[🇧🇩] Energy Security of Bangladesh

[Saif]

Government's plan for increasing gas supply for industries

The government has decided to increase gas supply for the industry sector. Dr Fauzul Kabir Khan, Energy adviser of the interim government, informed that the initiative would be taken to increase LNG import (4 additional LNG cargo would be imported during May-August 2025) for additional gas supply i

thefinancialexpress.com.bd

Government's plan for increasing gas supply for industries
Mushfiqur Rahman

Published :
May 15, 2025 11:48
Updated :
May 15, 2025 11:48

The government has decided to increase gas supply for the industry sector. Dr Fauzul Kabir Khan, Energy adviser of the interim government, informed that the initiative would be taken to increase LNG import (4 additional LNG cargo would be imported during May-August 2025) for additional gas supply in the country. He further informed that natural gas supply would be reduced (from the existing 1,200 mmcfd to 1,050 mmcfd) for power sector and the industries would get more gas. The impact of gas supply shortages for the power plants would be minimised by increased use of liquid fuel-based power plants. Business and Industry leaders of the country have long been demanding unhindered gas and power supply for the industries.

Petrobangla struggles to maintain gas supply as the domestic productions for natural gas has been steadily declining in the country. Currently, Petrobangla has been supplying approximately 2,700 mmcfd (both from domestic productions and from imported LNG). Imported LNG, regasification of the same and transmission of the natural gas processed from LNG remain costly and importing more LNG results in increasing government subsidies. The Energy Adviser informed that the additional 4 cargo LNG import (each LNG cargo holds approximately 3,000 million cubic feet of gas equivalent after regasification) during May-August 2025 period would compel the government to balance Taka 11,000 crore (Tk. 110 billion) shortfall for Petrobangla.

Business leaders have been claiming that the shortages of natural gas supply and abrupt gas price hikes at a regular interval 'erodes Bangladesh's regional competiveness', hurting investment and industrial growth. Energy Regulatory Commission raised 33 per cent gas prices for new industries and captive power plants on 13 April 2025. As per published sources, manufacturing sector consumes approximately 19 per cent and captive power sector consumes 18 per cent gas from the total consumption in industry and power sector in the country. So far, imported LNG share of the country's total gas supply accounts about 30 per cent. The balance supply is ensured from domestic sources (Petrobangla and IOC productions). Bangladesh Investment Development Authority (BIDA) criticised the government's decision (for gas tariff hike) as 'discriminatory' and called for review of the decision.

Ministry of Finance sources inform that the government's revised budget for the current financial year included Taka 190 billion crore subsidies for power, LNG and fertiliser. As reported, subsidies for power sector for the fiscal year stood at Taka 62,000 crore, for LNG Taka 9,000 crore and fertiliser Taka 28,000 crore. Experts consider that the price escalation for energy commodities in the global market and a number of wrong policies introduced in the energy and power sector in Bangladesh are responsible for huge government subsidy requirements for energy and power sectors. Experts feel that policy interventions and consistent monitoring of their execution to reduce the capacity charges paid to the power plants, eliminating inefficiencies and wastage of resources are important for reducing the subsidy burden. At the same time, government initiatives are urgent for increasing investment for domestic primary energy development.

Analysts have been observing that efficient use of energy and power has been increasing in industry sectors, specially, in small industrial enterprises. Experts also observe that the published information on GDP growth rate and growth of electricity consumption in the country do not match. Reports suggest that during the last 15 years electricity generation capacity growth in the country has increased almost 4.75 times. On the contrary, electricity consumption capacity growth remains limited (within the limits of 16-17 thousand megawatts maximum). Published sources further inform that during 2016-2024 period, electricity consumption growth was on average 4 per cent. Sector analysts observe that the industrial electricity consumption rate in the country is not increasing as expected. Industry owners prefer not to rely on grid electricity due to its unreliability. They rely on captive power generation. Published reports indicate that captive power generation capacity installed in the country is approximately 3,000 MW. President of the Bangladesh Chamber of Industries (BCI) Mr. Anwarul Alam Chowdhury considers that the 'growth of electricity use in industry sector is not significant'. He further considers that the true information on the country's GDP growth, energy sector growth should be published for the benefit of all concerned.

It may be recalled, that the previous government prepared the 'Power System Master Plan 2010' and projected that the annual growth of electricity would reach 10 per cent. The document projected that the economic growth would increase significant demand for electricity in the country. Based on the projections, nearly 90 power plants projects had been approved during 2010-2024 period. In reality, a large numbers of the installed power plants have been sitting idle as electricity demand growth projections did not prove correct. As a result, the burden for payments of huge capacity charges for the idling power plants has been increasing.

