PRESENTATION PREPARED BY:SHEIK SHAMI ULLAH CHOWDHURY

ID -2012121015HND BUSINESS INTAKE 1 , 2012

PREPARED FOR:MR. KHWAJA ARAFAT ABDULLAH

CO - ORD INATOR AND FACULTYSCHOOL OF BUS INESS

Impact of Governments Fiscal, Monetary & Competition Policy on

Ashuganj Power Station Company Ltd.

Ashuganj Power Station Company Ltd.

•Ashuganj Power Station is the second largest power station in Bangladesh.•All the activities of the company started formally on 01 June 2003.•The present total power generation capacity of its 9 units is 674 MW. •In this power station, Natural Gas from Titas Gas Transmission & Distribution Company Ltd. is used as fuel.This power station plays a significant role in the national

economic development by generating more than 10% of total demand for electricity in the country.

(Lo1.2.1) Bangladesh Governments Effort To Allocate Resources Effectively In The Power

SectorsBangladesh government follows The Mixed Economy System through maintaining a balance between market forces and state involvement.With this perspective, certain activities need to be coordinated by the state while others can be left to the control of market.

Here, Electricity is a key ingredient for the socio-economic development of country. Thus, Bangladesh government has given top priority to development of power sector considering its importance in the overall development of the country with goal of providing electricity to all citizens by 2021.

(Lo1.2.1) Bangladesh Governments Effort To Allocate Resources Effectively In The Power

SectorsRaw Material Used To Produce Electricity Ashuganj Power Station Company

Ltd. plays a significant role in the national economic development by generating more than 10% of total demand for electricity in the country. In this power station, Natural Gas from Titas Gas Transmission & Distribution Company Ltd. is used as fuel.

Recognising the urgency to reduce dependency on gas as fuel, the government is now planning to construct a 1300 MW Coal Based Power Plant for APSC, For which 220 acres of land acquisition is necessary.

(Lo1.2.2) Impact of Current Fiscal & Monetary Policy On Power Sectors

Fiscal Policy implements the adjustments of public expenditure and taxation so as to shape the cumulative

demand of the economy. To promote high and stable levels of growth and employment in private power sector Bangladesh government has implemented the following Fiscal Policies:Exemption from corporate income tax for a period of 15 years. Exemption from income tax for foreign lenders to such companies. Avoidance of double taxation case of foreign investors on the basis of bilateral agreements. Repatriation of equity along with dividends will be allowed freely.

(Lo1.2.2) Impact of Current Fiscal & Monetary Policy On Power Sectors

Monetary policy of a country attempts to influence economic activity through adjustments of interest rates, exchange rates, control of money supply & controls over bank lending and credit.The major constraints from this policy on power sectors were (i) The unavailability of long-term domestic capital for financing investments, and(ii) Limited foreign exchange debt service capability in the economy.Recognizing the need to improve the performance of the power

sector, the Government has now adopted a policy paper titled Power Sector Reforms in Bangladesh (PSRB) and established an

independent energy sector regulator solely for greater assistance to the power sectors.

(Lo1.2.3) Impact of Regulatory Mechanisms On The Activities of Power Sectors

Impact of Industrial PolicyPower sector is a capital-intensive industry, huge

investments are required in order to generate addition to the capacity.

Recognizing these trends, the government of Bangladesh amended its industrial policies to facilitate

greater private investment in the power sector.

At present, government is strongly committed to attract private investment for installing new power

generation capacity on build-own-operate basis.

(Lo1.2.3) Impact of Regulatory Mechanisms On The Activities of Power Sectors

Impact of Industrial Competitiveness Policy

To introduce competition and to increase power supply Private Sector Power Generation Policy

has been developed and adopted.

Policy has also been designed to promote small-scale generations in the private sector particularly to

serve non grid areas.

These changes has brought a lot a of encouragement to the investors of power sector in Bangladesh.

Impact of Governments Fiscal, Monetary & Competition Policy

Lastly, 1158 MW of capacity has been

contracted with offer of lowest

tariffs in the world through competitive

bidding.In addition, private projects totalling 1080 MW are under negotiation as we speak.

References: http://www.apscl.com/about.php

http://www.apscl.com/admin/download/APSCL%20Power%20Generation%20Plan%202012.pdf

http://boi.gov.bd/key-sectors/power-industry

http://www2.adb.org/Documents/Tranche-Releases/BAN/36205-BAN-PRSTR.pdf

http://www.apscl.com/admin/download/RFP%20Document.pdf