Economic impact of electricity supply interruptions on the industrial sector of Bangladesh

Abstract

The study, conducted in 2001-2003, presented in this paper examines the economic impact of the quality of electricity delivered to the industrial installations in Bangladesh. The assessment consists of analyzing power supply interruptions and their economic impact on a sample of industrial consumers, estimating self-generation costs and environmental impacts. It was found that the industrial sector losses attributable to unplanned electric power interruptions average 0.83 US$/kWh while they are only 0.34 US$/kWh for planned outages. Further, it was found that the voltage fluctuations can cause major problems in certain industries, such as tobacco manufacturing and chemicals. It is estimated that 94% of the total energy not served resulting from interruptions is due to unplanned outages and only 6% can be attributable to planned outages. Approximately 13.6% of the industrial sector demand cannot be met by the utilities due to these interruptions. This translates into 11.54% of the industrial sector GDP or 1.72% of Bangladesh's gross domestic product (GDP) in 2000-01. It is concluded that the impact of these outages on the economy is significant. If the frequency and duration of outages can be reduced, a higher tariff is likely to be acceptable to important industries such as tobacco, wearing apparel, and leather products. Further, improving awareness of energy conservation and implementation of an aggressive programme towards it in the industrial sector will help to ease these adverse impacts on the economy to a large extent.