[🇧🇩] Energy Security of Bangladesh

[Saif]

Govt cancels land lease of Orion’s coal power project

The lease of the land awarded by the past Awami League government to the Orion Group to build a 635MW coal-based power plant in Cox’s Bazar’s Matarbari has been cancelled.

www.newagebd.net

Govt cancels land lease of Orion’s coal power project
Emran Hossain 27 May, 2025, 01:02

The lease of the land awarded by the past Awami League government to the Orion Group to build a 635MW coal-based power plant in Cox’s Bazar’s Matarbari has been cancelled.

‘Our board of directors recently cancelled the land lease given to the coal power project of the Orion Group,’ said Nazmul Haque, managing director, Coal Power Generation Company Bangladesh Limited.

The company on February 27, 2023 leased 225 acres of land to the Orion Group, one of the largest beneficiaries from controversial power deals awarded under the indemnity law adopted by the past Awami regime.

The decision to cancel the lease came amidst green activists organising protests demanding the cancellation of the Orion Group’s coal power project.

Approved on September 29, 2013, the coal power plant was initially permitted to be built in Munshiganj’s Gajaria. A power purchase agreement for 25 years was also signed between the Orion Group and the Bangladesh Power Development Board in April 2016.

The power purchase agreement required the plant to be operational in 45 months of its signing. But the Orion Group could not yet start the plant’s construction.

‘The cancellation of the land lease is reminiscent of the undue favours extended to the Orion Group by the past government desperately trying to implement the coal power project,’ said Hasan Mehedi, member secretary, Bangladesh Working Group on Ecology and Development.

Initially, the project boasted of potential loans from the USA, Poland, Korea and China, though the loans never arrived. About two years after the project’s deadline expired, the BPDB in early 2022 extended the project’s deadline until 2026, while advising it to relocate to Matarbari.

Once again the Orion Group failed to start the plant’s construction. But the BPDB, instead of cancelling the PPA, extended the project deadline again, until 2027. Then again the deadline was extended until 2030 just before the student-led mass-uprising brought the authoritarian AL regime to an end.

After failing to complete the project in its initial deadline, the Orion Group in July 2020 proposed to construct the power plant taking loan from the national reserve, but the plan did not work out.

Bangladesh Bank eventually changed its provision of financing coal power plant in November 2022, allowing the Orion Group to secure declaration from three state-owned banks, namely Janata Bank, Agrani Bank and Rupali Bank, to receive Tk 10,579 crore to build the power plant. Janata Bank promised to give it half of the loan.

The construction cost of the 635MW power plant, according to an analysis revealed earlier this month, would be 70 per cent higher than the cost generally needed for setting up coal power plants with double its capacity, such as, the 1,320MW Payra power plant.

The estimated capacity charge to be given for the power plant could stand at Tk 6.47 per unit, as the analysis estimated, requiring the payment of Tk 76,478 crore in capacity charge over the lifetime of the power plant had it been built.

The analysis also put the estimated the loss in public health and agricultural production due to the power plant at over Tk 55,000 crore.

The analysis drew attention to the poorly-informed environmental impact assessment based on which the power plant was approved.

Currently, coal accounts for 21 per cent of the country’s total installed power generation capacity of 27,424MW.

Two more major coal-based power plants worth 1,244MW and 1,247MW are set to come online by 2030.​

 

[Saif]

Expediting operation of oil pipeline

Chattogram-Dhaka oil pipeline project has been encountering delays in multiple forms. First, its launching was delayed following its approval by the Executive Committee of the National Economic Council (ECNEC) in October 2018. Thus its original completion deadline by December 2020 was missed. The d

thefinancialexpress.com.bd

Expediting operation of oil pipeline

Published :
May 31, 2025 00:13
Updated :
May 31, 2025 00:13

Chattogram-Dhaka oil pipeline project has been encountering delays in multiple forms. First, its launching was delayed following its approval by the Executive Committee of the National Economic Council (ECNEC) in October 2018. Thus its original completion deadline by December 2020 was missed. The deadline was extended twice first, to December 2022 and then to December 2024. Consequently, the original project cost has soared from Tk28.61 billion to Tk 36.99 billion. On project completion, the operation, that is, transportation of the petroleum fuel through the pipeline was scheduled to begin early this month.

But it has not yet started due to non-completion of some pre-commissioning work. Whatever the nature of the pre-commissioning formalities may be, it must not cause inordinate delay to transportation of the fuel oil through the 237.71- kilometre pipeline from Padma oil installations in Patenga of Chattogram to Narayanganj's Godanail tank terminal. The more the delay in actual commissioning of the operational part of the project is the more the transportation of fuel oil by private tanker lorries and coastal tankers. The nexus pilfering oil during transportation will also share the loot. It is an entire chain of vested interests from transportation points to political high-ups that was engaged in stealing the state's precious fuel oils during the autocracy. The scale of operation gives some measure of profit with 200 tankers reportedly deployed to carry 90 per cent of oil by waterways.

Now that the autocracy has gone, what is then standing on the way of making the oil pipeline functional? If it is due to the usual bureaucratic tardiness, indecision or laxity on the part of BPC's administration, or, say, appointment of an operating company to run the pipeline, the delay should not be inordinate. That would call for bringing those responsible for the sloppiness in the administration to book. The main objective of installing the pipeline was to save about Tk2.30 billion annually in transportation cost. That objective is being defeated.

More than the money in the form of transportation cost, the time saved is the most critical part of the project. Once the pipeline begins to carry 2.62 million metric tonnes of petroleum products from Chittagong port to the capital city annually without all the hassles, risks, costs and lengthy time, the productivity of the national economic engine oil fires will increase manifold. It is not just the industries in the urban areas that the piped oil promises to serve, the 2.7 million tonnes of High Speed Diesel (HSD), the crucial fuel for agriculture in the northern districts to be transported through the pipeline would also help ensure the country's food security better. Notably, from Godanail and Fatullah in Narayanganj, tankers are used to carry the oil along the waterways to the depots in the northern districts such as Baghabari in Pabna, Chilmari in Kurigram and Sachnabazar of Sunamganj in the northeast. Obviously, after commissioning, the northern agricultural districts would also benefit greatly. In sum, every hour lost to commissioning delay of the pipeline would amount to huge loss in economic terms. This is the last thing expected of the current interim government.​

 

[Saif]

Power and energy crisis in Bangladesh

Bangladesh is currently facing one of the most disruptive energy crises in recent months. Extended load shedding, acute gas shortages, and high fuel price hikes have severely impacted daily life and economic activity across the country. According to the national dailies, the industrial production h

thefinancialexpress.com.bd

Power and energy crisis in Bangladesh
Gas, electricity, and transportation sectors
Fahmida Khatun, Mustafizur Rahman, Khondaker Golam Moazzem, Muntaseer Kamal and Syed Yusuf Saadat
Published :
May 31, 2025 00:01
Updated :
May 31, 2025 00:01

Bangladesh is currently facing one of the most disruptive energy crises in recent months. Extended load shedding, acute gas shortages, and high fuel price hikes have severely impacted daily life and economic activity across the country. According to the national dailies, the industrial production has slowed, transport services have been disrupted, and businesses—especially small and medium enterprises—have reported financial losses and operational downtime. This crisis has exposed systemic weaknesses in Bangladesh’s energy system, including its heavy dependence on imported fuels, ageing grid infrastructure, and inadequate investment in domestic energy production and renewables. As demand continues to rise—driven by urbanisation, industrial expansion, and agricultural mechanisation—the country’s limited and inefficient energy supply has struggled to keep up. This report analyses the current power and energy crisis in Bangladesh with a focus on natural gas, electricity, and transportation fuels such as diesel and petrol. Drawing from secondary data, in-depth interviews, and sector-specific trends, it identifies the scale of the supply-demand gap, pricing trends, and its impact across key user groups: households, industries, and the transport sector.

Energy supply-demand gap analysis: Bangladesh’s energy system relies heavily on three major energy sources: natural gas, electricity, and transportation fuels (diesel and petrol). This section analyses the trends in demand and supply for each of these energy types using national data, highlighting the scale of the deficits and their sectoral implications.

Natural gas. Natural gas remains vital to Bangladesh’s energy system, powering over half of the electricity generation and playing key roles in industry, domestic use, and fertiliser production. However, the sector is under severe strain due to falling domestic production and growing demand. Between FY2020 and FY2024, total gas production declined from 24,993 to 21,075 mmcf, while distribution remained steady. As a result, the production-distribution gap widened significantly from 3,492 to 6,479 mmcf.

