Institutional modalities for decarbonizing irrigation in Bangladesh

This weADAPT article is an abridged version of the original text, which can be downloaded from the right-hand column. We highlight some of the report’s key messages below, but please access the original text for more comprehensive detail, full references, or to quote text. 

Summary

Bangladesh has promoted multiple models for the diffusion of solar irrigation pumps (SIPs), ranging from the conventional subsidy-driven models of SIP ownership to the fee-for-service model that leverages private sector investments for expanding the outreach of irrigation services. The fee-for-service model promoted in Bangladesh by the Infrastructure Development Company Limited (IDCOL) is unique in the South-Asian context for bringing public-private partnership in SIP expansion. This model also offers useful lessons for the provision of affordable irrigation to smallholder farmers in the region.

Background

Bangladesh’s agricultural sector heavily depends on diesel-run shallow tube wells (STWs) for boro paddy production, which has significantly increased since the 1980s. The sector faces challenges due to energy insecurity and rising diesel prices, exacerbated by climate change. The use of diesel in agriculture contributes to a considerable amount of CO₂ emissions, impacting the country’s Nationally Determined Contribution (NDC) targets. To mitigate emissions, Bangladesh aims to increase renewable energy capacity, with solar power playing a crucial role.

New models for the diffusion of solar irrigation pumps

The four major implementors of SIPs in Bangladesh are the Infrastructure Development Company Limited (IDCOL), the Barind Multipurpose Development Authority (BMDA), the Bangladesh Agriculture Development Corporation (BADC), and the Bangladesh Rural Electrification Board (BREB). Together, they account for 97% of the total SIPs and 99% of the total installed SIP capacity in Bangladesh as of August 2022. 

The document outlines various institutional models for promoting solar irrigation, including:

The fee-for-service model by IDCOL, which installs and operates large SIPs through private sponsors. IDCOL channels a 50% grant and 35% credit funding to non-governmental organizations (NGOs) or private investors – called sponsors – who install, own, and operate the SIPs in diesel irrigated off-grid areas. The sponsors pay 15% of the total SIP cost upfront. Farmers pay irrigation fees to the sponsors, and sponsors use the income to pay IDCOL’s loan and cover their operational costs. After loan repayment, the revenue accrues as profit to sponsors. The main advantage of the IDCOL model is that it provides better quality and affordable irrigation services to small and marginal farmers who do not have to make upfront investments for SIPs (Buisson et al. 2022; Mitra et al. 2022). But these SIPs depend a lot on boro cultivation in the SIP command areas for their financial sustainability, with a large amount of unutilized capacity in seasons other than boro paddy.

Other models involve grants and subsidies by organizations like BMDA, BADC, and BREB, supporting both group and individual farmer ownership of SIPs through grants or a combination of loans and grants.

• BMDA and BADC have installed SIPs with farmer groups in off-grid areas through 100% grant financing of the capital expenditure. Under this model, farmer committees operate and maintain these SIPs. The farmers’ group decide on the irrigation fees to cover the operation and maintenance costs. This model supports smaller-sized SIPs fitted in a dug well and is suitable for vegetable cultivation, and larger solar low lift pumps, which draw water from rivers or canals.
• In the individual ownership model implemented by the BREB, individual farmers or groups of a few farmers can apply for a subsidized SIP. Depending on the pump size, farmers get a 62% to 66% grant from BREB, and the rest is a combination of a loan (30% to 35%) and an upfront equity payment by the farmer. Since these are grid-connected, farmers can sell the excess energy into the national grid.

Conclusions

The complexity of the agri-food system in Bangladesh, with small and fragmented landholdings, a large number of tenant farmers, diverse cropping patterns, and irrigation sources, requires multiple institutional models for scaling up SIPs in fair and inclusive ways. In this context, the co-existence of these diverse institutional and financial models is an important indicator of the potential scalability and appropriateness of SIPs under different conditions.

Suggested citation

Mitra, A., Yashodha, Y., Hossain, M., Siddiqui, M.B., Mukherji, A. (2022). Institutional modalities for decarbonizing irrigation in Bangladesh. IWMI Issue Brief nº1