1. Major Activities of the Month
The nationwide lockdown in response to COVID-19 outbreak, which started from the 5th of April 2021, continued to be imposed throughout the month. With the resumption of the international flights from 1st of May, the international consultant members of the Project Implementation (PI) Consultant Team started returning to Bangladesh to continue their contribution activities. By the time Eid ul Fitr festive period (official holidays fell on 13-15th of May) ended, international consultant member (head of the team) completed the self-quarantine period to join with the rest of the members at SREDA Project office.
The first issue to be tackled was to address the issue of stagnation of loan extending activities through the project. The PI Consultant Team resumed closer communication with IDCOL, BIFFL and JICA Bangladesh Office to identify the underlying issues, conducted a quick analysis and prepared a list of suggested measures to restart the loan provision activities. The measures need to be implemented without delay, with minimal preparations. The PI Consultant Team will work immediately to prepare measures and tackle the obstacles, aiming at resumption of active project activities within the upcoming few months.
Among the tasks, to deal with the stagnation, one constructive proposal raised by the PI Consultant Team was to hasten the introduction of once-abandoned Component III in a new form. This new component III is expected to enhance the lending channel for the IFIs, expediting the effective usage of the loan. It is also a measure which will respond to the necessity to fill the vacuum in the ongoing activities to promote EE&C in residential sector. The PI Consultant Team Leader consulted individually with SREDA, JICA, IDCOL and BIFFL to share the idea of the new Component III utilising the A-type loan (as in section 2.1 of this monthly progress report), to receive endorsement for proceeding with the preparation.
Approaching the end of the fiscal year for the government, the priority issue was to perform visible activities for awareness raising on EE&C promotion among the industries. Another essential task to be pursued was the national energy balance preparation. This follows SREDA’s intention to collect, analyse, and publish the country’s energy related data, with emphasis on the demand side. Such data is deemed essential for SREDA to prepare, implement and monitor EE&C promotion policies and actions. As the PI Consultant Team has been supporting SREDA, from 2016, to prepare the national energy balance, SREDA’s intention to be responsible for this important task for the country, the team welcomed SREDA’s stance, and agreed to support this positive intention. Ongoing activities, including the procurement of measurement tools for energy audit field activities, advertising activities, and mid-term report preparations are also being pursued, however, there are also external factors inhibiting the progress, mostly due to COVID-19 mobility restrictions and inactivity of other entities during the lockdown and unavailability of personnel.
1.1 Preparation for New Component III
1.1.1 Necessity for Residential Sector Energy Consumption
The Project started off with the aim to promote energy efficiency in three sectors, which are industry, building (commercial) and residential sectors. Up to now, the Project has been addressing to the issue through A-type loan, mostly for component I (industry sector) and partly for Component II (building/commercial sector). The original design of Component III was to make use of the Project fund through an intermediary function called the “Participating Distributors”, who use the low interest loan to make available the inverter -driven (= definition of energy efficient appliances which are eligible for the Project) air conditioners and refrigerators at more affordable conditions for the general consumers. This mode of lending was called the B-type loan, and for various reasons, this B-type loan lending never took off. The reasons included the high cost of business management at the IFI, lack of competitiveness against the credit card facilities, and also absence of enthusiasm by the IFIs, who have been preferring to make use of the Project fund through A-type loan.
The need for the promotion of energy saving in residential sector has always been obvious from the demand-side energy data analysis. The necessity for promoting energy conservation, especially in electricity consumption, is becoming more and more clear as time passed. The figure below, which is the breakdown of the country’s energy consumption on primary energy basis for the most recent fiscal year FY 2019-20. The importance of measures to tackle electricity consumption saving in residential sector, as well as in the industry sector is clearly visualised.
1.1.2 Basic Concept of the Proposed New Component III
Introduction of the new Component III is required not within the context of the achieving the Project purpose, but also required as a response to the stagnation of the lending activities. It is therefore necessary to prepare the component in the simplest and flexible form, so that it will can be implemented with only minimal lead time. It is therefore desired that the component will make use of already existing stipulations and processes. Another point in the basic concept was to adhere to the existing A-type loan mechanism rather than introducing any new ideas. Against this background, the subject of promotion will be the inverter-controlled air conditioners and refrigerators, which are the already-defined energy efficient appliances which exist in the eligible technology and equipment list (Annex 2 of the Business Process Manual). The PI Consultant Team reconfirmed that this eligibility criteria, which was introduced back in 2016, is still valid and appropriate, with regards to the latest technology trend and the market condition, whereby the penetration rate of inverter-controlled appliances is still very low, compared with the condition in other countries, as shown in the next figure.