There is limited effort even under the Interim Government regime to explore natural gas from the probable gas wells onshore and offshore. 34 wells were targeted to be explored in FY2025, whereas only 8 wells were being explored as of October 2024. A part of the gap is partially met by imported LNG. The share of LNG has increased from 7.3 per cent in FY2020 to 25 per cent in Fy2025 (till January). Such a rise in the import of LNG has significantly raised the expenses. Hence, the financial state of Petrobangla increasingly turned out to be negative.

The sectoral consumption patterns show power and industry as the largest gas users. While power has remained the dominant sector, industrial use has steadily increased. Domestic consumption, by contrast, has fallen from 158 BCF in FY2018 to 100 BCF in FY2024. Total national gas use peaked at 1,041 BCF in FY2019 but declined to 916 BCF in FY2024.

Also, the future demand is expected to grow sharply from 3,965 mmcfd in FY2025 to 4,762 mmcfd in FY2028, driven by the power and industrial sectors. Domestic and commercial demand is projected to decline slightly, reflecting lower allocation priorities.

In other words, unless alternate energy sources (including renewable energy) are managed for major economic activities, the gas crisis will be further acute in the coming years. Overdependence on LNG would further weaken the financial state of Petro Bangla as well as weaken the overall BoP of the country.

In the price trend analysis, it has been found that gas prices increased significantly for industries and captive power from BDT 30 to BDT 40–42 per cubic meter, while electricity generation retained the subsidised rate of BDT 14 in 2025. Rising gas prices along with lowering supply have heavily affected the gas dependent industries such as textiles, glass, ceramic and steel industries.

Together, these trends reveal a deepening gas crisis. Without new exploration, infrastructure upgrades, and pricing reform, Bangladesh’s energy security and industrial growth will remain at risk.

Electricity. Electricity demand in Bangladesh has risen steadily, driven by urbanisation, industrial growth, and agricultural electrification. Despite achieving over 95 per cent national electrification by 2021, supply has not kept pace with demand due to limited fuel availability, ageing infrastructure, and inefficiencies in generation and distribution.

From FY2011 to FY2024, installed capacity increased from 7,264 MW to 28,098 MW. However, actual demand only rose to 16,477 MW, significantly below the forecasted 17,830 MW. The gap has widened in recent years, with “energy not served” peaking at 3,818 MkWh in FY2023.

These shortfalls are especially severe during peak hours and irrigation seasons. Rural areas face daily outages, while urban users rely increasingly on diesel generators, raising energy costs. Industries adjust production schedules to cope with load shedding, and SMEs without backup power face financial strain. In agriculture, unreliable power forces a shift to diesel pumps, increasing irrigation costs and affecting food prices.

Although the generation mix has diversified, over 43 per cent still comes from gas-fired plants, which remain vulnerable to supply disruptions. Financial stress on utilities, stemming from high subsidies and low-cost recovery, further limits investment in system upgrades.

On the other hand, electricity tariffs have also risen. Between 2021 and 2024, annual average growth rates for residential users (0–50 kWh) rose by 13.6 per cent, while other categories like shops and small industries saw increases of 6.5 per cent. These hikes have impacted affordability, especially for low- and middle-income users. This rise in electricity tariff has been carried out to lessen the huge loss of the BPDB over the years owing to faulty pricing for purchasing electricity from IPPs, capacity payment, creating excess generation capacity, etc. The consumers have to take the burden of these faulty activities.

Despite capacity growth, Bangladesh’s electricity sector continues to face a growing gap between demand and reliable supply, underscoring the need for fuel diversification, pricing reform, and investment in transmission and distribution.

Petroleum fuels. Petroleum fuels such as diesel, petrol, octane, and kerosene are central to Bangladesh’s transport, agriculture, and energy backup needs. Unlike electricity or natural gas, these fuels are entirely imported, making their availability and affordability sensitive to global price volatility and exchange rate fluctuations. Since mid-2022, international market shocks combined with domestic price adjustments have significantly impacted fuel consumption patterns across sectors.

Over the last five years, fuel consumption initially increased across all four fuel types but saw a notable decline in FY2024. Diesel, the most consumed fuel, dropped by 14 per cent, from 4.94 million metric tons in FY2023 to 4.24 million metric tons in FY2024. Petrol and octane also declined by 5.2 per cent and 2.1 per cent, respectively, while kerosene consumption fell by nearly 10 per cent. This reversal reflects both high domestic prices and weakened purchasing power, especially among low-income and informal sector users.

These consumption drops occurred alongside persistently high fuel prices. Between June 2024 and May 2025, prices remained elevated, with diesel and kerosene fluctuating between BDT 104–108 per litre, petrol between BDT 121–127, and octane from BDT 125–131. Although these prices are marginally lower than the August 2022 peak, they remain high by historical standards, maintaining pressure on households, transport services, and farming operations (BPC, Local Selling Price of Petroleum Products, 2025). Although the BPC is supposed to follow automated pricing formula considering the global price, there is little reflection of it in retail pricing and consumers face the burden of a higher price.

The impacts of these high fuel prices have been felt across sectors. In transport, bus and freight services have reduced operations or raised fares, triggering public dissatisfaction and reduced mobility, especially in rural and peri-urban areas. Informal operators such as autorickshaws and motorbike ride-share drivers reported income losses due to low passenger demand and high fuel costs. In agriculture, diesel price increases raised irrigation costs by 20–30 per cent, particularly affecting boro season farmers reliant on shallow diesel pumps.

Industries have also suffered, especially during power outages, which forced many factories to switch to diesel-powered generators. This shift has significantly increased energy costs, particularly in energy-intensive sectors like textiles, steel, and ceramics. SMEs without captive or backup systems were hit harder, leading to production delays.
These underscore the vulnerability of Bangladesh’s petroleum fuel users to international market shocks. Without policy measures to improve fuel efficiency, stabilise prices, or protect lowincome users, such fuel price disruptions could continue to destabilise critical sectors in the future.

Inefficiencies and system loss: A core issue is inefficiency and mismanagement within the energy sector itself. Bangladesh suffers from gas system losses of 12–14 per cent, significantly higher than the international standard of 2 per cent. Each 1 per cent system loss is estimated to cost around Tk 800 billion. Despite this, institutional reforms have lagged, and there is little accountability or oversight to address wastage or corruption.

Fiscal planning has also been weak. In the current fiscal year, the Energy and Mineral Resources Division received a modest allocation of Tk 10.87 billion, of which only 10.4 per cent was spent in the first six months. While the government continues to prioritise imported LNG—having spent over Tk 1600 billion on imports from 2017 to 2023—investment in domestic gas exploration remains minimal. The state-owned BAPEX receives just Tk 10 billion annually. A recent tender for offshore oil and gas exploration failed to attract any foreign bidders, reflecting low investor confidence.

Meanwhile, energy subsidies remain substantial, approximately Tk 360 billion for electricity and Tk 200 billion for energy annually, in addition to Tk 60 billion spent on LNG imports. Yet these investments are undermined by systemic inefficiencies, poor governance, and a lack of competition in public procurement processes.
Bureaucratic inertia, political cronyism, and reliance on short-term import-based solutions are obstructing sustainable energy development.

Sectoral impacts of the energy crisis based on KIIs: The energy crisis in Bangladesh has had cascading effects across all layers of society and the economy. Beyond the macro-level gaps in supply and rising prices, the most critical disruptions are being experienced by end-users whose lives and livelihoods depend on affordable and stable access to electricity, gas, and fuel. The three most affected segments, households, industries, and the transportation sector, have undergone significant operational, behavioural, and financial adjustments to cope with the ongoing crisis. These user-level disruptions form the core of the current crisis and are expected to be further validated through the planned survey-based data collection.

Household sector. For households, the energy crisis has meant frequent and prolonged electricity outages, especially during peak hours and the summer season. In urban settings, families have experienced 1–4 hours of daily load shedding, while rural areas face even longer and less predictable outages. These interruptions have not only disrupted daily routines such as cooking, bathing, and studying but also created stress in maintaining access to digital services like mobile banking, online education, and remote work. In households with piped gas connections, low pressure has become a daily obstacle, especially during morning and evening hours. This has forced many families to shift to LPG cylinders as a substitute. However, LPG prices have surged, rising from Tk 900 to Tk 1,500 for a 12.5 kg cylinder between 2021 and 2023, causing an average monthly increase in cooking energy costs of Tk 500 to Tk 800 for many families.

