB 11 KV feeder . 4 nos of wind measuring tower at a hight
of 50 meters were installed at Muhuri Dam (feni), Moghnama ghat (Cox-bazar), Purki Saikat
(Patenga) and Kuakata area. The speed and direction of wind is being measured by two
anemometers in each place at a hight of 30 and 50 meters respectively. A comparative and

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comprehensive study of the data available shows that there exist a satisfactory potential of installation
of wind mills in Bangladesh.

A project has been taken from BPDB own fund at Kutubdia island named “1000 KW Wind-Battery
Hybrid Power Plant Project”. Tender evaluation is under process for this project which will be
completed by December 2015.

Micro hydro project

Some small potential of mini hydro power generation are available in hill tracts area of Bangladesh. At
Borcol area of Rangamati district a 50 KW generator has been installed. No fund has yet been
allocated from the government for this purpose. BPDB has completed a pilot project for installing 1x
50 KW mini hydro plant at Borcol water fall from its own revenue fund.

CFL (compact florescent lamp)

Bangladesh government has allocated an amount of 1(one) crore taka from its own source of fund
against greater Chittagong power distribution project. A comprehensive study on the requirement and
capacity of the lamps was completed. According to the requirement 21000 nos of 23 watt and 3000
nos of 14 watt lamp have already been procured and installed.

Sugar Co-generation

There is a good prospect of sugar Co-generation power plant installation in 50 sugar mills in
Bangladesh. If government allows and allocate fund for feasibility study and there after installation of
as many as 10-15 nos. of generator having 10-15 MW capacity each in the northern zone of
Bangladesh. where maximum numbers of bagasse could be available from the sugar mills. This type
of generation will help minimizing the low voltage problem in the remote and national grid. Cost will
also be economical compared to the cost of generation of electricity by using fuel oil.

Recent messages quoted from news paper:

1. Director (Public affairs), BPDB stated that around 28% of the electricity production has been
lost of which 13% lost during distribution. Yearly estimated loss is Tk. 6,000 crore taka.

2. Govt. has taken initiative to supply electricity without disruption to Q class customer of BPDB.
This class of people and industry will buy electricity at more price. Govt. is yet to decide the
price. Proposed price is Tk. 13.15 for residential connection and Tk. 16.73 (132 KV line), Tk.
17.52 (22KV line) and Tk. 18.23 (11 KV line) for industrial customers.

3. Initial requirement of electricity for this type of customers is estimated at 500 MW. It may be
supplied from IPP and Quick Rental Plants. BPDB owns a 50mw plant only. These plants are
run by Farnese oil.

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