Power disruptions cost firms 9pc of sales in Bangladesh: World Bank

Persistent electricity disruptions remain a major challenge for businesses in Bangladesh, significantly affecting productivity and competitiveness, according to the latest Bangladesh Development Update released by the World Bank on Wednesday.

The report identifies unreliable power supply as one of the most critical barriers to doing business in the country. On average, firms in Bangladesh experience around 26 power outages per month, placing them at a disadvantage compared to their counterparts in other South Asian nations.

According to the findings, these frequent disruptions impose a heavy financial burden on businesses. For a typical firm, power interruptions result in losses equivalent to nearly 9 per cent of annual sales. Such setbacks not only affect production schedules but also increase operational uncertainties for enterprises across sectors.

The report further highlights delays in obtaining new electricity connections remain longer in Bangladesh than in many neighbouring countries. This has slowed down industrial expansion and discouraged potential investment, particularly in emerging sectors.

Frequent outages have led to repeated production halts and reduced efficiency in factories, contributing to lower overall output. To cope with unreliable grid supply, nearly one-quarter of businesses rely on backup generators at least intermittently, which significantly raises operating costs and reduces profit margins.

The situation is even more severe outside major economic hubs, where infrastructure gaps are more pronounced. Businesses in these regions face greater challenges in maintaining consistent production, thereby widening regional economic disparities.

Looking ahead, the World Bank projects that electricity demand in Bangladesh will grow by approximately 7 per cent annually through 2030. In light of this increasing demand, the report stresses the need for urgent reforms in the power sector.

Key recommendations include improving operational efficiency, ensuring financial sustainability of power utilities, and strengthening electricity generation and distribution systems. The World Bank noted that without such measures, the country’s private sector growth and overall economic progress could face significant constraints.

The report underscores that reliable and affordable energy supply will be crucial for sustaining Bangladesh’s industrial development and enhancing its competitiveness in the global market.