The financial burden is further compounded by power outages, which have prompted middle and high-income families to invest in inverters, solar panels, or even diesel generators. However, these alternatives remain out of reach for poorer households, who are often left without any backup during outages. Consequently, low-income families have resorted to undercooking meals, using traditional fuels, or reducing energy use altogether. In addition to cooking and cooling, energy shortages have directly impacted education. Students are unable to charge devices, attend online classes, or study during evening hours due to power cuts. The energy crisis has also strained healthcare access, with refrigeration for medicines and the use of nebulisers or diagnostic equipment in homes being affected. Furthermore, inflation in transport and food prices—both driven by fuel costs has reduced household purchasing power, leading to a shift in consumption behaviour, where families are allocating more of their monthly budget to energy and less to education, nutrition, and healthcare.

Industrial sector. Loss in production and earning: Bangladesh’s industrial sector—particularly energy-intensive industries such as textiles, garments, cement, ceramics, and steel—has been severely affected by a prolonged and worsening energy crisis. These industries rely heavily on natural gas for process heating and captive power generation. However, due to declining domestic gas production and a policy preference to prioritise gas supply for power plants, industrial gas allocations have been frequently curtailed, often without sufficient notice. This has forced many factories to operate well below capacity or suspend operations altogether. Between 2021 and 2023, production in several key industrial zones dropped by an estimated 20–30 per cent during peak shortage periods. In recent months, the situation has further deteriorated, with many textile and garment factories operating at only 40–50 per cent capacity. Output in yarn, fabric, and garments has declined sharply, and nearly half of the textile factories have reportedly shut down. As a stopgap, large industries have turned to diesel generators, but with diesel prices exceeding Tk 104 per litre, the cost of self-generated power is three to four times higher than that of grid electricity.

This has significantly driven up production costs and negatively impacted their earnings. Small and medium enterprises (SMEs) have suffered even more. Lacking the capital to purchase backup generators or absorb price shocks, many SMEs, especially in plastics, agro-processing, and light engineering, have faced declining output, order cancellations, and missed delivery deadlines. Many have laid off contract workers or shifted to part-time operations.

Energy insecurity has also created hesitancy in new investments and delayed technology upgrades in manufacturing. In the garments and textiles sector, which accounts for over 80 per cent of Bangladesh’s exports, energy disruptions have led to shipment delays, resulting in financial penalties and reputational damage with international buyers. Even export processing zones (EPZs), once considered infrastructure reliable, have not been immune. Altogether, the unpredictability of energy supply is now considered one of the most pressing constraints to industrial productivity, expansion, and longterm competitiveness, especially when compared to regional competitors like Vietnam and India, who are offering more energy-secure environments for industrial investment.
Beyond the garments and SMEs, the broader industrial landscape has also suffered. Production in the steel industry has dropped by 25–30 per cent, while the ceramic industry has seen a decline of more than 50 per cent due to energy shortages.

Transportation sector. The transportation sector has experienced severe pressure due to fuel price volatility and shortages in compressed natural gas (CNG). Diesel, which powers most freight trucks, buses, and irrigation pumps, surged to Tk 108 per litre in 2024. This caused operating costs to increase by 15–25 per cent, leading logistics firms to reduce fleet use and pass costs to consumers through higher transport fares and commodity prices. Delays in goods delivery, particularly perishable agricultural product, have affected farm incomes and raised food prices in urban markets. Petrol prices, fluctuating between Tk 121 and 127 per litre, have likewise increased costs for private vehicle users and ride-sharing services, further reducing affordability for daily commuters CNG, once a cheaper and cleaner transport fuel, has faced erratic supply despite increased annual allocation. Long queues at CNG stations have become the norm, prompting many drivers to switch to petrol or diesel, thereby increasing their fuel costs by 25–30 per cent. Auto-rickshaw drivers and informal transport operators have reported a 30–40 per cent drop in daily earnings due to reduced trips, fuel switching, and rising costs. Public transport operators have raised fares, which disproportionately affect low-income commuters who rely on daily travel for work and education. App-based ride-hailing services have also seen driver dropout rates rise, with many citing poor fuel margins and reduced passenger demand as key reasons. These impacts have reduced transport availability, increased commuter costs, and introduced logistical inefficiencies that affect other sectors, including agriculture and retail distribution.
Policy recommendations: The energy situation in Bangladesh requires a comprehensive approach. First, it is important to diversify the energy sources. One method to overcome the domestic supply deficit is to expedite gas exploration, particularly offshore. On the other hand, promotion and scaling up of renewable energy sources, notably wind and solar, should be prioritised in order to reduce dependency on imports and fulfil at least 10 per cent of total electricity consumption by 2030.

Second, pricing adjustments should find a balance between fairness and efficiency. The establishment of an automated, transparent fuel pricing method will help with volatility management. Earlier, CPD investigated the pricing mechanism of BPC and BERC and found that the pricing could be reduced up to Tk15 per litre. MoEPMR should follow the scientific pricing mechanism in order to set the fuel and electricity prices.

Third, the infrastructure needs to be updated. Smart monitoring technology and grid upgrades are required to reduce transmission and distribution losses, which are now around 12 per cent.

To expedite the transition to clean transportation, the government should invest in EV charging infrastructure throughout the country, promoting concessional finance and public-private partnerships.

Industrial and business organisations are needed to ensure uninterrupted power and energy supply on a priority basis. In order to do this, the government should promote renewable energy as an alternative and provide fiscal incentives directly for adopting RE for using industrial sheds, rooftops, or fallow lands. Additionally, the MoEPMR must monitor this initiative and their billing amount for tracking usage records and provide incentives accordingly.
Finally, institutional reforms are needed. In order to manage fuel prices and tariffs independently, BERC needs to be strengthened. Petro Bangla, Power Division, and BPC need to collaborate to ensure integrated energy planning and rapid crisis response. Digitising energy data and making price and allocation more transparent will make policymaking more responsive.

Dr Fahmida Khatun, Executive Director, Centre for Policy Dialogue (CPD); Professor Mustafizur Rahman, Distinguished Fellow, CPD; Dr Khondaker Golam Moazzem, Research Director, CPD; Mr Muntaseer Kamal and Mr Syed Yusuf Saadat, Research Fellows, CPD.

[Abu Saleh Md Shamim Alam Shibly and Tamim Ahmed, Senior Research Associates; Afrin Mahbub, Preetilata Khondaker Huq, Anindita Islam, Md Mehadi Hasan Shamim, Nuzaira Zareen, Ayesha Suhaima Rab, Safrina Kamal, Khaled Al Faruque, Md. Imran Nazir, and Tanbin Alam Chowdhury, Programme Associates; and Syeda Safia Zahid, Research Intern of CPD provide research assistance.]​

 

[Saif]

Excessive dependence on LNG import is no solution

AN ACUTE gas crisis has severely affected industries and households in Dhaka and elsewhere. The supply of gas plummeted on May 29 after imported liquefied natural gas unloading had been suspended because of inclement weather. The power sector on May 27 received 941.3mmcfd of gas against the...

www.newagebd.net

Excessive dependence on LNG import is no solution
01 June, 2025, 00:00

AN ACUTE gas crisis has severely affected industries and households in Dhaka and elsewhere. The supply of gas plummeted on May 29 after imported liquefied natural gas unloading had been suspended because of inclement weather. The power sector on May 27 received 941.3mmcfd of gas against the demand for 2420.9mmcfd while the fertiliser sector received 119mmcfd against the demand for 329mmcfd. Recent Petrobangla data show a daily supply of around 2,692mmcfd against a demand for 4,000mmcfd. In the last quarter of 2024, the daily gas deficit was about 1.35 billion cubic feet, with industries receiving 30 per cent less gas than the demand. Four trade bodies in the apparel and ceramic sectors have recently said that operation in many factories has halved and that the situation could worsen after Eid-ul-Azha. Consumers are angered by the gas crisis because their energy bills soared, especially in the past few years, while the crisis worsened.

The current crisis is largely owed to flawed energy policy. Despite the potential of domestic gas reserves, the Awami League government prioritised liquefied natural gas import over exploration. Gas output has decreased, but the demand has grown, leading to the energy insecurity. An increased dependency on LNG import not only threatens the stability of the exchequer but also leaves Bangladesh at the mercy of other countries in a volatile geopolitical climate. In 2022, price increase on the LNG market led to a disastrous situation against the backdrop of the Russia-Ukraine war. Besides, LNG import has become difficult because of the dollar crisis. Only a third of the onshore area has, meanwhile, been explored for gas, making it one of the least explored nations although its success in gas discovery has been way above the world average. Energy experts fear that the situation will only worsen with increased demand for power in the high summer. While there is no quick-fix to the crisis, the government should consider scheduled, dedicated supply for different sectors and other short-term remedies.

