[🇧🇩] Energy Security of Bangladesh

[Saif]

Bangladesh eyes to procure 5 spot LNG cargoes in May

Bangladesh is eyeing to import five spot liquefied natural gas (LNG) cargoes in May to meet mounting summer demand. State-run Rupantarita Prakritik Gas Company Ltd (RPGCL) has already bought two spot LNG cargoes and sought to buy three more from spot market for May delivery windows, a senior RPGCL

thefinancialexpress.com.bd

Bangladesh eyes to procure 5 spot LNG cargoes in May
FE ONLINE REPORT
Published :
Apr 15, 2025 19:59
Updated :
Apr 15, 2025 20:17

Bangladesh is eyeing to import five spot liquefied natural gas (LNG) cargoes in May to meet mounting summer demand.

State-run Rupantarita Prakritik Gas Company Ltd (RPGCL) has already bought two spot LNG cargoes and sought to buy three more from spot market for May delivery windows, a senior RPGCL official told The Financial Express Tuesday.

The tender evaluation committee is currently evaluating three tenders for May 15-16, May 22-23 and May 25-26 delivery windows.

The country’s energy demand has gone up from early April with the advent of summer and is expected to grow further with the rise of mercury.

Bangladesh bought four spot LNG cargoes for the delivery windows of the past two months – April and March.

The bid winners will deliver the LNG cargoes at Moheshkhali Island in the Bay of Bengal, with options to discharge the cargo at either of the country’s two floating storage regasification units (FSRUs) located on Moheshkhali Island.

The RPGCL, a wholly owned subsidiary of state-run Bangladesh Oil, Gas, and Mineral Corporation, or Petrobangla, looks into LNG trades in Bangladesh.

The volume of each of the spot LNG cargoes will also be around 3.36 million British Thermal unit (MMBtu).

Bangladesh previously awarded its latest spot LNG cargo tender to TotalEnergies Gas and Power Ltd for May 10-11 delivery window at $12.68 per MMBtu.

It currently imports LNG from Qatar Energy and OQ Trading international under long term deals and purchases LNG also from spot market to re-gasify LNG in its two operational FSRUs having the total capacity of 1.10 billion cubic feet per day (Bcfd).

The country has been reeling an acute energy crisis as its natural gas output is depleting.

Bangladesh has been rationing gas supply to industries, power plants and other gas-guzzling industries to cope with the mounting demand.​

 

[Saif]

Gas price increase for industries unjustified, discriminatory

AN INCREASE of 33 per cent in prices of gas for use as raw materials and captive power in the industrial sector that the Energy Regulatory Commission announced on April 13 with an immediate effect is worrying for industries that plan to get new connections or expand their consumption. The plan...

www.newagebd.net

Gas price increase for industries unjustified, discriminatory
16 April, 2025, 00:00

AN INCREASE of 33 per cent in prices of gas for use as raw materials and captive power in the industrial sector that the Energy Regulatory Commission announced on April 13 with an immediate effect is worrying for industries that plan to get new connections or expand their consumption. The plan is discriminatory. The increase will force factories seeking to use gas for captive power generation to pay Tk 42 a unit in place of Tk 31.50. Old captive power producers seeking to use more gas to increase their present capacity would need to pay keeping to the new rates. The industries that would seek new connections would need to pay Tk 40 a unit instead of the previous Tk 30. The existing industries seeking to increase consumption would need to pay at the new rate for the additional supply. The industries in the process of getting new connections would need to pay for a half of the sanctioned limit at new rates and for the other half at the previous rate.

But for Petrobangla which proposed a 152 per cent increase in gas prices aimed at generating Tk 32.4 billion, all other stakeholders at the public hearing on February 26 expressed their strong disapproval, noting that the interim government was following in the footsteps of the Awami League government, which was overthrown in a mass uprising in August 2024 that flared up from protests against discrimination in civil service recruitment in July that year. The stakeholders who attended the hearing were surprised at the commission’s convening the public hearing on grounds of reducing deficits of public companies. Whilst the government remains unwilling to improve the efficiency of the agency and end corruption and irregularities in the process, industrialists have earlier noted that it appears something like resolving the issue by arbitrarily increasing prices. And, industrialists, who at the time of the public hearing said that such a government move would increase production costs that would eventually fall on consumers, add another reason to their argument against gas price increase, saying that the price increase for new and old industrial gas connections and for the use of gas for captive power would discourage fresh investments, especially at a time when the government is trying to attract investments. Businesspeople say that a profit-first mentality has driven the government move, but it benefits neither consumers nor industries.

The government should dispense with the discrimination in the gas price plan. But, it had better not increase gas prices at such a time and, first, put in some efforts to improve efficiency and end corruption in the agencies involved and the process before going for gas price increase.​

 

[Saif]

Titas Gas continues crackdown on illegal gas connections

Titas Gas Transmission and Distribution PLC continues its drive to identify and remove illegal gas connections. As part of a regular operation, a mobile court led by executive magistrate Milton Roy from the Energy and Mineral Resources Division conducted an eviction drive on Tuesday in the Jamgora

thefinancialexpress.com.bd

Titas Gas continues crackdown on illegal gas connections
Published :
Apr 16, 2025 22:49
Updated :
Apr 16, 2025 22:49

Titas Gas Transmission and Distribution PLC continues its drive to identify and remove illegal gas connections.

As part of a regular operation, a mobile court led by executive magistrate Milton Roy from the Energy and Mineral Resources Division conducted an eviction drive on Tuesday in the Jamgora and Itkhola areas of Ashulia, under the jurisdiction of the Jobio-Ashulia regional sales division of Titas Gas, Savar, UNB reports.

During the operation, around 500 illegal residential gas burners were disconnected, and 400 meters of pipeline were removed and seized.

According to Titas Gas officials, the initiative will save approximately 11,334 cubic feet/hour of gas.

Through mobile court proceedings, three commercial entities — Mokka Hotel & Chandpur Restaurant, Madina Hotel, and Gaibandha Hotel — along with two illegal consumers, Abdul Wahab Mir and Humayun, were fined a total of Tk 1.25 lakh, which was collected on the spot.

On the same day, another mobile court led by senior assistant commissioner and executive magistrate Nazmul Huda conducted a similar operation under the Jobio-Araihazar regional sales division of Titas Gas in areas including Kalibari Bazar, Satyabandi, and Duptara in Araihazar, Narayanganj, spanning 2.5 kilometers.

The operation resulted in the disconnection of around 820 illegal residential gas burners and the seizure of 110 feet of MS pipe, one package burner, and one booster. No fines or arrests could be made in the illegal factory found during the operation, as no responsible individuals were present at the scene.

Additionally, under the supervision of the regional revenue branch, Narayanganj, connection disconnection operations were carried out by five special teams in Hossain Nagar, Kashipur, and Fatulla areas of Narayanganj.

Due to unpaid gas bills, gas connections were disconnected in three households with six double burners.

For using gas in unauthorized extensions, 10 residential connections with a total of 99 double burners were disconnected. Furthermore, due to complete illegal usage without customer signal IDs, 10 illegal gas connections were disconnected, which included 33 double burners.

Titas Gas officials said that from September 2024 to April 15, 2025, a total of 29,617 illegal gas connections have been disconnected, including 230 industrial, 155 commercial, and 29,232 residential connections.

Additionally, 67,212 burners have been disconnected, and 144 kilometers of gas pipeline have been removed during this period.​

 

[Saif]

Gas price hike couldn't come at a worse time

The government's decision to raise gas prices for new industries by an average of 33 per cent, defying strong opposition from industrialists and business leaders, is being widely criticised for a multitude of reasons. First of all, the industrial gas tariff hike came amid the country's bleak invest

thefinancialexpress.com.bd

Gas price hike couldn't come at a worse time
Atiqul Kabir Tuhin
Published :
Apr 16, 2025 23:41
Updated :
Apr 16, 2025 23:41

The government's decision to raise gas prices for new industries by an average of 33 per cent, defying strong opposition from industrialists and business leaders, is being widely criticised for a multitude of reasons. First of all, the industrial gas tariff hike came amid the country's bleak investment scenario and macroeconomic vulnerability, and thereby, may put further damper on new investment.

Currently, several key economic indicators that reflect a country's investment scenario are on a downward trend. According to the latest data from Bangladesh Bank, private sector credit growth fell to a decade-low of 6.82 per cent in February, driven by declining loan demand from businesses. Another key indicator reflecting the investment climate is the import of capital machinery, which dropped by 30.10 per cent in the first eight months of fiscal year 2024-25 (July to February), compared to the same period last year. An investment slowdown, weak private credit growth, and reduced imports of capital machinery often go hand in hand.

Foreign direct investment has also experienced a sharp drop in the first half of the current fiscal year. In July-December period of FY2024-25, overseas investment fell by more than 71 per cent compared to the same period in the previous year.

These facts and figures make it amply clear that a red light is flashing on the country's investment dashboard. In this context, when investors are already unnerved by high interest rates, prolonged political uncertainty, and persistent high inflation, the increase in utility prices comes as yet another blow. The decision is feared to further dampen the already subdued investment climate, hinder industrial growth, impede job creation, and slow down economic recovery.

Then again, the new tariff is discriminatory. Introduction of a discriminatory tariff in the industrial sector by none other than a government that came to power riding on the back of an anti-discriminatory movement is the last thing one would have expected. But this is what has just happened.

As per the Sunday's announcement of the Bangladesh Energy Regulatory Commission (BERC), new industrial units will have to pay Tk 40 for per cubic metre of gas instead of Tk 30. Similarly, new captive power users will have to pay Tk 42 per cubic metre, which was previously Tk 31.5. The existing consumers will have to pay at the previous rate, but in the case of using gas beyond their sanctioned load, they will have to pay following the new tariff. Moreover, those who have received primary approval for new connections will have to pay new tariff if their usage exceeds 50 per cent of their sanctioned load.

