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Bangladesh Power Risk/Reward Index
- 26 Jan 2022
Key View: Bangladesh is ranked 15th regionally and 40th globally in our Power Risk/Reward Index. The market underperforms in this quarter as well, with mixed Rewards and Risks profile. Strong performance in Bangladesh's Rewards profile is balanced out by a risky political outlook, operational risks and labour market risks.
Bangladesh & Asia Region - Power Risk/Reward Index
Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions Power Risk/Reward Index
Global And Regional Ranks
- Regional rank (out of 21): 15th
- Global rank (out of 117): 40th
Key Features And Latest Updates
- Bangladesh outperforms in its Industry Rewards profile this quarter, higher than the global and regional averages. This is supported by strong capacity and generation growth over the recent years, pushed by the government’s commitment to electricity security. We expect growth opportunities for the market in the coming decade as well, which will ensure that Bangladesh remains an outperformer.
- Compared to global and regional averages, Bangladesh outperforms in its Country Rewards profile. In spite of the Covid-19 pandemic adversely impacting most economies in Asia, Bangladesh was able to maintain an overall growth in real GDP for 2020 and 2021. This resulted in the market performing near the top for the Real GDP Growth indicator, boosting its Industry Rewards profile. Alongside this indicator, Bangladesh’s dependence on electricity import, from India and Nepal, means that the market has opportunities for domestic capacity growth. On the flip side, labour market risk remains elevated given the level of national education and the technical expertise required for the power sector.
- For Industry Risks, Bangladesh performs below the global and regional averages. The competitive landscape for Bangladesh is dominated by the Bangladesh Power Development Board and its subsidiaries, which weighs down on its competitive landscape indicator. Additionally, accessing financing in the market has been challenging for investors given the market’s development. T&D losses remain fairly high at about 12% which bodes unfavourably for its Industry Risks profile.
- Bangladesh is an underperformer in its Country Risks profile, below both global and regional averages. The market has mixed scores within its profile, with operational risks and political risks weighing down on its performance. Its short-term and long-term economic situation at the moment, boosted by garment manufacturing and the construction industry, is performing at the regional average. Bangladesh’s deteriorating security situation is weighing down on its political and operational risk indicators. Factors include violent clashes between supporters of the two main political parties and non-existent cordial relations between opposing parties.
RRI Matrix Breakdown
Bangladesh & Asia Region - Power Risk/Reward Index By Component
Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions Power Risks/Reward Index
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