The chronic dependence on liquefied natural gas import, coupled with depleting gas reserves, holds the economy hostage. The government should, therefore, urgently devise a solution to ensure adequate gas supply. For a long-term solution, it needs to revise the energy policy, prioritise domestic gas exploration and renewable options to stop further decline and to end people’s suffering.​

 

[Saif]

Govt to cut power generation cost by 10 pc

The interim government has planned to reduce the overall cost of power generation by 10 per cent. Finance adviser Salehuddin Ahmed unveiled the government’s plan in his recorded budget speech televised on Monday. “If this plan can be implemented, it is estimated that the cost of elect

thefinancialexpress.com.bd

Govt to cut power generation cost by 10 pc

FE ONLINE REPORT
Published :
Jun 02, 2025 19:40
Updated :
Jun 02, 2025 19:40

The interim government has planned to reduce the overall cost of power generation by 10 per cent.

Finance adviser Salehuddin Ahmed unveiled the government’s plan in his recorded budget speech televised on Monday.

“If this plan can be implemented, it is estimated that the cost of electricity subsidy of more than Tk 110 billion will be saved,” he said.

“In principle, we have decided not to increase the price of electricity for the time being in the context of the prevailing high inflation,” said Mr Ahmed.

At present, the amount of subsidies given in the power sector is about 1 per cent of gross domestic product (GDP), which is very high.

“We are reviewing the power purchase agreements and have taken the initiative to conduct energy audits to reduce the cost of power generation,” he elaborated in his speech.

A plan has been made to supply 648 million cubic feet per day (mmcfd) of gas from domestic sources within this year and to extract an additional 1500 mmcfd from local wells by 2028.

Keeping these targets in mind, emphasis has been laid on increasing the capacity of the local gas exploration company – Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) and necessary funds have been allocated for this, the finance adviser added.

It is very important to ensure an adequate supply of energy and at the same time keep it as affordable as possible to improve the quality of life of citizens and keep the economy running, he said.​

 

[Saif]

Govt commercialises power sector on WB, ADB prescriptions: CAB

The interim government appears to continue commercialising the country’s power and energy sector on the prescriptions of the World Bank and the Asian Development Bank, following the footsteps of successive governments, alleged the Consumers Association of Bangladesh on Wednesday...

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Govt commercialises power sector on WB, ADB prescriptions: CAB
PBS employees’ strike against discrimination continues
Staff Correspondent 05 June, 2025, 00:04

The interim government appears to continue commercialising the country’s power and energy sector on the prescriptions of the World Bank and the Asian Development Bank, following the footsteps of successive governments, alleged the Consumers Association of Bangladesh on Wednesday.

The consumer rights body came to the conclusion based on recent steps taken by the government, particularly in its response to resolving the conflict that prevailed between the Rural Electrification Board and its entity Palli Bidyut Samity for a while.

Taking its root in discrimination between employees of the institutions, the conflict also led to the demand that employees on contract or appointed on irregular basis be regularised.

Several thousand employees of the PBS offices in the country have been demonstrating on the Shaheed Minar premises in the capital Dhaka for about two weeks to press their various demands.

The committee that the interim government formed after coming to power in August 2024 recommended turning the PBS into a company as part of a structural reform.

‘The intention to turn the Palli Bidyut Samity into a company is to fulfil the target set by the World Bank and the Asian Development Bank to commercialise the power and energy sector and turn the sector into an import market,’ said M Shamsul Alam, energy adviser at the CAB, at a press conference at the Dhaka Reporters Unity in the capital.

There are 80 Palli Bidyut Samity offices operating under the Rural Electrification Board, supplying electricity to 80 per cent of villages in Bangladesh, a market of 3.60 crore people. Though appointed by the REB, the PBS employees are governed by a separate service rules, which the High Court found discriminatory.

About 40,000 employees of the PBS began their movement against discrimination past year when the authoritarian Awami League government was in power. The movement was suspended several times following promises from the past government that were never met. Instead, many of the PBS employees were terminated and framed in false cases.

After the interim government assumed power, the Power Division formed a committee in September past year to evaluate structural reforms of the PBS and the REB. The presentation the committee made on its recommendations on June 1, according to the CAB, effectively talked about turning the PBS into a company.

The evaluation committee did not have representation from consumers, the CAB said, while pointing out that the committee never disclosed identities of experts cited in its report.

The CAB rejected the committee’s report, accusing it of failing to recognise the impacts on rural consumers of the crisis of electricity and its frequent price hikes.

‘Accepting the recommendation of the committee will be like throwing consumers from a frying pan into a burning stove,’ said the CAB in a written statement read out by Shamsul Alam.

The PBS offices are mostly loss-incurring running on subsidies, the CAB said, while the REB is always making profits. Most of the subsidies, ranged between Tk 60,000 to Tk 70,000 crore, go to the PBS. The proposition that turning the PBS into a company will make it profitable and benefit the consumers does not make any sense to the CAB.

Like in other power entities, irregularities were rampant in purchases and tenders at the REB, the CAB alleged, adding that the rights body had to shelve its plan of probing corruption in the REB due to non-cooperation from the Power Division.

The power and energy sector has been under a reform initiative prescribed by the ADB and the WB in 1980s, the CAB said, adding that the target of the reforms was to privatise the sector.

The previous governments, including the past AL government, had turned the power and energy entities into companies in accordance with the WB, ADB prescriptions, the CAB said.

There are 75 companies under the power and energy ministry, the CAB said, all the companies are profitable and have surplus money. The companies invest the surplus money in fixed deposits and then lend from banks to run own operations. The companies make huge profits and have budget deficits at the same time.

Power price is increased to make up for the deficits, the CAB said, adding that turning the PBS into a company would increase its expenses, further raising its deficits.

Deficit is used by the government to justify reduced energy import, increase power price and import electricity. In 2023-24, power import capacity accounted for 9.34 per cent of the installed capacity of 27,824MW. But the actual import of power accounted for 18 per cent of the power consumed in the year.

‘Companies have a long history in this country,’ said Humayun Kabir Bhuiyan, general secretary of the CAB, at the press conference, recalling the exploitative nature of the colonial East India Company.​

 

[Saif]

Palli Bidyut Protest: Staff shortage sparks concerns over Eid power supply

Demonstrators' demands include removal of REB chairman, unified service rule

www.thedailystar.net

Palli Bidyut Protest: Staff shortage sparks concerns over Eid power supply
Demonstrators' demands include removal of REB chairman, unified service rule

File photo: Reuters

Power supply during the Eid-ul-Azha holidays may be disrupted in many rural areas as Palli Bidyut Samity (PBS) workers continue to protest, causing staff shortages in several offices across Bangladesh.

With the Eid vacation beginning today and many city dwellers travelling to their hometowns, officials from various PBSs say that they may not be able to ensure uninterrupted electricity due to a lack of line crews and technical staffers.

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Eighty PBSs distribute about 60 percent of the country's total power supply under the Bangladesh Rural Electrification Board (REB).

Employees from multiple zones have joined an ongoing demonstration at Dhaka's Central Shaheed Minar, demanding changes to service conditions.

The Daily Star has seen at least 10 letters from the chiefs of different PBSs to their superiors, stating that operations of power distribution may suffer during the holidays due to the lack of manpower.

"Most staffers from seven sub-zonal offices, 18 complaint centres, and 11 substations in Sunamganj have joined the Shaheed Minar demonstration, leaving only three to four linemen per office," wrote Milan Kumar Kundu, general manager of the Sunamganj Zonal Office, to a director of Bangladesh Power Development Board, which oversees the PBSs.

"It's becoming extremely difficult to keep substations running, respond to complaints, or maintain power lines with such limited manpower," he wrote.

Protesters under the banner of Bangladesh Palli Bidyut Association have been demonstrating over the past 15 days to realise their seven-point demand, including the removal of REB chairman, a unified service rule, withdrawal of cases filed by REB against dismissed employees, and their reinstatement.

Since the demonstrations started on May 21, various PBSs have been trying to carry out the linemen's work with day-to-day basis staffers.

According to GM Milan, the workers are also rushing for their holidays.

