Sectoral inefficiencies and public finance constraints induced the policy-makers for the Bangladesh power sector to introduce private investment into the sector. Independent Power Producers (IPP's) are the organizations being utilized. However, ifthe rush to privatization occurs without complementary regulatory and structural reforms, cost-effective private investment may not be encouraged. Bangladesh officials have been working on such a reform program, but progress has been slow compared to the proposed growth ofIPP investments. If policy-makers had attempted the difficult regulatory and structural reforms first, Bangladesh could expect private sector participation at a more rapid pace and with lower costs.