As things stand, as per the BERC pricing structure, older factories, along with household, commercial users, and CNG filling stations, will continue to receive gas at previous rates, while new industrial units-as well as existing ones that decide to increase production-will have to pay significantly higher prices for this essential fuel. Business leaders rightly question the rationale behind applying different fuel rates for the production of similar goods within the same sector. Thanks to this discriminatory policy, new businesses will face significant challenges in competing with their established counterparts. Consequently, it will push new investors at the back foot and may even compel them to put their business expansion plan on hold as they will face added cost pressure and uneven competition.

The timing of the utility price hike is also being questioned, as it runs counter to the government's recent efforts to boost investment. It came at a time when the government is trying to rope in more foreign investors. Notably, the announcement was made just a few days after the conclusion of a major investment summit in Dhaka attended by over 500 foreign investors from around 50 countries. Many argue that it could potentially send a wrong signal to potential investors about the country's policy unpredictability.

The previous Awami League government, with the promise of providing uninterrupted supplies, had raised gas tariffs for small and cottage industries by 178.29 per cent to Tk 30 per cubic meter from Tk 10.78 in February 2024. Rates for captive power plants, small power plants and merchant power plants were raised by 87.50 per cent to Tk 30 per cubic meter from previous Tk 16. Despite this substantial price hike, the government failed to deliver the promised uninterrupted gas supply.

Bangladesh has witnessed a substantial hike in energy prices, apparently due to the policy failures of the previous government. Instead of prioritising the exploration of new gas fields, the government chose to import expensive LNG-allegedly to benefit certain cronies in the energy sector. To make matters worse, when LNG imports began in 2018, global gas prices were still at tolerable levels. However, the Russia-Ukraine war caused prices to surge worldwide. This, combined with exchange rate volatility and a persistent dollar crisis, has further aggravated the situation for Bangladesh.

Now, the pressing question is whether the current interim government will continue with the same flawed energy policies of its predecessor or chart a new course - one that would incorporate forward-looking strategies and prioritise the optimal utilisation of the country's onshore and offshore gas reserves.

Another critical challenge is the excessively high rate of system loss. At present, the technical loss rate of gas in Bangladesh stands at around 3 per cent-far above the international standard of 0.20 to 0.30 percent. Allegations have it that gas stolen through illegal connections is being passed off as technical loss. In just the first six months of the current fiscal year, 1.37 billion (137 crore) cubic meters of gas were lost due to system loss. With Petrobangla spending Tk 79.34 to import and supply each cubic meter of gas, the financial loss from this wastage amounts to Tk 108.7 billion. Reducing this excessive level of system loss could save the country billions. This is where the authorities should focus instead of burdening industries with steep tariff hikes that threatens future growth prospects.​

 

[Saif]

'Energy dominance agenda' and the catastrophic global warming

The new US 'reciprocal tariff' policy announced on April 2, 2025 has shaken the global trade systems and escalated tensions across the globe. It has been interpreted that the Trump administration wanted to increase US exports primarily to reduce the existing trade imbalances among the commodity exp

thefinancialexpress.com.bd

'Energy dominance agenda' and the catastrophic global warming
Mushfiqur Rahman
Published :
Apr 17, 2025 21:39
Updated :
Apr 17, 2025 21:39

The new US 'reciprocal tariff' policy announced on April 2, 2025 has shaken the global trade systems and escalated tensions across the globe. It has been interpreted that the Trump administration wanted to increase US exports primarily to reduce the existing trade imbalances among the commodity exporting countries and the USA.

The USA has been encouraging the increase of American export including the US energy export all over the world. Despite the sweeping package of imposed new tariff (President Trump's newly announced tariff has a minimum 10 per cent universal rate) on US imports, energy commodity imports received an exemption. Fossil fuel lobby groups in the USA had expressed their satisfaction and decided to welcome President Trumps' decision to exclude oil and natural gas from the new tariff. Within a short period of the President Trump's new import tariff policy announcement, globally fossil fuel prices started to decline (though the US new tariff policy would not apply directly to many oil and gas products). Demands for crude oil has been declining in the global market as the US exports increases and Chinese demands declining.

In the meantime, India and the USA have agreed to significantly increase the supply of oil and gas from the USA to the Indian market. At the end of the Indian Prime Minister Mr. Modi's US visit on February 14, 2025, it was stated that the US would be 'a leading supplier of crude oil and petroleum products and liquefied natural gas (LNG) to India'. Earlier international media reported that the Republic of Korea, the third largest LNG importing country of the world expressed its intention to buy more US oil and gas to reduce the existing trade surplus with the USA and improve energy security. Japan, the largest LNG importer of the world wanted to increase its LNG purchases from the USA to diversify its supply sources. Lorne Stockman, research director of the Oil Change International, a research and advocacy organisation for transition to clean energy suspected that the 'US seeks to either flood markets with cheap fossil fuels, or bully countries into buying more of its fossil fuels, or both.' It may be recalled that the USA is the largest oil and gas producer in the world. President Trump's 'drill, baby, drill' slogan is primarily aimed at ramping up fossil fuel extraction. AP report (February 15, 2025) suggests that the Trump administration announced the conditional export permission for a huge LNG project in Louisiana, USA (President Biden administration paused the project a year ago). President Trump has been encouraging for increased US energy productions, particularly fossil fuels and remove regulatory barriers that may slow down the increment. President Trump was delighted that the United States was blessed with 'liquid gold' and urged energy companies to sell more oil and gas to allies in Europe and around the world. As per published reports, President Trump stated 'we are going to make more money than anybody has ever made with energy.' He further explained, 'We're lucky to have it. I call it liquid gold under our feet. And we're going to utilise it.'

The shale fracking technological revolution helped the United States significantly increase natural gas and LNG productions in the mid-2000s. Natural gas productions in the USA surged dramatically and climbed 50 per cent from 2005 to 2015 and oil production doubled during 2009 to 2019. This production boom in the domestic market helped the Trump administration to promote 'energy dominance' agenda for the USA. The said agenda emphasised expanded fossil fuel production, deregulation and the use of US energy exports for 'economic strength and geopolitical leverage'. President Trump's 'energy dominance' strategy inadvertently would boost global oil and gas supply. Trump administration hopes that the USA's increased exports of oil and gas (and LNG) will reduce OPEC+'s groups bargaining power. It will help the USA 'to reshape global energy geopolitics and shifting US energy policy from dependency to strategic power.'

Trump administration has notified the United Nations of its withdrawal from the Paris Climate Agreement. 'The Guardian' reports (March 10, 2025) that Mr. Chris Wright, the US energy secretary stated that 'the Trump administration will end the Biden administration's irrational, quasi-religious policies on climate change that imposed endless sacrifices on our citizens.' He further stated that 'the Trump administration will treat climate change for what it is, global physical phenomenon that is a side-effect of building the modern world.' He added, 'everything in life involves trade off,'

Inevitable consequences of President Trump's energy dominance policy will be the weakening of the global efforts to 'transition away from carbon intensive energy'. Environmental rollbacks could delay the transition to clean energy solutions, net zero target achievements. Climate experts have been raising alarm that delaying actions to limit global warming would make the problem 'more dangerous and harder to solve'. If the world increases fossil fuel use including in the USA, the rate of global warming will move to the wrong direction. Already President Trump's 'drill, baby, drill' pledge is attracting other countries to reciprocate. As an example, Indonesia has hinted that it may follow the suit of the US administration policy. As reported by the news agency 'Antara', the Indonesian special envoy for climate change Mr. Hashim Djojohadikusumo raised question, 'if the United States does not want to comply with international agreement, why should a country like Indonesia comply with it?' It may be mentioned that the per capita production of carbon in Indonesia is three tons while in the USA it is 13 tons.

The energy dominance doctrine of the US administration may attract investment to increase fossil fuel energy and create job opportunity for Americans. However, it will further escalate climate change induced sufferings for the world, primarily for the most vulnerable nations.

Mushfiqur Rahman is a mining engineer. He writes on energy and environment issues.​

 

[Saif]

BIDA sees gas tariff hike as 'discriminatory'

The investment promotion authority found the recent gas tariff hike as ‘discriminatory’ for new investors and apprehended that it would put an adverse impact on its ongoing efforts to attract new investment. The hike just after the investment summit would ‘undoubtedly’

thefinancialexpress.com.bd

BIDA sees gas tariff hike as 'discriminatory'
Doulot Akter Mala
Published :
Apr 17, 2025 08:50
Updated :
Apr 17, 2025 20:10

The investment promotion authority found the recent gas tariff hike as ‘discriminatory’ for new investors and apprehended that it would put an adverse impact on its ongoing efforts to attract new investment.

The hike just after the investment summit would ‘undoubtedly’ create a negative perception among the aspiring investors, said Bangladesh Investment Development Authority (BIDA) executive chairman in a letter to BERC.

The latest upward revision, on April 13, 2025, of gas prices by 33 per cent would put a higher tariff burden on the new investors compared to that of the existing one.

However, BIDA said it supported the government’s effort to cut subsidy but it should not be discriminatory.

“The government can consider trimming the subsidy uniformly,” BIDA Executive Chairman Chowdhury Ashiq Mohammad Bin Harun wrote in a letter sent to the Chairman of the Bangladesh Energy Regulatory Commission (BERC) on Tuesday.

In the letter, obtained by the FE, Mr Chowdhury found the necessity to review the gas tariff hike decision for the sake of new investment and keep economic mobility unhindered.

