Urbanization in Bangladesh had been increasing at a rate of 6% per year since 1971. As of 2005, an estimated 38 million people or 27% of the total population lived in urban areas. Despite significant progress in poverty reduction, 37% of the urban population were below the poverty line in the 1990s.
At around project appraisal in 2006, Bangladesh had a total of about 140 million people, a quarter of whom lived in urban areas. While overall population was growing at 1.4% per year, urban population increased at 2.5% or nearly twice the national rate. Uncontrolled urbanization and rural-to-urban migration was creating heavy and largely unabated demands on the country’s urban infrastructure.
Despite remarkable progress during the previous decade, only about a third of Bangladesh’s households had access to electricity in 2005. The country had been suffering from unreliable power supply because of insufficient generation capacity, an inadequate transmission grid, and unbalanced distribution facilities.
In 2010, Bangladesh’s electrification rate was low, and blackouts were frequent. Several initiatives were taken to add generating capacity: the government allowed the installation of rental power plants of 40–115-megawatt (MW) capacity, refurbished old gas turbines, and converted open-cycle gas turbine plants to more efficient combined-cycle power plants.