Systems loss breeds mainly from distribution process, he said, adding, "Apart from unbundling generation and transmission from distribution, the private sector will be engaged in distribution system."

The state minister was speaking at an investment promotion meeting on "Remote Area Power Supply Systems (RAPSS).

Dhaka Chamber of Commerce and Industry (DCCI) and the Infrastructure Investment Facilitation Centre (IIFC) jointly arranged the meeting to inform the businessmen about the prospects of investment in RAPSS.

Mahmood also said the government should not do retail business in power sector, as it needs constant vigilance to make profit. "As private sector can ensure such vigilance they should be given the job," he added.

Inviting more private investment in power sector, the state minister said this could be one of the most profit-making sectors, if managed professionally and efficiently.

"Private sector can bring in competition which is needed to make electricity available at competitive price," he said

Citing the example of Rural Electrification Board (REB), Mahmood said cooperative system of distribution in REB has set an example of efficient distribution management keeping systems loss under control.

"It is because of unbridled systems loss multilateral lenders and donors had stopped providing assistance in power sector," he said.

The state minister said power sector must make profit to sustain. "Because the profits can be reinvested to generate more power."

Pointing to low private investment in power sector, he said high rate of systems loss in public sector is discouraging them to come up with investment plans.

He mentioned that Bangladesh need $2.8 billion investment to meet demand by 2007 for which private sector must invest in the sector.

The donor-funded IIFC identified over 25 remote areas under 14 districts as long-term business potential under on-grid and off-grid RAPSS programme. Tender has already been launched for two on-grid RAPSS ventures.

The main philosophy of the government to encourage a programme like RAPSS is that retailing brings only losses, and so now the government is more keen on keeping its business only with wholesale character.

Addressing the meeting, Nazrul Islam, executive director and CEO of Infrastructure Investment Facilitation Centre, said full and rapid electrification requires private sector participation through RAPSS concessions.

Presiding over the meeting, DCCI President Matiur Rahman said as electricity covers only 10 per cent rural population, remote area power supply systems will open new avenues for private sector in power sector.