2.1.3 In Bangladesh Context
It is essential to look into the air conditioner and refrigerator markets in the country before introducing the new Component III. There is, however, only a limited information available concerning the market. One of the recent newspaper articles explained that the current market size is around 40-50 billion taka of sales per year, which is deemed to be sufficiently large for this Project to be intervening. The article also mentioned about the severe backlash of the market growth due to COVID-19 pandemic, and that the sales and investment are expected to grow after the return to normal economic condition. Having checked some readily-available information on the market trend in Bangladesh, the PI Consultant Team decided to conduct its own market survey through interviews with some of the players in the market, to obtain the actual data on the market trend, to be able to correctly align the Component III in the Bangladesh Context.
Readily-Available Market Information for Component III Consideration is as follows:
- Information from the Recent Newspaper Article:
- Air conditioner market size (sales)
- 2019: BDT 45 billion
- 2018: BDT 35 billion
- Average annual growth = 15% since 2014.
- Air conditioner market size (quantity)
- 2020: 120,000 units (effect of COVID-19 fallout)
- 2019: 420,000 units
- Share of locally-manufactured/assembled = 70%
- Air conditioner market size (sales)
- Additional information commonly referred in the press:
- Walton has 60% share in refrigerator market.
1.2 Energy Audit
1.2.1 Energy Audit Equipment Procurement
There was only a limited progress with the measurement equipment purchase process during the month, for both Power Tech Electronics and Express Systems procurements. The delay was commonly explained as the limited access to the stocks and slower delivery mostly due to the country-wide lockdown in the neighbouring India. The PI Consultant Team will wait for the updates in the delivery status, still hopeful of the delivery to be made before the end of this fiscal year, in June 2021.
1.2.2 Reactions from Energy Audit Report Presentation to Ministry of Industry
The last month’s SREDA’s presentation to the Ministry of Industries on the result of the PI Consultant Team’s state-owned enterprises received positive reactions from the press. It was in the editorial of Financial Express, 17th May that SREDA’s activity was introduced as a model good practice that will contribute to improving the efficiency of many state-owned enterprises in the country. The PI Consultant Team understands that such activities which receives positive reaction from the public should be further promoted, and is ready to work with SREDA to conduct further model energy audit activities, and also to make the information widely available.
1.3 Awareness raising activities
1.3.1 Regional Focus Group Meetings
With the aim to further involve the industries in EE&C promotion at a national scale, the PI Consultant Team prepared a plan to interact with the local industries and the journalists in four regional cities, which are Bogura, Khulna, Sylhet and Chattogram. Although a thorough preparation was completed, it was decided to postpone the activity until the ongoing official mobility restriction measure against COVID-19 infection is lifted. Now the regional focus group meetings are expected to be conducted in August, when the infection situation improves and also when the international consultant members of the team will be present in Bangladesh. After the activities in the four regional cities, an additional meeting may also be held in Dhaka, attracting wider audience.
To widely publicise about the EECPFP and to distribute material in awareness raising occasions, the tri-fold Project leaflet was developed in Bangla. Five hundred copies were printed. The leaflets will be distributed in these focus group meetings with the aim to let more industries know about SREDA’s activity to promote EE&C in industry and building (commercial) sectors.
1.3.2 Newspaper Advertisement
Newspaper advertisement was now ordered to be published on four English language national newspapers (Daily Star, Daily Sun, Dhaka Tribune, and New Age) from 1st of June for seven consecutive days. After these English language newspapers, the Bangla version advertisement is planned to be published on some of the regional newspapers, which are currently under preparation.
1.3.3 Billboard Advertisement
Billboard advertisement carrying the similar / same message as the newspaper ads are also being considered. One billboard, each measuring 1,000 square feet, is planned to be erected in the eight regions around the country. The procurement for outsourcing is now under preparation, to be started in June.
1.4 Other Activities
- Reflected the newly revised eligible technology & equipment list and checklist on the Project MIS (11th May 2021).
- Considered sending guidelines to the IFIs on ESPR improvement.
- Supported SREDA on planning a training for the Ministry of Finance and Ministry of Planning officials.
- Continued with the DASH data analysis.
- Discussion ongoing for building energy saving calculation with the introduction of heat reflective glass.
- Continued with data collection for the latest fiscal year’s national energy intensity calculation.
- Continued with the preparation of national energy balance calculation for fiscal year 2019-20.
There is no appendix to this MPR21 for May 2021.