Customer dissatisfaction over power supply has been visible for several days, he said, adding that the staffers who live in the PBS complex are feeling insecurity and they sought help from law enforcers.

General managers from zonal offices in Rangpur, Manikganj, Jashore, Chattogram, and Sylhet said that they were also facing a manpower shortage, raising concerns about potential power service breakdown.

After a meeting with Power Division officials yesterday, the Palli Bidyut Association in a statement said their protest would continue until their seven-point demand is met.

Meanwhile, the Consumers Association of Bangladesh (CAB) yesterday called for a unified service rule for PBSs and REB to resolve the crisis.

The government is aggravating the issue by following advice from the World Bank and ADB without addressing the real problems, it said.

CAB Energy Adviser M Shamsul Alam said, "The root cause is the inequality and discrimination between REB and PBS staff."

Criticising the government's failure in resolving the issue, he said that commercialisation of rural electricity supply would not help solve the core problem.​

 

[Saif]

The untapped potential of wind power

Wind power, with its immense capacity to generate clean, renewable energy, remains underutilised in Bangladesh's energy strategy. However, recent developments signal a shift in direction. A major offshore wind project, still in its early stages, was announced at COP28 as a collaborative initiative

thefinancialexpress.com.bd

The untapped potential of wind power

Wasi Ahmed
Published :
Jun 11, 2025 00:51
Updated :
Jun 11, 2025 00:51
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Wind power, with its immense capacity to generate clean, renewable energy, remains underutilised in Bangladesh's energy strategy. However, recent developments signal a shift in direction. A major offshore wind project, still in its early stages, was announced at COP28 as a collaborative initiative involving fashion brands Bestseller and H&M Group, Copenhagen Infrastructure Partners (CIP), and a local partner. This ambitious project seeks to advance sustainable energy solutions and reduce greenhouse gas emissions along the fashion industry's value chain.

According to statements from the partners, the project aims not only to stabilise the supply of renewable energy to local apparel manufacturers linked to these global fashion giants but also to significantly cut emissions-by an estimated 725,000 tonnes annually. The fashion industry is a major contributor to global emissions, with more than 70 per cent arising from upstream power generation, which is still heavily reliant on non-renewable sources like coal, oil, and gas. This initiative envisions feeding energy generated from near-shore wind turbines to the national grid. With a projected capacity of 500 MW, the project aligns with Bangladesh's goal of reducing fossil fuel dependence, fostering job creation, and enhancing energy security.

More broadly, renewable energy sources such as wind and solar require greater attention. In the case of wind power, although initial installation costs are relatively higher, operational and maintenance expenses are much lower compared to traditional energy sources. Wind energy is harnessed from the natural movement of air caused by atmospheric pressure differences-an ancient concept that has been used for centuries. Wind results from uneven heating of the Earth's surface by the sun, influenced by rotation and geographical features. Warm air rises to form low-pressure zones, while cooler air creates high-pressure areas; air flows between these zones, producing what we experience as wind.

Humans have long used wind as a resource-from traditional windmills grinding grain and pumping water to today's sophisticated wind turbines. Unlike fossil fuels, wind is inexhaustible and does not pollute the environment. Wind turbines generate electricity without releasing carbon dioxide or other harmful pollutants, making wind power one of the cleanest and most sustainable energy sources available. This positions it as a key component in global efforts to combat climate change and reduce carbon footprints.

Globally, wind power has already proven its viability. Denmark leads by example, with wind turbines providing nearly half of its electricity needs. Germany, the United States, and China have also made significant investments in wind energy. China, in particular, has the highest installed wind power capacity, while the U.S. continues to expand its offshore and onshore wind infrastructure. These countries demonstrate the practical and economic feasibility of wind energy and offer models for nations like Bangladesh to follow.

However, wind power is not without challenges. A major concern is its intermittency-wind speeds can be unpredictable and vary by region and season. To counter this, countries are investing in advanced energy storage systems and smart grid technologies to ensure consistent electricity supply regardless of wind fluctuations.

Offshore wind farms present several advantages over land-based installations. Wind speeds over water are typically stronger and more consistent, yielding higher energy outputs. Offshore projects also alleviate land-use pressures, as they do not compete with agricultural or residential land. Additionally, placing turbines near coastal urban centres reduces the need for extensive transmission infrastructure. For nations with long coastlines and growing energy needs, offshore wind represents a particularly attractive solution.

Investing in wind power also brings significant economic benefits. The sector creates employment opportunities across multiple fields, including manufacturing, construction, maintenance, and research and development. As global demand for renewable energy rises, the wind industry can become a powerful engine for job creation and economic growth. Moreover, increased reliance on domestically generated renewable energy reduces exposure to volatile global fossil fuel markets, enhancing national energy independence.

The integration of wind with other renewable sources-such as solar and hydro-can further strengthen energy systems. Hybrid setups that combine different sources ensure a more stable electricity supply. For example, during times of low wind, solar power can help bridge the gap. Such hybrid approaches are crucial for building resilient and flexible energy infrastructures, especially in regions facing climate-related uncertainties.

In light of the climate crisis, the urgency of transitioning to renewable energy has never been clearer. Wind power offers a viable, scalable, and environmentally sound alternative to fossil fuels. For Bangladesh, which is vulnerable to the impacts of climate change, prioritising wind energy could have far-reaching benefits not just in reducing emissions but also in securing long-term energy sustainability.

To fully realise this potential, policymakers must act decisively. This includes facilitating investments in wind infrastructure, streamlining regulatory approvals, supporting research and development, and creating incentives for private sector participation. The success of wind energy depends on a collaborative effort between government, industry, and civil society to embrace innovation and sustainable growth.

However, for wind power to truly take root in the country's energy landscape, it must move beyond pilot projects and into the core of national energy planning. Only then can Bangladesh harness the full power of wind to build a cleaner, greener future.​

 

[Saif]

Energy ministry assessing model PSC for onshore blocks

The energy ministry is currently evaluating a draft Model Production Sharing Contract (MPSC) to launch an onshore bidding round after 28 years. State-run Petrobangla has already prepared the draft and submitted it to the Energy and Mineral Resources Division (EMRD) under the Ministry of Po

thefinancialexpress.com.bd

Energy ministry assessing model PSC for onshore blocks

M Azizur Rahman
Published :
Jun 11, 2025 01:01
Updated :
Jun 11, 2025 01:01

The energy ministry is currently evaluating a draft Model Production Sharing Contract (MPSC) to launch an onshore bidding round after 28 years.

State-run Petrobangla has already prepared the draft and submitted it to the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) for approval, Petrobangla Chairman Md Rezanur Rahman told The Financial Express Wednesday (June 4).

He said the terms of the MPSC have been made attractive to potential international oil companies (IOCs) in line with the recommendations of global leading consultant Wood Mackenzie.

Mr Rahman disclosed neither the number of blocks to be offered for exploration by the IOCs nor the prices.

Sources said Petrobangla has moved to launch the onshore bidding round after nearly three decades to expedite hydrocarbon exploration in onshore areas, especially in hilly ones, to help meet the country's mounting natural gas demand in industries, power plants, and other gas-guzzling entities.

Under the MPSC, the gas purchase price is linked with the dated Brent on a three-month rolling average basis.

The MPSC terms of the previous 1997 onshore bidding round were linked to high sulphur fuel oil (HSFO) with a price floor and a ceiling.

"We are working on fixing the new formula so that the price could be linked to around 8.0 per cent of the dated Brent crude with a capping in the Brent crude price," said another Petrobangla official.

Based on the current Brent price assumption, gas price is anticipated to be in the range of around $5.0 per million British thermal units (MMBtu).

This would bring gas prices more in line with the costs of supplying gas from liquefied natural gas (LNG) imports, which Bangladesh is projected to increasingly rely on, should the country fail to make a turnaround in its domestic gas production.

If fixed under this market-based pricing formula, the new gas price for onshore blocks will be nearly double the highest current price offered under the existing MPSCs for onshore gas blocks.

The US-based Chevron is getting around $2.76 per MMBTu against its gas sales to Petrobangla, while Singapore's KrisEnergy receives around $2.31 per MMBTu under the current gas pricing formula linked to HSFO.

Petrobangla also purchases natural gas from three of its subsidiary state-owned companies.

It purchases gas from state-run Sylhet Gas Fields Ltd (SGFL) and Bangladesh Gas Fields Company Ltd (BGFCL) at Tk 28 per Mcf (1,000 cubic feet) and from state-run Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) at Tk 112 per Mcf.

