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Study of Economic and Financial Impact of Electricity Outages and Willingness to Pay and Affordability for Services
Project Title:   Study of Economic and Financial Impact of Electricity Outages and Willingness to Pay and Affordability for Services
Type of Project Energy research
Duration:   July 1997-June 1998
Status:   Complete
Partner Organizations:   The World Bank-Dhaka and BCAS
Key words: Power shortages, load shedding, revenue, affordability, imports.
Main Objective:   The study had two components: (a) economic and financial impact of electricity outage in industrial and commercial sector; and b) survey on willingness to pay and affordability for the service. The objective of the first component was to provide a reliable quantification of the economic and financial impacts of electricity outages in the country while the objective of the second component was to provide reliable measure of the willingness to pay for electricity.
Brief Description: Processes (activities, project sites etc.): Power shortages are not a recent phenomenon in Bangladesh, but have become increasingly severe as supply has not kept pace with demand growth. Reliable estimates of the present extent of shortages are not available, but informed guesses suggest that as much as a quarter of demand at peak times is not met. In this circumstances the World Bank, Dhaka office felt the needs and undertook a study to carryout to quantify the cost to the country of power scarcity. It attempted to measure the degree of load shedding, the lost revenues to the power supply industry, the scale of lost industrial and agricultural output, the additional burden on the balance of payments from lost exports and the cost of importing generators and diesel. Methodological approach: The investigation was carried out through a detailed nation-wide random survey of enterprises belonging to industrial and commercial sectors. A conceptual framework was developed which included trend of power outage, industry related impact of power outage, willingness to pay and economic-wise impact of power etc.
Output Results achieved/key findings/outputs: BCAS rendered services in preparing the following items: (i) Analytical Framework, (ii) Power outage characteristics in Industrial sector of Bangladesh, (iii) Power outage characteristics in commercial sector of Bangladesh, (iv) Economic characteristics of Industrial units, (v) Economic and financial impact of electricity outages on industrial sector, (vi) Economic and financial impact of electricity outages on commercial sector, (vii) Macro-economic loss calculation, (viii) Stakeholder analysis of economic and financial impact of electricity outages, (ix) Willingness to pay and affordability, and (x) Concluding remarks. The report concluded that nearly a third of the industrial units which have been surveyed undergo load shedding during peak hours of production. On an average, each unit remains closed for about three hours a day due to outage electricity. Since, there is a heavy loss in production the industrial sector, revenue generated by BPDB is bound to be less than what has been projected. Lessons learnt by the implementing organisation/s: The outage problem could be avoided to a large extent, if the management of suppliers could have been made more efficient and accountable. There should be more efficient load management, greater generation of electricity in private sector and greater transparent policy making.
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