Barriers to Private Investment in Electricity Generation in Bangladesh

Bangladesh faces a crisis of limited electricity generation capacity. Only 30% of Bangladeshis have access to electricity, and those who do face poor quality service such as frequent blackouts and voltage variations. A lack of reliable power impedes economic development of the country. Since the early 1990s, the Government of Bangladesh has attempted to create market conditions for the sale of electricity. By introducing the incentives of a market, Independent Power Producers have the potential to make up the electricity deficit while inducing state-run utilities to operate more efficiently. However, the corruption among political elites dissuades potential investors. This study examines several barriers to private investment in electricity generation in Bangladesh, such as corruption in the sector, weak regulatory oversight and a poorly defined market for electricity. Through analysis based on elite interviews and case studies, I identify policy options for increasing IPP investment and make recommendations.