Talking to the FE, Energy Adviser Md Fouzul Kabir Khan said investors were queuing up with their investment proposals despite the gas tariff hike.

“Many investors are willing to make investment despite this gas price. So far, we have more than 300 investment proposals who have agreed to invest at this price,” he told the FE.

It’s BERC’s discretion to review it, but the government is not in a position to subsidise for an unlimited period, he said.

In the letter, the BIDA chair said the discriminatory policy on gas tariff would affect new investment and discourage country’s competitiveness.

“Investors have already taken stance against the decision,” he wrote.

BIDA thinks that this decision would hinder the Foreign Direct Investment (FDI) flow to Bangladesh, he added.

To attract investment, the Bangladesh Investment Summit-2025 was held from April 7 to 10 in the city.

A total of 450 investors from 40 countries participated in the summit.

“A number of investors have signed Memorandum of Understanding (MoU) and agreements with the BIDA showing their interest to invest in Bangladesh,” Mr Chowdhury wrote.

In the letter, Mr Chowdhury sought sincere cooperation of BERC to set an investment friendly gas tariff rate.

He suggested a review and impact analysis workshop to discuss the issue.

Talking to the FE on Wednesday, BERC chairman Jalal Ahmed said they were yet to officially receive the letter.

“We are open to discuss the issue in the commission and also with the Petrobangla that has put forward the proposal of gas tariff hike, if it creates any controversies,” he said.

The BERC chairman said the commission delayed the decision of gas tariff hike considering the investment summit.

Nahian Rahman Rochi, Head of Business Development of BIDA, said the BIDA chair put forward the proposal to review as differential tariff structure will dissuade new investors from entering the market.

“We are happy to organise a consultation to further discuss and pros and cons about it,” he said.

However, Mr Rochi urged the BERC to do review it within the fastest possible time.

“….and we need to ensure that the ultimate decision on rate is investment friendly,” he said.

Preferring anonymity, representative of one large foreign investor said the energy advisor have played smart, with this new concept, everyone is against rather discriminatory price between old and new, next move he will do is equalize old industry in to new industry to Tk 40 per cubic meter from today’s rate of Tk 30 cm.​

 

[Saif]

Abnormal capacity charges show power sector abuse

Greatly varying capacity charges paid to power companies with similar capacities highlight a chronic ill practice by the past Awami League regime, sending Bangladesh’s economy into a tailspin.

www.newagebd.net

Abnormal capacity charges show power sector abuse
Emran Hossain 19 April, 2025, 00:10

Greatly varying capacity charges paid to power companies with similar capacities highlight a chronic ill practice by the past Awami League regime, sending Bangladesh’s economy into a tailspin.

The Bangladesh Power Development Board calculated the capacity charges considering the use of 60 per cent capacities of the power plants.

Established about the same time using the same technology, some power plants received way more capacity charge than their peers, 300 per cent or even more, per unit of electricity produced, revealed a BPDB analysis.

The list of beneficiaries invariably included AL favorites whose names frequently surfaced in reports, including the white paper published by the incumbent interim government in December last year, as power companies raking abnormal profits, often flouting the law.

‘The varying capacity charges speak of too many ill practices,’ said Hasan Mehedi, member secretary, the Bangladesh Working Group on Ecology and Development.

From manipulating loans to bribing politicians to distorting information on equity to tampering expenses, private power companies left no stones unturned to inflate their capacity charges, he noted.

‘The sad news is they are still enjoying the privilege despite a political changeover promising to end such favours,’ he said.

Capacity charge is the amount of money the BPDB pays a power-sector investor, covering the power plant’s establishment cost plus its estimated profit, regardless of whether the plant produces or does not produce electricity.

Energy experts explained that capacity charge covers the loans received by a plant, along with interest, employees’ salaries and a return on equity.

Power plants with shorter lifetime could be entitled to a higher rate of capacity charge. Power plants taking loans at high interest rates could also result in excessive capacity charge payment, energy experts said.

‘Usually the return on equity remains about 12 per cent,’ said energy expert Mohammad Tamim, who was also a member of the team that prepared the white paper on the economy of Bangladesh last year.

Joint ventures were found to be earning 16 per cent return on equity while the Rampal power plant was entitled to an 18 per cent return on equity, he said.

After considering possible investment in power plants by different types of fuels, energy experts gave a range of ideal capacity charge rates per unit of electricity – around Tk 1 for gas-based power plants, maximum Tk 4 for coal-based power plants and Tk 2 for oil-based power plants.

But the situation in Bangladesh is far from ideal.

For instance, the Jamalpur 115MW oil-based power plant, owned by the United Group, received Tk 4.23 for generating per KWh of electricity. The rate is 327 per cent higher than what is paid to another private power producer Raj Lanka for its 52MW power plant in Natore – Tk 0.99. The power plants operate with reciprocating engine. While the Jamalpur plant has been operating since 2019, the Natore plant has been in operation since 2014.

The United Group received Tk 4.26 for a unit of power for its 200MW power plant in Mymensingh, which was established in 2018.

Set up in 2020, the 104MW oil-based Meghnaghat power plant, owned by the Orion Group, receives Tk 3.42 per unit, which is 272 per cent higher than what state-owned oil-based power plant receives on average – Tk 2.39 a unit.

Similarly, the 149MW and the 300MW oil-based Kodda power plants and the 55MW oil-based Madanganj power plant, all owned by the Summit Group, receive in capacity charge for a unit of electricity Tk 3.34, Tk 3.33 and Tk 3.06 respectively. The Summit Group built its power plants between 2016 and 2018. The 200MW oil-based power plant in Chandpur, owned by the Desh Energy, set up in 2018, receives Tk 3.42 per unit in capacity charge. The power plants all have reciprocating engines.

The average capacity charge received by independent oil-based power plants for a unit of power is Tk 3.23, followed by similar public plants earning Tk 2.44 and state-owned power plants Tk 2.39. The state-owned oil-based 100MW Gopalganj power plant, set up in 2011, receives the lowest Tk 0.92 capacity charge per unit.

‘Such huge differences in prices are reminiscent of the absence of competition in the power sector,’ said Shafiqul Alam, lead energy analyst, Institute for Energy Economics and Financial Analysis.

During the 15 years of the past AL regime, power projects went ahead mainly through one-on-one negotiation without any tender under the indemnity law recently scrapped. The power ministry was under the authority of former prime minister Sheikh Hasina and she oversaw $33 billion investments.

The average capacity charge paid to gas-based independent power plants is Tk 3. The gas-based Meghnaghat 335MW and 583MW power plants, both owned by the Summit Group, receive Tk 3.48 and Tk 3.67 per unit respectively. The power plants were set up in 2015 and 2024 respectively with combined cycle engines.

The 584MW Meghnaghat power plant, owned by the Unique Group and set up in 2024 with combined cycle engine, receives Tk 3.78 per unit.

The average gas-based joint venture projects’ capacity charge stands at Tk 3.71. The 195MW Ashuganj power plant, set up in 2015 and owned by the United Group, receives Tk 3.51 per unit.

There were big anomalies in capacity charges received by public power companies. For instance, the Haripur 100MW plant, set up in 1987, receives Tk 2.42 as capacity charge, far higher than Tk 0.55 received by the Ghorashal 409MW power plant, set up in 1989.

There are other gas-based public power plants that get less than Tk 1 in capacity charge per unit. The average capacity charge received by BPDB-owned gas-based power plant is Tk 1.31. The average capacity charge received by gas-based power plants owned by public companies other than the BPDB is Tk 2.44.

To coal-based state-owned power plants, the average capacity charge paid is Tk 4.63 for each unit. Joint venture coal projects receive an average of Tk 5.43 capacity charge per unit. Independent power plants, on the other hand, get an average of Tk 7.17.

The 1,320MW coal-based Banshkhali power station, owned by the

S Alam Group and set up in 2023, receives the highest Tk 7.34 capacity charge per unit.

The national capacity charge spending is set to reach Tk 38,000 crore in the current financial year of 2024–25. Initially introduced to incentivise private investment to tackle an acute power crisis by the ousted AL government, the capacity charge eventually proved to be a huge burden for the nation.

In September 2023, the then power state minister informed the parliament that in its three consecutive terms, the AL government paid a total of Tk 1.04 lakh crore as capacity charges.

Bangladesh’s power generation overcapacity is about 50 per cent of the total installed generation capacity of 27,645MW. The overcapacity is the result of the inability to buy energy, mainly due to the dollar crisis partly triggered by the massive power sector spending. The energy crisis has also set off a staggering inflation, trapping Bangladesh in a huge debt obligation.

BPDB chair Rezaul Karim said that they are reviewing power purchase agreements and will sit with power companies to present their side of the story.

‘We want to resolve the issue rationally, giving the companies a chance to present their case as well,’ he said.

‘We can assure you that a good result will come out of it,’ he told New Age on Friday.​

 

[Saif]

https://thefinancialexpress.com.bd/trade/bangladesh-to-buy-3-more-spot-lng-cargoes-by-mid-june

Bangladesh to buy 3 more spot LNG cargoes by mid-June
FE Online Report
Published :
Apr 19, 2025 19:50
Updated :
Apr 19, 2025 20:00

Bangladesh has moved to buy three spot liquefied natural gas (LNG) cargoes by mid-June to meet mounting summer demand.

State-run Rupantarita Prakritik Gas Company Ltd (RPGCL) floated three separate tenders to procure three spot LNG cargoes for May 22-23, June 5-6 and June 12-13 delivery windows, a senior RPGCL official told The Financial Express Saturday.

The country’s energy demand has gone up since March with the advent of summer and is expected to grow further with the rise of mercury.

