[🇧🇩] Energy Security of Bangladesh

[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.​

 

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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

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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

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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

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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

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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.​