Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: The People’s Republic of Bangladesh
Project: Energy Efficiency and Conservation Promotion Financing Project
Loan Agreement: June 29, 2016
Loan Amount: 11,988 million Yen
Borrower: The Government of the People’s Republic of Bangladesh
2. Background and Necessity of the Project(1) Current State and Issues of the Power Sector in Bangladesh
The People’s Republic of Bangladesh has been achieving steady economic growth ofapproximately 6% in average. The demand of electric power and primary energy has rapidlyincreased and the supply and demand gap has expanded. While the demand for electric power
in 2015 was 9,000MW, supply remained 8,177MW (Bangladesh Power Development Board(BPDB), August 2015). It is estimated that the production of domestic natural gas, which
accounts for approximately 50% of primary energy and 60% of generated energy, will decline
from the peak in the second half of 2016 (Data Collection Survey on Revision of Power
System Master Plan 2010 (2015)). Under such situation, the government of Bangladesh hastaken measures to enhance the supply system through diversification of energy sources andimprovement of power generation facilities, which is however insufficient for eliminating thesupply and demand gap, and it is imperative to save energy in order to control the demand.
(2) Development Policies for the Power Sector in Bangladesh and the Priority of the Project
The People’s Republic of Bangladesh developed the Sustainable and Renewable Energy
Development Authority (SREDA) Act in 2012, and established SREDA under the Ministry ofPower, Energy and Mineral Resources. Improvement of energy efficiency is prioritized as animportant issue in The Seventh Five Year Plan (FY2015/16 - FY2019/20) continuously fromthe previous five year plan. SREDA is currently trying to develop energy-saving regulations
and enhance the comprehensive project implementation structure. Based on the consensus that
it is necessary to motivate incorporation of energy-saving facilities in the industrial sector andthroughout the country, it is intended to promote incorporation of energy-saving facilities,
raise the awareness on the economic effect of reducing production costs as well as the effectof energy-saving by making use of low interest loans, and thereby establish an environment
for promoting energy-saving measures. The Energy Efficiency and Conservation Promotion
Financing Project (hereinafter referred to as “the Project”) is intended to contribute directly toestablish such environment.
(3) Japan and JICA’s Policy and Operations in the Power Sector
The Country Assistance Policy for Bangladesh (June 2012) prioritizes drastic improvementof electric power and energy (increase of supply and improvement of efficiency) as an urgent
issue because the issue stands in the way of economic and industrial activities. Analyzing

“stable supply of electricity” as a priority issue in JICA Country Analysis Paper for
Bangladesh (April 2013), JICA is working to establish a policy and system of energy-saving
measures through technical cooperation for development planning The Project forDevelopment of Energy Efficiency and Conservation Master Plan in Bangladesh (January
2014 through February 2015). The Project is one of the measures suggested in the master planand is consistent with the policy and analysis of the Japanese Government and JICA.
JICA’s assistance in the power sector includes loan assistance through Renewable EnergyDevelopment Project (2013), Matarbari Ultra Super Critical Coal-Fired Power Project (2014)
and Natural Gas Efficiency Project (2014) as well as technical cooperation by dispatching
Power Sector Adviser (2014).
(4) Other Donors’ Activities
The Asian Development Bank (ADB) provides assistance concerning planning of measures
for renewable energy. The World Bank provides assistance for conversion from incandescencelamps to compact fluorescent lamps for domestic lighting. The United Nations Development
Programme provides assistance for establishing energy-saving standards and incorporating thelabeling system for home appliances.
(5) Necessity of the Project
The Project is consistent with the assistance policy and analysis of the Government ofJapan and JICA, and the policy of the Government of Bangladesh prioritizes improvement ofenergy efficiency as an urgent issue. Therefore, it is highly necessary and relevant for JICA toimplement the Project.
3. Project Description(1)

Project Objective
The Project is intended to improve efficiency of energy by promoting incorporation ofenergy-saving equipment through two-step concessional loans in Bangladesh where theenergy demand is pressing due to the economic growth, and thereby contribute to stabilize thedemand/supply balance and reduce greenhouse gas.
(2) Project Site / Target Area: Throughout Bangladesh(3) Project Componentsa) Loans for promoting energy-saving: Financing for private businesses in the industrial
and commercial sectors to incorporate energy-saving equipment through financial
institutions in partnership with SREDAb) Consulting services: Technical assistance for loans to promote implementation of theProject and loans to promote incorporation of energy-saving equipment(4) Estimated Project Cost (Loan Amount)
13,089 million Yen (Loan Amont: 11,988 million Yen)
(5) Schedule
June 2016 - November 2022 (78 months in total). The Project will be completed when theJICA’s final disbursement is made (November 2022).