Bangladesh has been buying three spot LNG cargoes for the delivery windows of March and April, respectively.

The bid winners will deliver the LNG cargoes at Moheshkhali Island in the Bay of Bengal, with options to discharge the cargo at either of the country’s two floating storage re-gasification units (FSRUs) located on Moheshkhali Island.

The RPGCL, a wholly owned subsidiary of state-run Bangladesh Oil, Gas, and Mineral Corporation, or Petrobangla, looks into LNG trades in Bangladesh.

The volume of each of the spot LNG cargoes will also be around 3.36 million British Thermal unit (MMBtu).

Bangladesh currently imports LNG from Qatar Energy and OQ Trading International under long-term deals and purchases LNG also from the spot market to re-gasify LNG in its two operational FSRUs, having a total capacity of 1.10 billion cubic feet per day (Bcfd).

The country has been reeling from an acute energy crisis as its natural gas output is depleting.

Bangladesh has been rationing gas supply to industries, power plants and other gas-guzzling industries to cope with the mounting demand.​

 

[Saif]

Capacity charge ills should not menace power sector

THIS is unfortunate that the capacity charge — the money that the Power Development Board pays power-sector investors even when the plants do not produce electricity, with an aim to cover the loans that the plants receive, along with interests, salaries of the employees and returns on the equity...

www.newagebd.net

Capacity charge ills should not menace power sector
20 April, 2025, 00:00

THIS is unfortunate that the capacity charge — the money that the Power Development Board pays power-sector investors even when the plants do not produce electricity, with an aim to cover the loans that the plants receive, along with interests, salaries of the employees and returns on the equity — continues even after the political changeover of August 5, 2024, with the interim government having promised to end such favours dished out quarters close to the Awami League government that was toppled in a mass uprising. But this does not make up the whole story. What is further unfortunate is that the capacity charges greatly vary depending on power companies with similar capacities. The power board calculates the capacity charge considering the use of 60 per cent capacity of the plants. Set up about the same time with the same technology, some plants receive way more capacity charge than the others do, 300 per cent or even more, as a power board analysis shows, for the production of a unit of electricity. Whilst the capacity charge remains a menace, varying capacity charges suggest that the power sector is plagued with too many ill practices, putting the economy in a tight spot.

Private-sector power producers have tried all every possible means — manipulating loans, bribing politicians, distorting information on equity or tampering with expenses — to inflate their capacity charge. An energy expert who was on the committee that prepared the white paper on the state of the Bangladesh economy, submitted to the government on December 1, 2024, says that the return on equity is usually 12 per cent. Joint ventures are found to be earning 16 per cent return on equity. The Rampal power plant is, however, entitled to an 18 per cent return on equity. In view of possible investments in power plants run on various types of fuel, energy experts say that an ideal capacity charge for plants based on gas is about Tk 1 a unit, for plants based on coal a maximum of Tk 4 a unit and for plants based on oil Tk 2 a unit. But the proposition remains far from ideal. The average capacity charge paid to gas-based independent power plants is Tk 3 a unit. The average capacity charge for gas-based independent power plants is Tk 7.17 a unit. The average capacity charge for independent oil-based plants is Tk 3.23 a unit.

With the overcapacity having already been about 50 per cent, this is pressing that the government should rethink the provision, or at least renegotiate, especially after the interim government in November 2024 repealed the Awami League-era Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act 2010 that brought in the menace in the energy policy.​

 

[Saif]

Eliminating power subsidy more than a challenge

The International Monetary Fund's (IMF) insistence on eliminating power subsidies and raising electricity tariffs has got the interim government in a difficult position. These two measures are among the primary conditions for the release of the 4th and 5th tranches of the IMF's $4.7 billion loan. A

thefinancialexpress.com.bd

Eliminating power subsidy more than a challenge
Published :
Apr 24, 2025 23:32
Updated :
Apr 24, 2025 23:32

The International Monetary Fund's (IMF) insistence on eliminating power subsidies and raising electricity tariffs has got the interim government in a difficult position. These two measures are among the primary conditions for the release of the 4th and 5th tranches of the IMF's $4.7 billion loan. As per the latest IMF review mission, which conducted a comprehensive assessment of Bangladesh's economic landscape, the government is expected to completely remove power subsidies by the 2025-26 fiscal year to qualify for further disbursements from the multilateral body. The IMF has also recommended an upward adjustment in electricity tariffs to reduce the fiscal burden. According to media reports, failure to phase out the electricity subsidy could jeopardise the release of the 4th and 5th tranches of the loan.

However, the reality on the ground in Bangladesh's power and energy sector starkly by no means corresponds to these expectations. The interim government recently revised the national budget, increasing the total subsidy allocation from Tk 360 billion to Tk 620 billion. Over the years, electricity subsidies have escalated, largely due to the proliferation of independent power producers (IPPs) and rental power plants that operate at high costs. To manage the growing fiscal pressure, the Bangladesh Power Development Board (BPDB) has begun ramping up generation from coal and gas-fired power plants -- seen as more cost-effective options. This shift is part of a broader strategy to gradually reduce dependence on expensive IPPs. Nonetheless, some newly commissioned IPPs have already begun supplying power to the national grid under previously signed power purchase agreements (PPAs), and their outstanding payments remain a financial liability. The BPDB has informed the IMF that it may take a few more years to clear these dues and trim overall subsidies.

The IMF's call for a zero-subsidy regime stems from its emphasis on building a sustainable, market-driven economy. However, many economists argue that such a model may not be suitable for a power-starved country like Bangladesh. Removing subsidies so soon could have far-reaching consequences, particularly for the manufacturing sector which is highly dependent on affordable energy. The ripple effects could include higher inflation, a spike in production costs, and a decline in export competitiveness -- outcomes that are likely to undercut the very economic stability the IMF loan aims to support. A more balanced and pragmatic approach would be to implement a gradual phase-out of subsidies, allowing industries and common consumers time to adapt. A sudden and complete withdrawal, as suggested by the IMF, may result in economic disruption that outweighs the benefits of the $4.7 billion loan.

It is crucial for Bangladesh to secure the IMF funds, including the additional $3.0 billion agreed upon recently, but not at the cost of macroeconomic stability. Currently, a high-level delegation from the interim government is in Washington, D.C., participating in the IMF-World Bank annual meetings. Their mission is to negotiate the release of the delayed tranches and to persuade the IMF to adopt a more flexible approach to subsidy reform. There is hope that with careful diplomacy and sound economic reasoning, the delegation can convince the global lender to support a gradual transition that better aligns with the country's current realities.​

 

[Saif]

Govt to set up land-based LNG terminal soon: Alam

The interim government has decided to set up a land-based LNG terminal to ensure a smooth gas supply to the country’s factories. “Many are saying that they are unable to set up factories due to a lack of gas. So, we want to set up a land-based LNG terminal as quickly as possible so tha

thefinancialexpress.com.bd

Govt to set up land-based LNG terminal soon: Alam
BSS
Published :
Apr 25, 2025 16:28
Updated :
Apr 25, 2025 16:28

The interim government has decided to set up a land-based LNG terminal to ensure a smooth gas supply to the country’s factories.

“Many are saying that they are unable to set up factories due to a lack of gas. So, we want to set up a land-based LNG terminal as quickly as possible so that enough gas can be brought (from abroad),” Chief Adviser’s Press Secretary Shafiqul Alam told reporters in Doha on Thursday.

In this regard, he said, a plan was shared with Qatar Energy during Chief Adviser Professor Muhammad Yunus’s tour to Doha.

The land-based LNG terminal will be set up soon to expand the gas supply to factories in Bangladesh, the press secretary said.

Regarding the chief adviser’s Doha tour, he said it was a very successful and fruitful visit.

“I would say it is one of the most successful and very engaging visits,” he said.

Due to this tour, Alam hoped, the reputation of Bangladesh would spread across the world and many foreign investors would come forward to invest in Bangladesh.

Highlighting the bounce-back of the country’s economy, he said there were outstanding debts of US$ 3.2 billion during the ousted regime, but the interim government has reduced it to US$ 600 million.

The remaining debt will be paid within a few months, the press secretary said, adding, “It sends a positive signal to the outside world that we are ready for business.”

Wrapping up his four-day tour, Prof Yunus is scheduled to leave Doha today for Rome, Italy, to join the funeral of Pope Francis.​

 

[Saif]

Grid failure plunges 21 southern districts into darkness

Around 21 districts in the southern region of the country, including the entire Barishal Division and parts of Khulna Division, were plunged into darkness on Saturday evening following a major power grid failure. According to officials at Power Grid Company of Bangladesh (PGCB), the grid collapse

thefinancialexpress.com.bd

Grid failure plunges 21 southern districts into darkness
Published :
Apr 26, 2025 22:17
Updated :
Apr 26, 2025 22:36

Around 21 districts in the southern region of the country, including the entire Barishal Division and parts of Khulna Division, were plunged into darkness on Saturday evening following a major power grid failure.

According to officials at Power Grid Company of Bangladesh (PGCB), the grid collapse began at 5:45 pm in one district and then gradually spread across the 21 districts, UNB reports.

However, the power transmission was restored within 45 minutes to one hour in all the affected areas, they said.

“A good number of districts had their power supply restored within 15 to 20 minutes due to the prompt measures taken by PGCB,” said the transmission entity in an official statement.

It added that the transmission system is currently operating normally following the restoration across the Barishal and Khulna regions.

The reason behind the massive grid failure could not be confirmed immediately, as no PGCB official could determine the exact cause as of filing this report.

