Modernization in Bangladesh has followed a familiar pattern with emerging economies: Once an infrastructure is in place that provides reliable electricity, businesses flourish, employment increases, and the middle class grows. This, in turn, leads to further demand for power generation. Bangladesh native and Summit Group founder Muhammed Aziz Khan saw his company help build the foundation that has driven Bangladesh’s growth — and now continues to strategize on how to meet future demands.
The signs of what Bangladesh has accomplished as an emerging nation are apparent in some key statistics. For example, in the past few years, Bangladesh has seen unemployment steadily decline sooner. Given the current pace of economic growth, the size of the country’s middle class is expected to expand 33% by 2030. Poverty rates have declined and the gross domestic product has steadily increased annually in recent years.
Khan says one of his biggest satisfactions in life is the role that Summit Group, which he founded in the 1990s, has played in the growth of his native country. His company built the first private sector power plant in Bangladesh in 1997 and is now the country’s largest independent power producer.
Summit Power International, founded in 2016, has 18 power plants. SPI also operates Bangladesh’s second floating storage and regasification unit and liquefied natural gas import terminal.
“One of the biggest satisfactions and happiness of my life is being able to come into infrastructure, which I did back in 1995, when Bangladesh needed a lot of port-related facilities,” Khan recalls. “I built the first inland container depot and and port-related facilities as well as terminals for storage of oil. That’s how it started.”
He eventually moved into building a power-generating infrastructure in Bangladesh at a time when only 20% of the country had access to electricity. “I am so humbled and so happy that we, at that time, started generating electricity and today 100% of the people have access to electricity in Bangladesh and that I was party to it,” Muhammed Aziz Khan says.
However, he notes, the country’s growth trajectory will require addressing more energy challenges in the future.
Summit’s Business Strategies Seek To Strengthen Bangladesh’s Emerging Economy
While Bangladesh has made great strides in expanding its power generation capacity, it continues to grapple with aligning this growth to demand. It also faces issues in diversifying its energy mix to include sustainable sources. Strategic planning and policy reforms remain crucial to ensure a resilient electricity sector capable of supporting the nation’s economic aspirations.
“Improving the supply and reliability of electricity and energy in general, while maintaining affordability, is essential to supporting the continued growth of industry and commerce in Bangladesh,” according to the International Trade Administration.
As a supplier of 7% of the country’s total electricity capacity, SPI has made moves to meet those challenges. With sources for renewable energy scarce in Bangladesh, Summit is keen to explore the import of renewable energy from neighboring India, Bhutan and Nepal.
Part of Summit’s business strategy also involved locating the SPI headquarters in Singapore.
Basing Summit Power International in Singapore Opened Door to Cost Competitive Financing Options
In 2016, Muhammed Aziz Khan and the leadership at Summit Group decided to headquarter SPI in Singapore. The country provides a mature financial market and high corporate governance standards that made Summit’s projects in Bangladesh more attractive to international investors and lenders.
Wu Yan Bin, chief financial officer at SPI, noted that since 2016, SPI has partnered with Japan-based Mitsubishi Corporation in developing the liquified natural gas floating storage and regasification unit and with U.S.-based General Electric (GE) on a new power plant using the latest available technology. GE not only provided the most advanced class of turbine at that time for the project — considered one of the most efficient gas turbines in the world — but also has a 20% equity stake in the project.
In 2019, Japan’s Energy for a New Era (JERA), Japan’s largest power generation company, bought a 22% stake in SPI.
Those deals represent “the inspiration and the idea” behind the move to Singapore, said Yan Bin, adding that the Singapore location “is quite important in convincing international world-class corporations like JERA to invest into Bangladesh projects.”
Future Power Generation Demands in Bangladesh
When Bangladesh achieved independence from Pakistan in 1971, it ranked as the second poorest nation in the world. However, the country has experienced no famine since 1974 and more than 20 million people in the country escaped poverty between 1991 and 2010, according to the World Bank. The economy has grown at about 6% annually since 2000.
A reliable power supply is key to this growth. However, Muhammed Aziz Khan says he expects the demand to only increase in the coming years as Bangladesh’s rapid adoption of innovations in technology, including artificial intelligence, spurs growth in electricity demands.
“I think that as artificial intelligence, the cloud and other technological advancements come up, these technologies will require so much more electricity that we would again have shortage of electricity, as we are seeing in the United States of America and Europe, where they’re building huge artificial intelligence capacities. They’re requiring a lot of electricity,” Khan says.
He’s referring to the recent rapid increase in data center construction. Many tech companies, including cloud service providers like Amazon Web Services, Microsoft Azure, Google Cloud Platform, IBM, Alibaba, and Oracle, have invested billions in constructing new data centers in the U.S. and around the world. In the U.S. alone, some estimate that by 2030, data centers will consume up to 9% of the country’s total electricity output, double the current level.
In Bangladesh, besides the projected increase in electricity demand due to global technological advancements, a rapidly growing population leads to a higher demand for residential electricity as more households require power for lighting, cooling, and appliances. The surge in internet users in Bangladesh fuels the need for data centers and increased electricity consumption for powering devices and charging batteries. The rising adoption of electrical home appliances, such as refrigerators, air conditioners, and televisions, further strains the electricity grid. Additionally, the increasing popularity of battery-run rickshaws, while promoting eco-friendly transportation, also contributes to electricity demand as they require charging infrastructure and power supply.
However, Muhammed Aziz Khan believes the increased use of electricity is the price to be paid for helping to bring more equality to Bangladesh and the world as a whole. He adds, “Human evolution and the desire to bring equality and desire to produce more requires electricity. And I’m humbled and very pleased to be part of that.”
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