(6) Project Implementation Structure1) Borrower: The Government of the People’s Republic of Bangladesh
2) Guarantor: None
3) Executing Agencies: Sustainable and Renewable Energy Development Authority(SREDA), Infrastructure Development Company Limited (IDCOL) and Bangladesh
Infrastructure Finance Fund Limited (BIFFL)
4) Operation and Maintenance System: SREDA will be in charge of development of projectplanning, supervision of the entire Project, listing of relevant equipment items, renewal,etc. SREDA has the sufficient capacity as it has secured human resources throughdispatch of experienced persons from other ministries and government offices who arefamiliar with energy-saving. The executing financial institutions in partnership (IDCOL,BIFFL) will be in charge of financing to end-users. IDCOL has implemented Japanese
ODA loan project Renewable Energy Development Project by a two-step loan, andBIFFL has implemented Japanese ODA loan Foreign Direct Investment Promotion
Project. Therefore, both of them are competent to continue similar loans after theProject.
(7) Environmental and Social Consideration / Poverty Reduction / Social Development
1) Environmental and Social Consideration① Category: FI② Reason for Categorization: The Project is classified as Category FI, according to theJICA Guidelines for Environmental and Social Considerations (April 2010), because
its sub-projects cannot be specified prior to JICA’s approval of funding and because
those sub-projects are expected to have a potential impact on the environment.
③ Other / Monitoring: In the Project, IDCOL and BIFFL will receive support fromconsultants hired through the Project, classify each sub-project according to the lawsand regulations of Bangladesh and the JICA Guidelines for Environmental and Social
Considerations (April 2010) and take necessary measures depending on the category.
None of the sub-projects will fall under the Category A.
2) Promotion of Social Development① Gender perspective
Gender category: Gender mainstreaming needs assessment and analysis project
Reason for categorization: Gender measures, gender considerations in similar projects
and impacts of men and women on the Project have been discussed and confirmed with
the Bangladesh government. Therefore, the Project is categorized as gendermainstreaming needs assessment and analysis project.
(8) Collaboration with Other Donors: GIZ supports SREDA for development and enforcementof the Energy-saving Act and its provisions, the energy management/diagnosis program andthe home appliance labeling program. In order to avoid overlapped assistance but to createsynergy, frequently exchange opinions with GIZ through the executing agency SREDA.

4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators (Operation and Effect Indicators)
Indicator

Baseline(Actual Value in 2015)

Target (2024)【Expected value 2 years afterproject completion】-Amount of sub-project approval

9,978

and total loan amount (millionyen)
Rate of receivables in arrear-(amount basis) (%)
Rate of receivables in arrear-(count basis) (%)
Greenhouse gas reduction-(CO2 equivalent tons/year)

To be set upon start of the Project
To be set upon start of the Project
To be set upon completion of
sub-loanRate of energy efficiency andenergy-saving (%)-(achievement rate by targetedenergy-saving equipment of loan

To be set upon completion ofsub-loantarget)

2) Impact (Operation and Effect Indicator)
Indicator (unit)

Baseline(Actual Value in 2015)

Reduction of energy consumption(oil equivalent tons/year)-Target (2024)【Expected value 2 years afterproject completion】
To be set upon completion ofsub-loan3) Internal Rate of Return
The Financial Internal Rate of Return (FIRR) and Economic Internal Rate of Return(EIRR) were not calculated because it is difficult to identify sub-projects before
implementing the Project.
(2) Qualitative Effects
Stabilization of energy demand and supply, improvement of energy-saving awareness of theindustrial sector and the households, improvement of the screening capacity of the executing
agencies (SREDA and intermediary financial institutions)
5. External Factors and Risk Control
N/A6. Lessons Learned from Past Projects(1) Lessons Learned from Past Projects
From the ex-post evaluation of Small and Medium Scale Industry Promotion Program(BPIMB, BITMB, MIDF 1)” in Malaysia (1998), it has been learned that it is effective for each
executing agency to adapt flexibly to the financial demand and scale of the targeted end-users
instead of applying the same project scale in case that several executing agencies (financialinstitutions) are simultaneously involved in development loan through the banking system.
From the evaluation of past similar projects in the power sector in the Socialist Republic ofVietnam, it has been learned that it is necessary to improve the transparency andaccountability of funding while simplifying the screening procedure and it is imperative toestablish standards for selecting sub-projects in order to prevent funding for inappropriate
sub-projects.
(2) Application of Lessons Learned to the Project
The Project is to improve the access to sub-loans by not limiting the project scale of the two
executing financial institutions and not setting any upper limit for individual funds.
The Project makes a screening manual as stated above, and selects sub-projects based on
the list of energy-saving appliances and equipment (specifications) indicating the financing
standards in the Project.
7. Plan for Future Evaluation(1) Indicators to be Used:
1) Amount of sub-project approval and total loan amount (million yen)
2) Rate of receivables in arrear (amount basis) (%)3) Rate of receivables in arrear (count basis) rate (%)4) Greenhouse gas reduction (CO2 equivalent tons/year)5) Rate of energy efficiency and energy-saving (%) (achievement rate by targeted energy-saving
equipment of loan target)

6) Reduction of energy consumption (oil equivalent tons/year)(2) Timing: Two years after project completion (ex-post evaluation)

1

BPIMB, BITMB, MIDF stand for “Bank Pembangunan & Infrastruktur Malaysia Berhad”, “BankIndustri & Teknologi Malaysia Berhand” and “Malaysia/Malaysian Industrial Development Finance
Berhand” respectively.