The price of LNG imported from long-term contract suppliers - Qatar Energy and OQ Trading International - was $10.66 per MMBTu and $10.09 per MMBTu, respectively, until the first seven months of the current fiscal year.

Petrobangla is also working on narrowing down the differences in exploration benefits to attract the IOCs to take part in the next onshore bidding round.

It floated the last bidding round for 24 offshore blocks last year under the MPSC 2023 with no response from the IOCs.

Under the MPSC 2023, gas was priced at 10 per cent of the dated Brent on a three-month rolling average basis. Based on the current Brent price assumption, the gas price would be in the range of around $7.08 per MMBtu.

During Bangladesh's latest onshore bidding round in 1997, four onshore blocks - block-5, block-7, block-9, and block-10 - were awarded.

Currently, four IOCs have active PSCs, either individually or under joint venture, to explore three shallow-water blocks for offshore exploration.

Chevron is active in exploring and producing natural gas in three onshore gas fields under blocks 12, 13, and 14.

KrisEnergy is producing natural gas from the Bangora field under block 9.

ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) are jointly exploring shallow-water blocks SS-04 and SS-09.

Currently, Bangladesh imports lean LNG from RasGas of Qatar and Oman Trading International (OTI) of Oman under long-term contracts and from different suppliers under spot market terms to meet the mounting natural gas demand.

The country's overall gas output is around 2,883 mmcfd, including the re-gasified LNG, against the demand of over 4,000 mmcfd.​

 

[Saif]

No new gas connection to households, says energy adviser

Bangladesh interim government power, energy and mineral resources adviser Muhammad Fouzul Kabir Khan said on Friday that no new gas connections would be provided to households.

www.newagebd.net

No new gas connection to households, says energy adviser
Zaman Monir . Sylhet 13 June, 2025, 19:54

Muhammad Fouzul Kabir Khan | BSS file photo

Bangladesh interim government power, energy and mineral resources adviser Muhammad Fouzul Kabir Khan said on Friday that no new gas connections would be provided to households.

‘Even if we wait till doomsday, there is no possibility of providing gas connections to households,’ he said.

Fouzul Kabir came up with the comments while talking to journalists after visiting two gas wells at Golabganj upazila in Sylhet in the morning.

Stating that the pipeline gas is being wasted in households, he said that had he had the opportunity, he would have turned off the gas connections to all houses in Dhaka as well.

He added that providing gas to houses was a waste when industrial factories were not getting sufficient amount of gas.

‘The government, however, will supply gas cylinders at a low price in areas, including Sylhet, where gas is extracted and liquefied petroleum gas cylinders will be used in houses from now on,’ Fouzul said.

The production of about 200 million cubic feet gas is being decreased every year in the country, Fouzul Kabir said, adding that imports of liquefied natural gas, however, have increased.

‘So, efforts are being made to increase gas production to reduce imports,’ he said.

The adviser said that 16 million cubic feet of gas was being added to the national grid per day from the Kailashtila-7 and Sylhet-10 gas wells.

Fouzul Kabir inspected Well 7 at Kailashtila Gas Field in the Golabganj municipal area under the upazila, and the rig pad of Kailashtila Well 1 at around 10:00am.

Later, he also inspected the Kailashtila Molecular Sieve Turbo Plant under the same upazila.​

 

[Saif]

Govt to buy 2 more spot LNG cargoes in July to feed more gas to industries

The government is eyeing the import of two more spot liquefied natural gas (LNG) cargoes in July to supply more gas to industries and other commercial consumers, excluding power plants. State-run Rupantarita Prakritik Gas Company Ltd (RPGCL) has floated a couple of tenders to purchase two spot LNG

thefinancialexpress.com.bd

Govt to buy 2 more spot LNG cargoes in July to feed more gas to industries

FE Online Report
Published :
Jun 14, 2025 20:12
Updated :
Jun 14, 2025 20:12

The government is eyeing the import of two more spot liquefied natural gas (LNG) cargoes in July to supply more gas to industries and other commercial consumers, excluding power plants.

State-run Rupantarita Prakritik Gas Company Ltd (RPGCL) has floated a couple of tenders to purchase two spot LNG cargoes for the July 15–16 and 17–18 delivery windows, a senior RPGCL official told The Financial Express on Saturday.

The volume of each of the spot LNG cargoes is around 3.36 million British thermal units (MMBtu).

The bid winner will deliver the LNG cargo 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 located on Moheshkhali Island.

If this tender is successful, the country’s total purchase of spot LNG cargoes in early July will be five in total.

The country might seek to buy more spot LNG cargoes in late July, said the official.

Bangladesh has purchased three spot LNG cargoes for June deliveries.

RPGCL is a wholly owned subsidiary of state-run Petrobangla and oversees LNG trades in Bangladesh.

Bangladesh previously awarded its latest spot LNG cargo tender to POSCO International Corporation of South Korea for the July 11–12 delivery window at \$12.68 per MMBtu.

Officials said the interim government has been importing more spot LNG cargoes, as it has decided to import six additional LNG cargoes to supply an augmented volume of re-gasified natural gas to industries.

Gas supply to industries has already increased from early June with the import of additional spot LNG cargoes, a senior Petrobangla official said.

The government aims to increase around 250 million cubic feet per day (mmcfd) of gas to industries by ramping up spot LNG imports and diverting gas from power plants to industries.

According to the Ministry of Power, Energy and Mineral Resources (MPEMR), average gas supply to industries during the first four months of 2025 until April was 997 mmcfd, compared to 823 mmcfd during the same period of the previous year.

The government will have to provide a subsidy worth around Tk 35 per cubic meter for importing the additional LNG cargoes for industries, the MPEMR said.

The import cost of the LNG would be Tk 65 per cubic meter, while its selling price would be Tk 30 for new industries and Tk 31.50 for captive power plants.

State-run Petrobangla has planned to reduce natural gas allocations for gas-fired power plants to 1,050 mmcfd from the existing 1,200 mmcfd.

Bangladesh currently imports LNG from Qatar Energy and OQ Trading International under long-term deals and also purchases LNG from the spot market to re-gasify it in its two operational floating, storage and re-gasification units (FSRUs), which have 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 sectors to cope with the mounting demand.​

 

[Saif]

Investing in energy future

BANGLADESH stands at a crossroads. On the one hand, it faces intensifying climate risks, mounting fuel import costs and increasing energy demand; on the other, it has the opportunity to shape a more sustainable and resilient energy future. The national budget for the 2025-26 financial year...

www.newagebd.net

RENEWABLE ENERGY TRANSITION
Investing in energy future
Musharraf Tansen 15 June, 2025, 00:00

BANGLADESH stands at a crossroads. On the one hand, it faces intensifying climate risks, mounting fuel import costs and increasing energy demand; on the other, it has the opportunity to shape a more sustainable and resilient energy future. The national budget for the 2025-26 financial year, recently unveiled, provides a timely lens through which to assess how seriously the country is preparing for a renewable energy transition. While there have been institutional efforts — notably the government’s move to update the Renewable Energy Policy 2008 to make it more relevant to the current context — the fiscal strategy laid out in this year’s budget does not reflect a proportionate commitment to the renewable energy agenda.

Current allocation

IN THE previous financial year (2024–25), the government had made a modest yet symbolically important allocation of Tk 100 crore (approximately $10 million) to establish a renewable energy fund. This was widely interpreted as a recognition that a transition to clean energy is not just desirable but necessary. Unfortunately, in the 2025–26 financial year budget, there is no mention of any continued or enhanced funding for this renewable energy fund, signalling a retreat rather than progress.

Instead, the broader energy and mineral resources division received a total allocation of Tk 2,178 crore — up from Tk 1,086 crore in the previous budget (which was later revised downward to Tk 1,053 crore). While the increased budgetary allocation may appear encouraging on the surface, it lacks any dedicated or earmarked fund for renewable energy development. In other words, there is no clear indication that any portion of this increased allocation is targeted towards achieving the country’s stated renewable energy goals.

This omission is glaring, particularly when viewed against the targets outlined in the Integrated Energy and Power Master Plan, which aims to generate 40 per cent of Bangladesh’s electricity from renewable sources by 2041. According to the plan, meeting this target would require a cumulative investment of approximately $37.4 billion to install 37.8GW of renewable energy capacity by 2050. The previous Tk 100 crore allocation, although symbolic, covered less than 0.03 per cent of the estimated investment requirement. The disappearance of even that symbolic commitment in the current fiscal year raises serious concerns about the country’s policy coherence and long-term strategy.

