Analyses of Financial Viability of Rural Cooperatives (PBS) under Rural Electrification Board of Bangladesh

Abstract: Rural Electrification Board (REB) of Bangladesh was founded in October 1977 as a semi-autonomous government agency reporting to the Ministry of Power Energy and Minerals Resources, which was responsible for electrifying rural Bangladesh. From its beginning it operates several rural electrification program's to use electricity as a means of creating opportunities for improving agricultural production and enhancing socio-economic development in rural areas, whereby there would be improvements in the standard of living and quality of life for the rural people. To achieve the objectives of rural electrification program, the Board established rural cooperatives named ''Palli Bidyut Samities (PBS)'' based on the model of Rural Electric Co-operatives in USA under the universal principle of co-operative, democratic decentralization and ownership of consumers. It operates and manages a rural distribution system within its area of jurisdiction. REB of Bangladesh is making tremendous progress through its 67 rural cooperatives (PBSs) in providing electricity to the rural population of Bangladesh. Although remarkable progress was made in increasing access to electricity in rural areas, concerns remain in terms of financial sustainability of PBSs majority of which are unable to cover debt service liabilities from the revenues they generate. In our thesis work we try to find ways how to improve the financial performances of the PBSs. We start with a brief overview of the current financial performance of the PBSs. Then we try to identify the factors and their impact which affect the financial performance. The impact has been analyzed using aggregate system loss, individual operating performance and financial performance. we also provide recommendations of finding ways to improve the financial performance of the PBSs by looking at areas of efficiency improvements in the existing and planned taken-over areas, customer-mix, elimination of outages, and tariff increase.