In recognition of the importance of energy in socio-economic development, the Government of Bangladesh has given continuing attention to the overall development of energy sector. It involved survey, exploration, exploitation and distribution of indigenous natural gas; establishment of petroleum refining facility and distribution systems; and establishment of power generation plants and networks for transmission and distribution of electricity. During last one decade, about 20 percent of total public sector investment was allocated for the development of energy sector.

Despite all these efforts per-capita consumption of commercial energy and generation of electricity in 2000 were about 200 KGOE / year and 120 kWh / year respectively. Per capita consumption of commercial energy and electricity in Bangladesh in one of the lowest among the developing countries. At present about 65% of total final energy consumption is met by different type of biomass fuels (e.g. agricultural residues, wood fuels, animal dung etc.).

 In 2000 only 2.2% of total households (mostly in urban areas) had piped natural gas connections for cooking and 30% of households had electricity connections and only 3.9% of total households used kerosene for cooking. Shortcomings of the past energy development programmes and management practices are identified as follows.

(a) Due to shortage of capital it has not been possible to undertake systematic survey, exploration and exploitation of energy resources throughout the country. As a result, it has not been possible to ensure balanced development of energy resources of different zones of the country and balanced development of different sub-sectors of the energy sector.

(b) Due to shortage of capital it has not been possible to undertake systematic development of Power Generation, Transmission and Distribution projects and rational use of electricity in the country.

(c) Necessary attention has not been given to formulate appropriate policies to encourage private sector participation in energy sector development programme to meet the shortage of fund.

(d) Development programmes of energy consuming sectors (e.g. industrial sector) have been constrained due to shortage and unreliable supply of commercial energy.

(e) Energy agencies have not been operated and managed efficiently.

(f) Energy prices have not been set on a rational basis.

(g) Effective measures have not been taken to ensure rational use of energy

(h) Unplanned and inefficient use of fuels are contributing to environmental degradation.

(i) Adequate attention has not been given to meet the total energy needs of rural areas.

(j) Adequate attention has not been given to undertake systematic research programmes to develop indigenous technological capabilities.

Adequate attention has not been given to develop trained manpower for the efficient management of the sector. In the above context the Government formulated and announced the first National Energy Policy (NEP) of the county in 1996 to ensure proper exploration, production, distribution and rational use of energy sources to meet the growing energy demand of different zones, consuming sectors and consumers groups on a sustainable basis. With rapid change of global as well as domestic situation it has been decided to update this NEP. 1.2

OBJECTIVES

The objectives of the revised National Energy Policy (NEP) are outlined as follows. (i) To provide energy for sustainable economic growth so that the economic development activities of different sectors are not constrained due to shortage of energy. (ii) To meet the energy needs of different zones of the country and socio-economic groups. (iii) To ensure optimum development of all the indigenous energy sources. (iv) To ensure sustainable operation of the energy utilities (v) To ensure rational use of total energy sources. (vi) To ensure environmentally sound sustainable energy development programmes causing minimum damage to environment. (vii) To encourage public and private sector participation in the development and management of the energy sector. (viii) To bring entire country under electrification by the year 2020. (ix) To ensure reliable supply of energy to the people at reasonable and affordable price. (x) To develop a regional energy market for rational exchange of commercial energy to ensure energy security.