In the absence of sustained and scaled-up investments, policy reforms and clear budgetary commitment, the country risks falling behind its own renewable energy road map. Simply put, Bangladesh cannot afford to allow renewable energy to remain an afterthought in its national budgeting priorities — not when the stakes are this high.

More broadly, the energy sector budget continues to be skewed in favour of fossil fuels. A significant portion is still devoted to liquefied natural gas subsidies, diesel-based generation and capacity payments for idle fossil fuel plants. These priorities undermine the broader goal of transitioning to clean energy. At a time when global energy prices are volatile and the fiscal pressure from energy imports is growing, this approach risks deepening Bangladesh’s economic vulnerability.

Despite policy statements advocating for renewable expansion, the budget does little to shift the energy paradigm. There is no substantial provision for retiring outdated oil-based generation capacity. Neither is there a dedicated allocation to support the development of utility-scale solar or wind projects, or to build the necessary transmission infrastructure to integrate intermittent renewable sources into the national grid.

Barriers beyond budgets

BEYOND financial allocation, Bangladesh faces several structural and regulatory barriers to renewable energy development. While some incentives exist — such as tax holidays for solar equipment imports and duty reductions on key components — these have not been sufficient to spur large-scale private investment. Land acquisition remains a major obstacle, as does the lack of grid connectivity in remote or suitable locations for renewable projects.

Policy inconsistency further hampers progress. The Renewable Energy Policy of 2008 is outdated and lacks enforcement mechanisms. Tender processes are often delayed or cancelled, creating uncertainty for investors. Moreover, there is limited coordination between different government agencies, which slows down project approvals and implementation. Even when policies are in place, weak institutional capacity at both national and local levels constrains effective execution.

Bangladesh’s continued reliance on imported fossil fuels also acts as a structural impediment. In the 2023-24 financial year, the government spent billions on energy imports, which exacerbated the trade deficit and drained foreign exchange reserves. Instead of reallocating these funds to build domestic renewable capacity, the 2025–26 financial year budget continues this dependency, with more than Tk 7,000 crore proposed for subsidies on liquefied natural gas alone. This not only distorts market signals but also undercuts the competitiveness of renewables.

Green shoots

DESPITE these challenges, there are positive developments that suggest a shift, albeit gradual, is underway. The operation of a 60 MW wind power plant in Cox’s Bazar marks a significant milestone, being the country’s first major commercial wind project. Similarly, a 500 MW solar tender is currently in progress, aimed at integrating large-scale solar generation into the national grid.

Institutions like the Sustainable and Renewable Energy Development Authority and the Renewable Energy Research Centre in the University of Dhaka are contributing to the policy and research landscape. Their efforts in energy auditing, project feasibility assessments and capacity building are laying the groundwork for future growth. The newly announced Tk 100 crore renewable energy fund, while modest, indicates an institutional willingness to explore alternative financing mechanisms.

There are also encouraging signs in the private sector. Several local companies are investing in rooftop solar for industrial use, spurred by rising electricity tariffs and unreliable grid supply. Bangladesh has also seen a proliferation of solar irrigation systems in rural areas, supported by donor funding and government facilitation. These decentralised renewable energy solutions are critical for ensuring energy access in off-grid areas and reducing pressure on the national grid.

Recommendations

BANGLADESH must rethink its budgetary and policy approach to turn these green shoots into a robust forest of clean energy. Here are majore recommendations:

Scaled up targeted investment: The government should commit to allocating at least Tk 1,000 crore annually to renewable energy development. This funding should prioritise utility-scale solar and wind projects, battery storage, and smart grid technologies. Special attention should be given to scaling solar irrigation and mini-grid solutions for off-grid communities. Such targeted investments will yield both environmental and economic returns.

Financial market integration: Bangladesh must develop financial instruments to mobilise private capital. Green bonds, blended finance, and viability gap funding can reduce risks for investors. The central bank can play a role by issuing refinancing schemes for renewable projects. Local banks and non-bank financial institutions should be equipped with tools and incentives to lend to green energy ventures.

Fixing policy inconsistency: A new Renewable Energy Act is urgently needed to replace the outdated 2008 policy. This act should mandate clear targets, streamline approval processes, and ensure regulatory certainty. Transparent and timely tender processes must become the norm. Government agencies should coordinate better to ensure smooth implementation.

Redirecting fossil subsidies: The government should gradually phase out fossil fuel subsidies and reallocate these funds to clean energy development. A portion of the liquefied natural gass subsidy budget can be redirected to support renewable energy research and development, grid modernisation, and capacity building. This reallocation will not only reduce fiscal pressure but also level the playing field for renewables.

Advancing enabling infrastructure: A modern, flexible grid is essential for integrating renewable energy. Investments in transmission and distribution infrastructure must go hand-in-hand with renewable deployment. Net metering should be simplified and expanded. Technical standards for grid connection should be clearly defined to avoid project delays.

The 2025–26 budget marks a cautious step towards renewable energy development in Bangladesh. While the creation of a renewable energy fund is a move in the right direction, the overall allocation and strategic direction remain insufficient for a transformative shift. The continued emphasis on fossil fuel subsidies and lack of systemic support for renewables highlight the need for a more coherent and ambitious approach.

The transition to clean energy is not just an environmental imperative but an economic necessity. It is about reducing dependence on volatile global markets, creating green jobs, and ensuring energy security for future generations. Bangladesh has the technical capacity, entrepreneurial spirit, and policy frameworks to lead in South Asia’s green transition. What it needs now is the political will, financial commitment, and policy coherence to realise that potential.

The time for incremental change is over. The budget for the 2025–26 financial year should be seen as a foundation — but the real work lies ahead. Bangladesh must act boldly, invest wisely and lead decisively in building a resilient, inclusive and sustainable energy future.

Musharraf Tansen is a PhD Researcher and former Country Representative of the Malala Fund.​

 

[Saif]

Bangladesh’s energy policy raises more questions than answers

The recent announcement to build a new coal-fired power plant to generate cheaper electricity than oil-fired peaking plants further highlights the lack of policy coherence.

www.thedailystar.net

Bangladesh’s energy policy raises more questions than answers

The sudden shift to competitive bidding and the suspension of more than 30 renewable energy projects have cost developers dearly. FILE VISUAL: ALIZA RAHMAN

The government's approval of a new renewable energy policy, which sets higher targets of 20 percent and 30 percent electricity generation from renewables by 2030 and 2041 respectively, is a welcome step towards advancing the energy transition. However, despite these enhanced commitments, a lack of support mechanisms and persistent policy inconsistencies continue to hinder progress in the renewable energy sector.

While the national budget for fiscal year (FY) 2025–26, unveiled on June 2, articulates an ambitious vision of building a society based on "three zeroes"—zero poverty, zero unemployment, and zero net carbon emissions—it fails to offer incentives for the private sector to scale up renewable energy deployment.

In parallel, the government has made sweeping changes to the energy and power sectors. It repealed the Quick Enhancement of Electricity and Energy Supply Act (QEEESA) 2010, which previously allowed unsolicited project proposals without competitive bidding. It has also suspended renewable energy projects that had received Letters of Intent (LOIs) under QEEESA before August 2024. Additionally, the government floated four tender packages for renewable energy projects totalling over 5,000 megawatts (MW) in capacity but removed the payment guarantee clause. Such abrupt policy shifts raise serious concerns for investors.

The recent announcement to build a new coal-fired power plant to generate cheaper electricity than oil-fired peaking plants further highlights the lack of policy coherence. A baseload coal plant is unlikely to reduce the share of oil-fired generation and may instead exacerbate the sector's overcapacity, especially amid sluggish power demand growth.

Proposed budget fails to incentivise renewable energy

While solar power can reduce reliance on expensive oil-based generation, the proposed FY2025–26 budget does not include any incentives to promote solar or other renewable technologies. It also excludes the Tk 100 crore ($8.2 million) in renewable energy funding that was allocated in the previous year's budget. This disconnect between the government's stated ambitions and actual fiscal measures undermines momentum in the renewable energy space.

Abrupt policy changes dent investor confidence

The sudden shift to competitive bidding and the suspension of more than 30 renewable energy projects have cost developers dearly, as many had already invested substantial time and resources in land acquisition.