So far, no committee has been formed to investigate the incident, an official said.​

 

[Saif]

Bangladesh’s energy crossroads

BANGLADESH’S energy sector stands at a critical inflection point, caught between the urgent need to meet growing demand and the imperative to transition towards sustainable solutions. The country has made impressive strides in electricity coverage, expanding access to over 96 per cent today. Yet...

www.newagebd.net

Bangladesh’s energy crossroads
Musharraf Tansen 27 April, 2025, 00:00

BANGLADESH’S energy sector stands at a critical inflection point, caught between the urgent need to meet growing demand and the imperative to transition towards sustainable solutions. The country has made impressive strides in electricity coverage, expanding access to over 96 per cent today. Yet this remarkable achievement rests on increasingly shaky foundations — an overreliance on imported fossil fuels that drains foreign reserves, exposes the economy to volatile global markets, and contributes significantly to environmental degradation. With peak electricity demand projected to reach 40,000 MW by 2041 and climate change intensifying vulnerabilities across the country, Bangladesh faces a defining challenge: how to power its economic ambitions while ensuring energy security and environmental sustainability.

The cost of fossil fuel dependence

BANGLADESH’S current energy model has become economically unsustainable. The country spends approximately $2.5 billion annually on fossil fuel subsidies — equivalent to 15 per cent of its total import bill — while simultaneously grappling with a dollar shortage crisis. The much-touted shift to liquefied natural gas (LNG) as a bridge fuel has backfired spectacularly, with import prices soaring 300 per cent since 2021 and forcing painful cuts to power generation. Meanwhile, the coal power expansion strategy, which envisioned 22,000 MW of new capacity, has left the country with underutilised white elephants like the 1,320 MW Payra plant that operates at just 40 per cent capacity due to fuel affordability issues. This overreliance on imported energy has not only created fiscal strain but also environmental consequences, with air pollution from fossil fuel combustion estimated to cause 80,000 premature deaths annually.

Structural barriers to clean energy transition

SEVERAL entrenched obstacles stand in the way of Bangladesh’s renewable energy potential. Policy inconsistency remains a fundamental challenge — the 2008 Renewable Energy Policy’s target of 10 per cent renewables by 2020 was missed by a staggering 65 per cent, even as contradictory support for coal power continued. Financial constraints compound these issues, with dollar shortages limiting clean technology imports and risk-averse local banks preferring to finance conventional fossil projects. The grid itself presents technical barriers, lacking the flexibility to handle variable renewable output and constrained by land scarcity that complicates large-scale solar and wind deployment. These challenges are exacerbated by institutional fragmentation, where overlapping mandates between the Bangladesh Energy Regulatory Commission, Power Division, and Sustainable and Renewable Energy Development Authority often lead to conflicting priorities and stalled progress.

Overdependence on imported fossil fuels: Bangladesh’s energy security is compromised by its heavy reliance on imported fossil fuels. The volatility of global fuel prices, as evidenced during the Russia-Ukraine conflict, has led to increased electricity generation costs and significant subsidy burdens. In the fiscal year 2021–22, the power sector’s subsidy burden escalated to approximately $2.82 billion. This financial strain limits the government’s capacity to invest in renewable energy infrastructure and technologies.

Limited land availability: As one of the most densely populated countries, Bangladesh faces acute land scarcity, posing a significant challenge for large-scale renewable energy projects. The competition for land use between agriculture, habitation, and energy infrastructure necessitates innovative solutions, such as rooftop solar installations and floating solar systems, to optimize space utilization.

Grid infrastructure constraints: The existing electricity grid infrastructure is ill-equipped to handle the variability and intermittency associated with renewable energy sources. The lack of modern grid management systems, energy storage solutions, and smart grid technologies hampers the integration of renewables into the national grid, leading to inefficiencies and potential reliability issues.

Policy and regulatory challenges: While the government has introduced policies to promote renewable energy, such as net metering guidelines, the overall policy framework lacks coherence and long-term vision. The absence of a comprehensive, integrated energy and power master plan has resulted in fragmented efforts and limited investor confidence. Additionally, bureaucratic hurdles and inconsistent regulatory practices deter private sector participation and investment in the renewable energy sector.

Financial and investment barriers: The high upfront costs associated with renewable energy projects, coupled with limited access to affordable financing, pose significant challenges. Despite the Bangladesh Bank’s directive for financial institutions to allocate at least 5 per cent of their loan portfolios to green financing, actual disbursements remain below target. Furthermore, the lack of risk mitigation instruments and incentives for investors impedes the mobilization of private capital.

Untapped renewable potential

BENEATH these challenges lies extraordinary untapped potential. Bangladesh’s solar energy capacity alone could theoretically generate 3,000 MW from rooftops — equivalent to six mid-sized coal plants — yet current installations total just 329 MW. The country’s extensive coastline holds an estimated 5,000 MW of wind power potential, while agricultural residues could produce 500 MW of bioenergy. The success of Bangladesh’s pioneering solar home system programme, which brought electricity to 20 million people, demonstrates the viability of distributed renewable solutions. Coastal areas could host hybrid offshore wind and solar farms, while Kaptai Lake’s 3,000 MW floating solar potential remains virtually unexploited. Emerging technologies like green hydrogen could eventually decarbonize hard-to-abate industries like fertiliser production by leveraging existing gas infrastructure.

Policy priorities for accelerated transition

Reforming the financial architecture: The transition requires fundamental financial restructuring. Bangladesh must move from blanket fossil fuel subsidies to targeted incentives for renewables, establishing a 500 million green bond market to attract institutional investors. Partnering with multilateral development banks on currency hedging instruments could mitigate forex risks for renewable projects, while development partners could help capitalise a renewable energy development fund. The recent 4.5 billion IMF bailout, partially necessitated by energy sector strains, underscores the urgency of these financial reforms.

Modernizing grid infrastructure: Grid modernization represents another critical frontier. Deploying smart meters and AI-driven demand forecasting could better manage variable renewable supply, while creating dedicated renewable energy zones with streamlined land allocation would accelerate project development. Pilot battery storage installations at 50 strategic substations could demonstrate the viability of energy storage for grid stability. These technical upgrades must be paired with regulatory reforms that properly value distributed generation and encourage private investment in grid flexibility solutions.

Strengthening institutions and human capital: Institutional strengthening is equally vital. Elevating Sustainable and Renewable Energy Development Authority to a statutory authority with real enforcement power would give renewables policy more teeth, while implementing renewable purchase obligations for large industrial consumers could create guaranteed demand. Launching a ‘Clean Energy Corps’ fellowship programme could build the technical capacity needed across government and utilities, ensuring the workforce keeps pace with technological change.

Economic imperative of transition

THE case for energy transition is fundamentally economic. Every 1,000 MW of added solar capacity could save $300 million annually in avoided fuel imports while creating three times more jobs per megawatt than fossil fuel projects. Renewable energy offers insulation from commodity price shocks — during the 2022 global energy crisis, solar-powered factories maintained operations while gas-dependent industries faltered. Moreover, positioning Bangladesh as a regional leader in offshore wind and green hydrogen could attract significant foreign investment in coming decades.

A just transition road map

THE path forward must balance urgency with equity. In the short term (2025–2026), Bangladesh should impose a moratorium on new coal and LNG plants while launching a 500 MW rooftop solar initiative and reforming tariff structures to favour renewables. The medium-term (2027–2030) should focus on achieving 15 per cent renewable penetration through offshore wind and waste-to-energy projects, coupled with retraining programmes for 50,000 fossil sector workers. Long-term planning (2031–2041) should envision Bangladesh as a regional clean energy leader, with 40 per cent renewable generation supported by green hydrogen backup and potential electricity exports to neighbouring countries.

Seizing the moment

BANGLADESH’S energy choices in the coming years will determine whether it becomes trapped in a cycle of fossil fuel dependency or emerges as a solar-powered pioneer. With coordinated policy action, financial innovation and technological adaptation, the country can build an energy system that powers inclusive growth while meeting climate commitments. The alternative — continued reliance on expensive, unreliable fossil imports — risks economic stagnation and ecological harm. For a nation that has already shown remarkable ingenuity in expanding energy access, the renewable energy transition represents the next great challenge — and opportunity — in its development journey.

Musharraf Tansen is a development analyst and former Country Representative of Malala Fund.​

 

[Saif]

18,000MW power production planned for summer

Load shedding during the summer days will be kept at a tolerable level, Power and Energy Adviser Fouzul Kabir Khan said yesterday.

www.thedailystar.net

18,000MW power production planned for summer
Load shedding to stay tolerable, says energy adviser

Photo: Freepik

Load shedding during the summer days will be kept at a tolerable level, Power and Energy Adviser Fouzul Kabir Khan said yesterday.

"I won't say there will be no power outage during the summer, but the load shedding will remain within a tolerable level. And there will be no difference between urban and rural areas," he said at a seminar, titled "Energy Crisis: Way Forward," organised by the Forum for Energy Reporters Bangladesh (FERB) at Bidyut Bhaban in the capital.

He said plans are in place to produce 18,000 megawatts (MW) during peak demand in summer, up from the current 16,000 MW. Additional demand will be met through coal and LNG imports.

Kabir added that when the interim government took charge, the power sector was in a disastrous state. "We have paid most overdue and late payments to companies."

The overdue bill, originally around US $3.2 billion, has been reduced to US $600 million and is expected to hit zero by the end of the fiscal year in June, he added.

To clear the payments, the government cut allocations from unnecessary projects. Kabir noted that late payments had also raised power production costs.

On gas exploration, Kabir said the government only took steps it could complete within its tenure.

Regarding electricity prices, Kabir said negotiations are ongoing with coal-based power plants, setting the Matarbari plant's rate of Tk 8.44 per kilowatt-hour (kWh) as a benchmark. "We are asking them why their prices differ by Tk 3-4 instead of Tk 0.30-0.40," he said.

