[🇧🇩] Energy Security of Bangladesh

[Saif]

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

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

thefinancialexpress.com.bd

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

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

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

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

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

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

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

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

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

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

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

 

[Saif]

Grid failure plunges 21 southern districts into darkness

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

thefinancialexpress.com.bd

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

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

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

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

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

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

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

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

 

[Saif]

Bangladesh’s energy crossroads

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

www.newagebd.net

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

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

The cost of fossil fuel dependence

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

Structural barriers to clean energy transition

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

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

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

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

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

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

Untapped renewable potential

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

Policy priorities for accelerated transition

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

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

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

Economic imperative of transition

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

A just transition road map

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

Seizing the moment

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

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

 

[Saif]

18,000MW power production planned for summer

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

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

Photo: Freepik

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

[Saif]

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

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

thefinancialexpress.com.bd

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

[Saif]

Severe energy crisis affects life, business

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

www.newagebd.net

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

Emran Hossain 28 April, 2025, 23:27

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Still, frequent load shedding occurred, even in Dhaka.

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

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

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

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

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

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

 

[Saif]

No margin loan for power sector

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

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

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

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

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

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

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

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

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

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

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

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

 

[Saif]

Rising gas prices threaten our investment prospects

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

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Rising gas prices threaten our investment prospects

VISUAL: ANWAR SOHEL

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

[Saif]

Govt should try all means to plug energy supply gap

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

www.newagebd.net

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

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

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

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

 

[Saif]

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

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

www.thedailystar.net

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

FILE ILLUSTRATION: BIPLOB CHAKROBORTY

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

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

Macroeconomic concerns

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

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

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

Five-year financial recovery plan needed

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

Developing domestic gas sector is crucial

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

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

Reducing import tariffs, other duties for green energy transition

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

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

Withdrawing benefits for fossil-fuel-based power

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

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

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

 

[Saif]

Power sector managers need to ensure quality control

THE absence of a quality control mechanism in the power sector has led to extra fuel costs in power generation. A recent Power Development Board analysis shows that some plants consume up to 90 per cent more fuel than others do. The finding indicates an overall power management failure in...

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Power sector managers need to ensure quality control
01 May, 2025, 00:00

THE absence of a quality control mechanism in the power sector has led to extra fuel costs in power generation. A recent Power Development Board analysis shows that some plants consume up to 90 per cent more fuel than others do. The finding indicates an overall power management failure in stopping the leak of the already scanty supplies of imported fuels. Experts say that factors such as the import and transport cost, the dollar exchange rate, plant factor and, especially, the quality of machines that contribute to varying degrees of fuel consumption, exist in the power sector. During the Awami League regime, when the power sector experienced a lopsided development, driven by an abnormally high overcapacity and an absurd capacity charge system, many party loyalists were rewarded with power projects without tender under the now-repealed indemnity law, with the power sector investors choosing their machines while quality control mechanisms did not exist. Independent power plants exploited the situation and brought used machines that led to the over-consumption of fuels and frequent shutdown of plants. The public power plants also used more fuels as they were poorly maintained. The scenario has not yet changed.

The frequent shutdowns of power plants, not only the old ones but also new ones, because of technical glitches show the absence of quality checks. For example, the first unit of the 1,320MW coal-fired Rampal plant, a Bangladesh-India joint venture, shut down eight times in the first nine months after it started running in December 2022. The plant, where per-unit fuel cost is 28 per cent higher than a similar power plant, was available for only 18 per cent of the time this January, according to the power board. Frequent shutdowns and resumptions of the plants require extra fuel. The fuel cost in the Tongi Power Plant is 47 per cent higher compared with the average cost of fuel in similar plants. Many other plants have continued to operate at a little fraction of their capacity. Among gas-based plants, as the power board analysis shows, the average fuel costs of public plants are about 20 per cent higher than that of independent power plants, largely because of old machines that have served out their economic life. So is the case with oil- and coal-based public power plants. Some independent power plants, including Adani and Summit’s, also have high fuel costs riding on unequal power deals.​