Furthermore, the exclusion of an "implementation agreement clause"—a provision akin to a payment guarantee—from the tender documents has negatively affected project bankability. Developers may now struggle to secure debt financing. The issue is already visible: Bangladesh failed to attract bidders for the first tender package of 12 projects totalling 453 MW, leading the government to extend the submission deadline six times.

Although 20 local companies ultimately submitted proposals, no foreign firms participated. This lack of foreign interest signals serious challenges for Bangladesh in achieving its 6,145 MW renewable energy target by 2030. Reaching this goal would require annual capacity additions of around 750 MW between July 2025 and December 2030. With the country's current renewable energy capacity at 1,562 MW—and only 400 MW of utility-scale projects under construction—domestic capital alone will not suffice. Foreign investment, along with support from multilateral and bilateral development partners, will be critical.

In June 2021, Bangladesh scrapped 10 coal-fired power projects due to concerns over excess capacity and the growing difficulty of securing funding, especially from institutions focused on environmental, social, and governance (ESG) criteria. The move was also presented as part of the country's enhanced greenhouse gas (GHG) mitigation efforts, raising hopes for an accelerated renewable energy transition.

Fast forward to June 2025: the current government is now reconsidering one of the scrapped plants and plans to build a 1,200 MW coal-fired power plant in Matarbari, next to an existing plant. Although the rationale is to generate cheaper electricity compared to oil-based generation, this logic appears short-sighted.

Bangladesh's peak electricity demand declined by around 1.1 percent in 2025 compared to 2024—falling from 17,200 MW to 16,999 MW. With more than 7,000 MW of baseload capacity already under construction, adding another coal plant will only worsen the country's reserve margin, which currently stands at around 61 percent. This surplus will further strain the power sector's finances as capacity payment obligations rise in the absence of sufficient demand.

The decision also contradicts the GHG mitigation pledge made in 2021 and risks damaging Bangladesh's credibility in the eyes of investors and development partners.

As the government finalises the FY2025–26 budget, it should reconsider introducing a dedicated renewable energy fund and reinstating the Tk 100 crore allocation. It should also waive import duties on components used in rooftop solar systems.

Achieving Bangladesh's renewable energy targets will require not only sustained fiscal support but also a stable and predictable policy environment. Avoiding abrupt policy reversals is essential to attract long-term domestic and foreign investment.

Shafiqul Alam is lead energy analyst for Bangladesh at Institute for Energy Economics and Financial Analysis (IEEFA).​

 

[Saif]

Govt releases big sum to pay off private power plant dues

A clean chit up to April on huge leftover arrears cost Tk 600 billion as the interim government doubled the state subsidy to pay off the overdue bills to private-sector power producers, officials said. In order to clear all the much-talked-about capacity charges and electricity bills, the governme

thefinancialexpress.com.bd

Govt releases big sum to pay off private power plant dues
Clean chit claims Tk620b in state subsidy in revised budget

FHM Humayan Kabir
Published :
Jun 21, 2025 10:07
Updated :
Jun 21, 2025 10:07

A clean chit up to April on huge leftover arrears cost Tk 600 billion as the interim government doubled the state subsidy to pay off the overdue bills to private-sector power producers, officials said.

In order to clear all the much-talked-about capacity charges and electricity bills, the government already jacked up the power-sector subsidy to Tk 620 billion from Tk 360-billion allocations in the original budget for the outgoing fiscal year (FY) 2024-25, they said Friday.

"We have so far released nearly Tk600 billion worth of funds as power subsidy to pay the arrears to the private-sector rental and independent power producers (IPPs)," says a Ministry of Finance (MoF) official.

"After getting bill of the remaining two months of the current fiscal year (FY) 2024-25, we will provide the remaining arrears shortly," he adds about the contingencies aimed at averting any major power breakdowns.

As a matter of set practice, after getting power-supply and other bills from the Bangladesh Power Development Board (BPDB), the MoF usually scrutinises those and then releases the necessary funds.

A hefty sum of subsidy in the revised budget has given a big respite to Bangladesh government as it has already paid a good amount of overdue bills to the private power producers, officials said.

All 133 private and public-sector power stations across Bangladesh have a combined generation capacity of nearly 20,697 megawatts a day. Out of the total, 78 private-sector power plants has a production capacity of nearly 8,778mws a day.

Besides, BPDB imports 1,160mw power from India where Adani power station from Jharkhand alone supplies nearly 750 megawatts a day.

Finance ministry and power division officials said the government would be paying all the arrears and dues to the IPPs and rental power plants gradually by next FY2026.

The interim administration of Prof Muhammad Yunus has decided to repay off the outstanding capacity charges, power-purchase bills and other liabilities to the local and foreign IPPs and rental electricity producers.

Among the producers are Indian Adani Power, Bangladesh-China Power Company Plant (Payra power plant), Meghnaghat 450mw Power Ltd, 210mw Rural Power Co Ltd, 335mw Summit-Meghnaghat Power Ltd and 414mw Sembcorp NWPC Ltd, 145mw Aggreko International Projects, United Power and Doreen Power.

The bills of the rental power plants and IPPs are paid from BPDB's income and the subsidies provided by the MoF.

However, the bills for imported electricity from Adani and other Indian power plants are paid from BPDB's own income.

About the massive Tk620-billion allocation for the power subsidy in the current revised budget, the MoF official says: "We are paying the arrears every month to the private power-plant owners. But the arrears are comparatively higher than our monthly payments. So, we will allocate a higher amount of money in the revised national budget for the current FY2025."

From the next FY, power division would slash the subsidy on power sector drastically and try to ensure loss-free supply within next few years, says the official.

The government in the newly placed national budget has proposed a Tk 370-billion fund as power subsidy for the upcoming FY2026.

Bangladesh purchases power at higher rates from the costly IPPs and the rental-power producers and sells to the consumers at lower rates by way of subsidizing the distribution.

Another MoF official says Bangladesh wants to be a liability-free country to the IPPs and private-sector power plants from the next fiscal year as it has agreed with the International Monetary Fund (IMF) for getting its financial support.

In the last FY2024 revised budget, the government allocated Tk 394.06 billion in subsidy for the power sector.

Data from MoF, BPDB and a non-government research organisation show a total of Tk 783.7 billion had been paid as capacity charges since 2018-19 till 2022-23.

Some Tk 62.41 billion was paid in FY2019, Tk 89.29 billion in 2020, Tk 132 billion in 2021, Tk 240 billion in 2022 and Tk 260 billion paid in FY2023 as capacity charges for private-and rental-power plants.

Such huge capacity payments to IPPs and rentals have become a big burden for the government while struggling with emaciated foreign-exchange reserves and rising external debts.

Banks can ill afford to provide dollars for repayment of dues of the foreign companies in the power and energy sector. The country had forex reserves worth over US$48.0 billion two years back, which depleted to $22 billion in recent days.

Usually, the state-run power board sells electricity to consumers at rates lower than it purchases from the IPPs and the gap needs to be made up with state subsidies.

Most of the IPPs and rental-power plants are HFO- or diesel-based ones which is costly for generating electricity.

The BPDB purchases the electricity from the private-sector plants at costs that vary from Tk 14 to Tk 26 per kilowatt hour (kwh) for feeding into the national grid.

On the other hand, the average retail price of electricity the consumers pay is some Tk 8.95 per unit and the average bulk electricity tariff is Tk 7.04 per unit.​

 

[Saif]

Power outage hits parts of Dhaka due to Rampura substation malfunction

A major power outage affected several areas of Dhaka on Sunday night following a mechanical failure at the Rampura substation, causing widespread inconvenience to residents, according to local media. Md Shamim Hasan, Director of the Public Relations Department of the Bangladesh Power Development B

thefinancialexpress.com.bd

Power outage hits parts of Dhaka due to Rampura substation malfunction

FE ONLINE DESK
Published :
Jun 22, 2025 23:26
Updated :
Jun 22, 2025 23:26

A major power outage affected several areas of Dhaka on Sunday night following a mechanical failure at the Rampura substation, causing widespread inconvenience to residents, according to local media.

Md Shamim Hasan, Director of the Public Relations Department of the Bangladesh Power Development Board (BPDB), confirmed the matter to Jago News. He said the disruption occurred at around 9:30 PM due to a technical fault in the 230/132 KV grid line connected to the national grid via Rampura substation. Repair work is underway, and normal supply is expected to resume between midnight and 12:30 AM.

Due to the sudden malfunction, electricity supply was cut off in areas including Banani and Moghbazar for several hours. Later in the night, around 10:30 PM, parts of Azimpur and New Market also experienced blackouts.​