Activities to reduce system loss will be visible by next June, he added.

Addressing the recent gas price hike for new industries, Kabir said it was set based on the marginal cost.

In the keynote paper, energy expert Ijaz Hossain said Bangladesh's energy crisis began in 2019 when gas production declined and oil replaced gas, increasing the government's energy subsidy burden.

"Gas reserves were depleting, but exploration was ignored, while LNG import was preferred at a time when the government should have gone for aggressive production," he said.

He noted that local production stood at 2,786 million cubic feet of gas a day (mmcfd) in 2019 but has now fallen to 1,800 mmcfd. Future governments should promise to keep production around 2,000 mmcfd by exploring at least 10 wells a year, he said.

Bangladesh will also need to import 2,600 mmcfd of LNG after 2030 and build two new floating storage and regasification units (FSRUs), he added.

Dr Shamsul Alam, energy adviser to the Consumers' Association of Bangladesh, said Bangladesh is shifting towards becoming an LNG-importing nation, with domestic gas's share expected to fall from 75 percent to 25 percent by 2030.

Dr Golam Moazzem, research director at the Centre for Policy Dialogue, called for a new energy policy with a clear transition plan.

He warned that ongoing LNG deals with Qatar and the US could impact the country's long-term renewable energy goals.​

 

[Saif]

Five per cent tax rebate for solar panel users under consideration: DNCC

Administrator of Dhaka North City Corporation (DNCC) Mohammad Azaz has said his administration is contemplating providing a 5.0 per cent tax rebate for city dwellers who will use solar panels as part of green energy promotion. "The DNCC is thinking of considering a 5.0 per cent tax rebate for the

thefinancialexpress.com.bd

Five per cent tax rebate for solar panel users under consideration: DNCC
UNB
Published :
Apr 28, 2025 22:16
Updated :
Apr 28, 2025 22:16

Administrator of Dhaka North City Corporation (DNCC) Mohammad Azaz has said his administration is contemplating providing a 5.0 per cent tax rebate for city dwellers who will use solar panels as part of green energy promotion.

"The DNCC is thinking of considering a 5.0 per cent tax rebate for the city dwellers if they use the rooftop solar panel", he made the remarks at a policy dialogue titled "The Role of Renewable Energy for in Building a Just Urban".

The event was jointly organised by Dhaka North City Corporation (DNCC) and the Center for Atmospheric Pollution Studies (CAPS) at the auditorium of the DNCC Nagar Bhaban in Gulshan-2 on Monday.

With Professor Mohammad Ali Naqi, head of the Department of Architecture, State University of Bangladesh, in the chair, the seminar was also addressed by Prof Dr Ahmad Kamruzzaman Majumder, Chairman of CAPS, who made the keynote presentation.

The DNCC administrator also stressed the need for continued research in this area as to how the advantage of green energy could be utilised.

He emphasised the potential of installing solar panels on buildings in Dhaka's planned neighbourhoods, where rooftop solar clearance is adequate due to uniform building heights.

He noted that through the effective rooftop solar implementation, buildings can meet their own electricity demand and even contribute to the national grid-making the concept of a "just transition" more attainable.

Prof. Dr. Ahmad Kamruzzaman Majumder said that Dhaka ranks among the worst cities in terms of air quality, liveability, traffic congestion, and noise pollution.

Referring to Yale University's 2024 Environmental Performance Index, where Bangladesh ranks 175th out of 180 countries, he warned that unplanned urbanisation, industrialisation, and population growth have led to severe environmental degradation. Transitioning from fossil fuels to renewable energy is one of the key solutions to combat this crisis.

DNCC Chief Executive Officer Abu Sayed Md. Kamruzzaman pointed out that Dhaka is an unplanned city and achieving justice in such a context requires comprehensive planning and implementation.

Prof. Dr Adil Mohammed Khan, President of the Bangladesh Institute of Planners (BIP), noted that Bangladesh has significant potential for renewable energy. He emphasised the need to promote its use across sectors and raise awareness to build a greener and healthier future.

Professor Dr M. Shahidul Islam, Chairman of the Department of Geography and Environment at the University of Dhaka, advocated for reduced energy demand, increased use of public transport, and greater responsibility among polluters.

Mohammad Fazle Reza Sumon, Convenor of BIP's Advisory Board, proposed that rooftop management could be a major source of renewable energy and urged collective action at the individual level.

Professor Dr Ijaz Hossain, former Dean of the Faculty of Engineering at BUET, suggested identifying major polluters and taking strict control measures, including promoting electric vehicles charged by solar energy.

Roufa Khanam of the Center for Climate and Environmental Research (CCER) stressed the need for skilled technical management, effective monitoring, and incentives to implement renewable energy laws effectively.

Professor Naqi underscored the dual necessity of reducing energy consumption and increasing the use of renewable energy.​

 

[Saif]

Severe energy crisis affects life, business

A severe energy crisis has been affecting every aspect of life, commerce and business as the country passes yet another year of bad energy planning.

www.newagebd.net

Severe energy crisis affects life, business
Industries report big drop in production, people suffer at home

Emran Hossain 28 April, 2025, 23:27

A severe energy crisis has been affecting every aspect of life, commerce and business as the country passes yet another year of bad energy planning.

While industries are left with no choices but to reduce production by half or even more due to long hours of power cuts, compounded by a severe shortage of gas, power plants sat idle in dozens, CNG refueling stations saw long lines of vehicles and many households needed to wait until midnight to cook meals.

The crisis is a grim reminder of the interim government’s failure to import enough energy as it continues to carry the energy sector debt burden left behind by the past Awami League regime amid the dollar crisis.

On April 27, the latest daily gas report released by Petrobangla showed that the overall gas supply stood at 2,692.2mmcfd against the demand of 4,000mmcfd. The gas supply was 10 per cent less compared with the same day a year before.

An analysis of daily Petrobangla reports of the days in comparison revealed that gas production from domestic wells fell by 170.9mmcfd amid reduced liquefied natural gas imports of 159mmcfd.

‘We are witnessing the worst energy crisis ever,’ said Bangladesh Knitwear Manufacturers and Exporters Association vice president Saleudh Zaman.

About 19 per cent of about 1,800 textile mills are running at their half or 40 per cent capacity navigating seven to nine hours of power cuts daily, he said.

Industries could not use their alternative captive power generation because of gas supply shortage. Many industries need gas as raw materials.

‘Many factories might default on paying workers’ wages,’ he said.

Gas accounts for 54 per cent of Bangladesh’s total energy supply. The other energy sources are oil, coal and biomass. Power sector is the biggest gas consumer accounting for 43 per cent of the overall consumption. Captive power consumes 17 per cent of gas.

Industries use 18 per cent of supplied gas while households use 11 per cent and CNG and fertilizer production use 5 per cent each.

On April 27, gas supply met 42 per cent of power sector demand and only 38 per cent of fertilizer sector demand.

Consumers are particularly angered by the gas crisis because their gas bill soared in the past few years without any improvement in its supply. Industries saw gas price increase by more than two and a half times since 2023.

Over the past week, the crowd of vehicles at CNG refueling stations in the capital and many other districts got thicker, signaling a worsening turn in the energy crisis.

The gas pressure, supposed to be 15psi, dropped to between zero and 2psi in two-thirds of CNG refueling stations, said Farhan Noor, general secretary of the Bangladesh CNG Filling Station and Conversion Workshop Owners Association, a platform of 539 refueling stations.

The refueling stations never received the promised pressure and faced gas rationing since 2010.

Though the stations are supposed to get gas 21 hours a day, the supply reaches operable levels around midnight.

‘The problem is that you cannot find customers in the wee hours,’ said Farhan.

Low gas pressure means increased energy cost for the refueling stations which need to use three to five times more electricity to run their compressors to get a certain amount of output, he explained.

Farhan said that he was under pressure from his colleagues to call a nationwide strike as their margin dropped over the years amid inflation, wage hike, and the devaluation of taka.

‘I lost a long-time client today as I was two hours late to pick him up due to long queues at gas refueling stations,’ said Abdul Malek, a rent-a-car owner in Tangail.

The drop in the gas supply in CNG refueling stations mirrored lives in households relying on piped gas. Many households have to wait until midnight to start cooking.

‘Cooking at midnight after working a whole day is simply inhuman,’ said Hamida Banu, a housewife in the capital’s Badda area.

Most households using piped gas pay a fixed monthly price though they never get what they pay for. Households in many areas in Dhaka reported acute low gas pressure in most parts of the day.

The shortage of gas is felt more than any other energy shortage as public infrastructures are mostly gas-based. Coal and furnace oil are mostly used in industries and power production.

Petrobangla director Rafiqul Islam said that the crisis was unlikely to improve until June when the state-owned oil company is planning to increase LNG import.

‘Local gas production fall and increased power demand are the main drivers of the crisis,’ he said.

This summer has been rather less warm as the warmest month of the year, April, is about to end with maximum day temperatures remaining around 37C. Last April saw consecutive days spread over weeks with temperatures exceeding 40C over vast swathes of land.

Still, frequent load shedding occurred, even in Dhaka.

At 1:00am on April 28, 218MW of load shedding was recorded when the power demand rose to 15,240MW. Bangladesh’s current installed power generation capacity is over 27,500MW with gas accounting for nearly half of the capacity. Coal and oil account for 20 per cent of the capacity each.

Energy expert Ijaz Hossain advised increasing gas supply to industries even if it meant increasing load shedding. He called for prioritizing some industries to supply 200mmcfd of extra gas, which could go a long way in saving the country’s economy.

‘The crisis reflected shortcomings of energy planning,’ he said, ‘I don’t understand what the government is trying to achieve by not fully using its LNG import capacity.’

Bangladesh’s full LNG import capacity is 1,100mmcfd.

Oil-based power plants could be used more to mitigate power outages, he suggested.

‘There is no easy solution. We are facing a critical situation. Further failure in taking the right action could lead everything to collapse,’ said Ijaz.​

 

[Saif]

No margin loan for power sector

The taskforce for capital market reforms has suggested excluding power plants from the list of marginable securities as their nature of having fixed tenures makes them more aligned with bonds..The taskforce submitted its final proposals to the Bangladesh Securities and Exchange Commission

www.thedailystar.net

No margin loan for power sector
Taskforce says in final proposal for capital market reforms

The taskforce for capital market reforms has suggested excluding power plants from the list of marginable securities as their nature of having fixed tenures makes them more aligned with bonds.

The taskforce submitted its final proposals to the Bangladesh Securities and Exchange Commission on Sunday before disclosing them to the media through a press briefing at the regulator's office in Dhaka today.

It previously submitted a draft proposal in February, where it proposed that power plants with limited lifecycles should not qualify for margin financing during the last two years before their expiry.

According to the final proposal, mutual funds as a group should be non-marginable. Also, the marginable limit of banks and financial companies should be linked with their net asset value, not earnings.

This is because the valuation of banks and financial institutes are ideally linked to their net asset value and return on equity.

If a client has two accounts, with one being a margin account while the other is a non-margin account, and the margin account goes negative, the institution should have absolute discretion to sell from the non-margin account to repay the negative amount.

Also, clients should be required to pay interest against their margin loans within 15 days of the expiry of the notice period.

If left unpaid, brokerages should have the right to liquidate holdings to recover outstanding interest.

Meanwhile, considering how margin loan products are different from regular loan products, it proposed not including defaulters of margin loans in the Credit Information Bureau (CIB) report.

The assessment of earning, collateral and so on is different for margin loans. Besides, merchant banks and stockbrokers do not have access to the CIB database, the taskforce said.​

 

[Saif]

Rising gas prices threaten our investment prospects

The previous government not only turned the country into a net importer of energy, but also initiated a process to make it an import-dependent.

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Rising gas prices threaten our investment prospects

VISUAL: ANWAR SOHEL

On April 13, 2025, despite objections from businesses and consumer rights organisations, the Bangladesh Energy Regulatory Commission (BERC) set new gas prices for new industries, raising the tariff from Tk 30 to Tk 40 per unit. For captive power plants, the tariff has been increased from Tk 31.50 to Tk 42 per unit. This increased rate will also apply to existing customers if they use more than 50 percent of their approved load.

At a time when the government has presented the country as an attractive destination for global business through the Bangladesh Investment Summit 2025, this gas price hike has caused concern among industrial consumers who are worried about investments getting stalled by increased gas prices. A business leader pointed out that the method used to determine gas prices was flawed; VAT is being imposed at both the import and distribution stages. Meanwhile, gas theft continues without effective measures to prevent it. Instead, to cover the losses, the gas price is being increased, he remarked.

This differential pricing has caused discrepancies in energy costs for similar operations, disrupted the level playing field, and weakened national competitiveness in industrial sectors—posing a threat to both domestic and foreign investments. A transparent and fair energy pricing is essential to maintain investor confidence and ensure industrial growth. The said BERC order to increase gas prices is inconsistent with the goals of economic development and attracting investment. No effective initiatives have been taken to explore our own gas resources. Instead, the government has become overly dependent on LNG imports, which primarily benefit an oligarchic class. One of the core foundations for attracting foreign investment is energy security. Repeated abnormal hikes in gas prices disrupt energy security and create uncertainty in investment security.

In Bangladesh, the ratio of private investment in terms of GDP, which has been historically underwhelming, is now on the decline. In FY2021-22, the private investment to GDP ratio was 24.52 percent. By FY2023-24, it fell down to 23.96 percent, according to a Prothom Alo report. In the first six months of FY2024-25, foreign direct investment in the country amounted to only $213 million, a significantly lower amount than the $744 million during the same period the previous fiscal year. If investment cannot be increased, employment will decline, people's income will decrease, and young people will not get the jobs they hope for.

Statistics on private bank loans and the import of capital machinery also reflect stagnation in investment. In February 2025, private sector credit growth dropped to 6.82 percent—the lowest in the past 10 years. Between July 2024 and February 2025, capital machinery imports shrunk by nearly 25 percent. The main issue is the lack of energy security, which is making the investment environment unfavourable. To address the gas crisis, the government, in 2023, raised industrial gas prices by up to 178 percent while promising increased LNG supply. Yet, the crisis remains unresolved. In January, Petrobangla proposed to raise gas prices for industries by 152 percent, aligning the rate with the cost of LNG supply.

System loss in gas distribution and transmission is 13.53 percent. However, according to BERC's own estimates, it is just 1.12 percent—the rest is due to wastage and theft. As I have mentioned before, if the value of these losses were not adjusted into the pricing, around Tk 10,870 crore of taxpayers' money could have been saved annually.

VAT is being charged twice in gas pricing. The BERC technical committee recommended charging VAT only once, which would reduce annual predatory expenses by approximately Tk 3,548 crore. In contrast, a 33 percent hike in gas prices for industrial and captive power use is expected to generate only about Tk 713 crore in additional annual revenue.

These figures clearly demonstrate that simply making VAT and system loss fair and reasonable could prevent predatory expenses, potentially saving Tk 14,418 crore annually. Yet, instead of eliminating these predatory costs, BERC has arbitrarily raised industrial gas prices under a separate gas pricing structure—beyond its jurisdiction.

Domestic gas supply in FY2022-23, FY2023-24, and FY2024-25 was 22,651, 21,082, and 20,067 (projected) million cubic metres, respectively. This consistent decline indicates a deepening energy crisis. Currently, LNG accounts for 25 percent of the total gas supply—a figure projected to rise to 75 percent by 2030. In light of this, the government is now determined to sell gas to industrial consumers at the LNG rate of Tk 79.34 per cubic metre. Meanwhile, all charges related to energy supply are being raised to abnormal levels.

After gaining power for pricing, the previous government increased gas production, transmission, and distribution charges by approximately 40 percent, 114 percent, and 60 percent, respectively, within a year. The charges of Petrobangla and Rupantarita Prakritik Gas Company Ltd (RPGCL) were raised by 24 percent and 109 percent, respectively. The gas price was increased by 150 percent, 155 percent, and 178 percent for large, medium, and small and cottage industries, respectively. For captive power, the increase was 97 percent, and for electricity, it was 209 percent. Under the current government, a 33 percent hike has already been implemented. In this context, BERC stated that gas distribution companies had proposed raising prices by over 150 percent for new industries, but acknowledged that such a jump would be too difficult to bear at this moment.

In the public hearing held in 2022, it was revealed that 65 percent of the Gas Development Fund remained unspent. Only 35 percent was used to pay foreign contractors. National capacity development was not prioritised. As a result, 75 percent of gas supply is projected to come from LNG by 2030. This trend remains unchanged under the current administration.

Earlier on February 13, 2025, the Consumers Association of Bangladesh (CAB) sent a letter to BERC. In a press conference on February 22, CAB proposed postponing the public hearing on gas price hikes and reducing energy prices by eliminating predatory expenses. During the hearing held on February 26, CAB recommended rejecting the unjust and unreasonable gas price hike proposal. In the post-hearing report dated March 4, the following recommendations were forwarded:

i) Under the amended Section 34 Ka of the BERC Act, all pricing orders issued by the ministry concerning energy should be revoked, and new prices should be set by BERC.

ii) The total amount of predatory costs adjusted into energy pricing during the previous government's tenure should be determined, and existing rates should be reduced by excluding such costs and excessive government revenue.

iii) A tribunal led by a retired Supreme Court judge should be formed to bring energy criminals to justice.

iv) The BERC Act should be amended to ensure energy justice and protect consumer rights.

v) A reform commission under BERC, comprising stakeholder representatives, should be formed to restructure the energy sector, ensuring affordability and availability for consumers.

BERC did not respond at all to these proposals. Instead, it showed particular interest in aligning industrial gas pricing with the high cost of LNG, leading to discriminatory pricing.

It indicates that the previous government not only turned the country into a net importer of energy, but also initiated a process to make it an import-dependent market for industrial goods. Is the current government going to continue following the same trajectory?

M. Shamsul Alam is energy adviser at the Consumers Association of Bangladesh (CAB), and professor of electrical and electronic engineering at Daffodil University.​

 

[Saif]

Govt should try all means to plug energy supply gap

A POOR state of the energy sector — where industries almost halve their production, power plants sit idle by the dozens, queues grow longer at filling stations and households wait until midnight to cook meals all because of constraining inadequacy in energy supply, especially gas — has come to...

www.newagebd.net

Govt should try all means to plug energy supply gap
30 April, 2025, 00:00

A POOR state of the energy sector — where industries almost halve their production, power plants sit idle by the dozens, queues grow longer at filling stations and households wait until midnight to cook meals all because of constraining inadequacy in energy supply, especially gas — has come to be a grim reminder of a bad energy planning of the interim government, which additionally continues to carry the problems in the sector that the Awami League regime left it with. The government failures keep affecting every aspect of life. The daily gas supply report that Petrobangla released on April 27 shows that the overall supply stood at 2,692.2mmcfd against the demand for 4,000mmcfd, meeting only 32.69 of what is estimated needed. The supply is 10 per cent less compared with the supply on the same day a year before. An analysis of Petrobangla reports show that gas production from domestic wells has fallen by 170.9mmcfd amidst a reduced liquefied natural gas import of 159mmcfd, which the government is struggling to attend to because of a dollar shortage.

Gas accounts for 54 per cent of the total energy supply, with other sources being oil, coal and biomass. And, the power sector is the biggest consumer of gas, accounting for 43 per cent of the overall consumption whilst captive power generation consumes 17 per cent of the gas, industries 18 per cent, households 11 per cent, and compressed natural gas and fertiliser production 5 per cent each. On April 27, when the gap between the supply and the demand stood at 1,307.8mmcfd, the day’s gas supply could meet 42 per cent of the demand of the power sector and only 38 per cent of the demand of the fertiliser sector. Industrial consumers, many of which cannot depend on captive power generation because of the supply shortage and many that use gas as raw materials have halved their production, resented low gas pressure, which remains in the ranges of 0–2 pounds per square inch against the standard 15 pounds per square inch. Consumers generally resent the poor or no supply as gas prices have soared in the past few years, more than two times and a half since 2023, without any improvement in the supply situation. What makes all this concerning is that a Petrobangla director says that the situation is unlikely to ease until June when the state-owned agency plans to increase the import of liquefied natural gas.

The government should, therefore, anyhow increase gas supply by importing liquefied natural gas and diverting some gas from other sectors to industries. It could also use oil-based plants more to mitigate the power supply shortage. A further failure could make industries hurtle to a disaster.​

 

[Saif]

How the power and energy sector can come out of constant financial crunch

The sector has faced prolonged financial losses, rising public debt, and increasing fiscal burdens.

www.thedailystar.net

How the power and energy sector can come out of constant financial crunch

FILE ILLUSTRATION: BIPLOB CHAKROBORTY

The Centre for Policy Dialogue (CPD) has put forward a set of recommendations targeting the national budget for FY2025-26, especially with regard to the power and energy sector. There are grave concerns about the sector since it has confronted a vicious cycle of financial crunch over the last several years, which is likely to continue in the next fiscal year unless necessary measures are taken by the Ministry of Power, Energy and Mineral Resources (MoPEMR) and Ministry of Finance (MoF).

The power and energy sector has faced prolonged financial losses, rising public debt, and increasing fiscal burdens due to faulty policies, lack of transparency, and weak governance during the previous regime. Key challenges include: a) defaults on import bill payments; b) repayment of international loans and dues to international companies; c) disrupted gas and electricity supply; d) a lack of domestic gas exploration; and e) a growing subsidy burden passed onto consumers via higher tariffs. The upcoming national budget should focus on paying off outstanding dues, reducing subsidies, prioritising domestic gas exploration over LNG imports, lowering tariff barriers for renewable energy components, and eliminating discriminatory fiscal benefits for fossil-fuel-based power generation. As of February 2024, the Bangladesh Power Development Board (BPDB) has an overdue payment of Tk 29,000 crore, with Tk 21,000 crore owed to locally owned independent power plants (IPPs) and Tk 8,000 crore to foreign-owned IPPs, including Adani Power Jharkhand Ltd. Similarly, Bangladesh Oil, Gas and Mineral Corporation, also known as Petrobangla, faces outstanding dues for LNG and coal imports. To address this, the finance ministry plans to clear all arrears within the current fiscal year by reallocating unused ADP funds and raising the power sector subsidy to Tk 62,000 crore. However, this approach highlights a troubling cycle of overdue loans, unpaid bills, and ongoing financial liabilities in the power and energy sector.

Macroeconomic concerns

Fiscal policies directly impact macroeconomic performance. However, one major mistake and overlooked issue of the previous regime was failing to consider the broader macroeconomic context while injecting substantial funds into the power and energy sector, without addressing the effects of rapidly increasing money supply. This sector has been one of the highest recipients of subsidies, contributing to a weak macroeconomic foundation and rising price levels that persist today.

While subsidies may lower energy prices for consumers, they inadvertently increase the overall money supply, raising demand for power and contributing to demand-pull inflation. This inflationary pressure, driven by more money in the economy and artificially low prices, causes general price levels to rise.

Conversely, reducing subsidies would lead to higher prices for consumers at both household and production levels, also contributing to inflation but with different consequences. In this case, the government's fiscal burden would decrease, potentially alleviating pressure on public finances. However, reducing subsidies could also increase the fiscal deficit, adding pressure to inflation. The reality is, there is no straightforward solution; decisions must balance controlling inflation, reducing fiscal deficits, and reallocating subsidies for long-term sustainability in the sector.

Five-year financial recovery plan needed

To break the cycle, the MoPEMR, particularly BPDB and Petrobangla, should design a five-year financial plan to gradually reduce overdue payments. This plan should phase out fossil-fuel-based power plants after current contracts end, removing the "capacity payment" clause from renewed power purchase agreements (PPAs) and new contracts. In the short term, the MoPEMR should work with the finance and planning ministries to allocate additional funds as loans to BPDB and Petrobangla to clear overdue payments. These funds could come from ministries with poor fund utilisation records. The MoPEMR should also coordinate with the finance ministry to secure foreign exchange to clear overdue payments to foreign companies and projects, with the finance ministry and the Economic Relations Division (ERD) negotiating with multinational development banks like the International Monetary Fund (IMF), World Bank, and Asian Development Bank (ADB) for budget support. Additionally, the MoPEMR must present a medium-to-long-term financial sustainability plan.

Developing domestic gas sector is crucial

Despite the plan to drill 35 gas wells across the country by 2025, only one has been drilled so far. While three key projects have been approved and eight new projects are proposed for survey, exploration and extraction of hydrocarbons to boost gas reserves, the number of ongoing and planned projects remains too small to meet the exploration target. To address this, Petrobangla should expedite the explorations of gas wells using its own gas development fund instead of relying on foreign bidders. The Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) can take loans to allocate resources for the exploration of the 10 gas wells, scheduled to be explored using rented rigs. Since supplying energy is one of the topmost priorities for the national economy, the MoPEMR should discuss the necessary allocation of resources for ADP projects on the development of gas fields with the planning ministry.

Such a slow pace of gas exploration, coupled with prompt initiatives to import liquefied natural gas (LNG) continuously from the spot market, has raised concerns regarding the government's commitment to reduce energy import dependency. To address this, the government should start deprioritising LNG imports. In this context, the recent deal signed with the US for LNG supply could undermine the efforts to explore domestic gas resources. Instead, the government may consider welcoming US-based companies to submit their proposals for gas exploration in the off-shore fields.

Reducing import tariffs, other duties for green energy transition

One significant barrier to attracting private and public investment for green energy transition and attaining self-sustenance is the high tariff structure imposed on the import of essential renewable energy components. The total tax incidence on these imported components consists of multiple layers, such as customs duty, supplementary duty, advance income tax, advance tax, and value-added tax (VAT), significantly raising the costs. The overall impact of these tariffs is twofold: a) they increase the capital expenditure for renewable energy projects; and b) they slow the adoption of clean energy technologies due to higher financial barriers. For example, the total tax incidence imposed on solar panels is 26.2 percent, solar inverters 37 percent, mounting structures 58.6 percent, lithium-ion batteries 58.6 percent, and lead-acid batteries 89.32 percent. Additionally, other key renewable energy technologies such as wind, hydro, geothermal, and biomass-based power generation rely on imported equipment and components that are subject to similarly higher import duties and tax incidence. Similarly, electric vehicles face higher tax incidence. In contrast, the tax incidence is much lower for equipment and other components of fossil-fuel-based power generation.

Custom duties on parts, equipment, and components related to renewable energy supply chains, including generation, transmission, and distribution, should be reduced to five percent. The government should also eliminate taxes on all renewable energy goods to reduce costs and boost wider adoption of renewable energy technologies. Such measures would have only a marginal impact on the government's aggregate revenue generation. Also, VAT on parts, equipment, and components related to renewable energy supply chains should be reduced from 15 percent to 10 percent. In addition, a dedicated Renewable Energy Development Fund should be established to provide financial support for facilitating the establishment of distributed renewable energy systems, under private and commercial solar, wind, and biomass production units. To improve access to clean energy in remote and underserved regions, development funds should be allocated for mini-grid solar, battery storage technologies and wind projects.

Withdrawing benefits for fossil-fuel-based power

Addressing the fiscal benefits provided to fossil-fuel-based power producers is crucial for creating a level playing field for renewable energy producers. Under the Private Sector Power Generation Policy, fossil-fuel-based power plants receive significant tax exemptions, including a 15-year corporate income tax holiday, exemptions on plant and equipment imports, and full customs duty exemptions on imported fuel. The companies are allowed to import plant and equipment and spare parts up to a maximum of 10 percent of the original value of total plant and equipment within 12 years of commercial operation without payment of customs duties, VAT, and any other surcharges. The exemption includes paying import permit fees, except for indigenously produced equipment manufactured according to international standards. For imported fuel, there is full exemption of custom and import duties, and five percent VAT on the imported fuel as it will be used for the power generation process. These advantages have skewed the power sector, making it difficult for renewable energy producers to compete.

To rectify this, the Power Division should work with the National Board of Revenue (NBR) to remove corporate tax exemptions for fossil-fuel-based power plants in upcoming projects. A minimum five percent customs duty and surcharge should be imposed on the import of machinery and steel structures for fossil fuel plants. The Power Division should also review and compare the fiscal benefits given to fossil fuel plants with those for renewable energy producers, taking steps to eliminate discriminatory advantages. The MoPEMR, Power Division, Bangladesh Energy Regulatory Commission (BERC), and Sustainable And Renewable Energy Development Authority should collaborate with the finance ministry and NBR to withdraw these measures, reducing government fiscal expenditure and generating additional revenue.

Dr Khondaker Golam Moazzem is research director at the Centre for Policy Dialogue (CPD).​