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

 

[Saif]

Adani Power and high cost of its electricity

The cost of keeping the lights on in Bangladesh is drawing ever more intense scrutiny, especially over electricity imported under the agreement with Adani Power. In early May, Adani Power's Chief Financial Officer Dilip Jha disclosed that Bangladesh owes approximately $0.9 billion for electricity s

thefinancialexpress.com.bd

Adani Power and high cost of its electricity
SYED MUHAMMED SHOWAIB

Published :
May 17, 2025 00:52
Updated :
May 17, 2025 00:52

The cost of keeping the lights on in Bangladesh is drawing ever more intense scrutiny, especially over electricity imported under the agreement with Adani Power. In early May, Adani Power's Chief Financial Officer Dilip Jha disclosed that Bangladesh owes approximately $0.9 billion for electricity supplied from the 1,600 MW Godda Plant in India's Jharkhand state. This follows a $1.2 billion payment made to Adani just last November. By June, the outstanding amount is projected to reach $1.3 billion, once again placing considerable pressure on the country's foreign currency reserves and raising serious questions about the wisdom of the deal.

One reason why the dues are mounting so quickly is the steep late payment fee, which reportedly stood at $136 million as of May 2025, accruing at an interest rate of 2.0 per cent per month. That's nearly 27 per cent annually, making it a penalty five times higher than typical global borrowing costs. With reserves already depleted to just over $20 billion following recent international payments, it is getting increasingly difficult for Bangladesh to sustain such costly terms.

The core issue, however, lies in the inflated cost of electricity itself. In fiscal year 2023-24, Bangladesh Power Development Board (BPDB) paid an average of Tk 14.87 per kilowatt-hour (kWh) to Adani, totalling over Tk 121 billion or around $1.0 billion. In contrast, other Indian suppliers charged significantly lower prices. NVVN Ltd charged around Tk 8.07 per kWh, Sembcorp Energy India Ltd Tk 10.42 and PTC India Ltd Tk 9.28. This puts Adani's tariff at least 30 per cent higher than comparable suppliers. The discrepancy becomes even more pronounced when compared to domestic projects such as the 1,200 MW Matarbari Coal-Fired Power Plant in Cox's Bazar, which has agreed to sell power to BPDB at just Tk 8.45 per kWh.

In a country where public subsidies are required to keep retail electricity prices affordable, such inflated import prices are hard to justify. Subsidising overpriced electricity drains public funds and distorts budget priorities, yet the government has little choice if it wants to avoid public backlash over higher retail electricity prices. Amid these concerns, the High Court in November last year ordered the formation of a committee to review the terms and conditions of the power purchase agreement with Adani. A three-member committee was reportedly formed in response, but its findings are yet to be made public.

The over-reliance on imported electricity also raises strategic considerations. Energy is a strategic asset, and dependence on a single foreign supplier under restrictive and lopsided conditions leaves Bangladesh exposed to serious geopolitical and economic vulnerabilities. It is not hard to see how Europe paid a heavy price for its dependence on Russian gas after the invasion of Ukraine, for instance.

Bangladesh has relied heavily on energy imports in recent years, often out of necessity. But that necessity is quickly diminishing. A number of domestic energy projects including gas, coal, solar and the Rooppur Nuclear Power Plant is set to transform the country's energy mix. Rooppur alone will add 1,200 MW of nuclear capacity by late 2025. Several existing plants are also operating below capacity due to fuel supply or grid issues, not for a lack of infrastructure. This changing situation makes it both necessary and possible to revisit past deals signed under very different conditions.

The Adani agreement is particularly troubling not only because of high cost, but also for its lack of transparency. Under the PPA, Adani Power was required to disclose any tax exemptions granted by the Indian government. However, BPDB officials have reported that Adani failed to inform them about a key regulatory change. In February 2019, India amended its Special Economic Zone (SEZ) policy to grant tax-free status to Adani's Godda plant for electricity exports. This benefit was never passed on to Bangladesh which constituted a breach of contract and a serious lapse in disclosure. Had Bangladesh been informed, it could have pushed for a lower tariff to reflect Adani's reduced operating costs. Instead, the country not only overpaid for electricity but also ended up subsidising a foreign company's tax advantage.

Given the scenario, Bangladesh has a strong case for renegotiating its agreement with Adani Power. Although the contract reportedly contains strict conditions for termination, this only makes renegotiation more urgent. An unfavourable deal does not mean it is unchangeable. In international business, new information and changing circumstances, especially failures to disclose key terms, can provide legitimate grounds for reopening agreements. Doing so, however, requires political will and strategic foresight. The BPDB's approach to Adani Power should be that of a sovereign entity protecting its economic future, not merely a passive debtor. The renegotiation efforts should also prioritise all three demands: lowering per-unit cost, softening late payment penalty and adjusting tax-sharing terms in light of exemptions granted to Adani by the Indian government.

Bangladesh need not enter this process from a position of weakness. The Matarbari agreement with the Coal Power Generation Company of Bangladesh Ltd (CPGCBL) provides a clear and relevant benchmark. If a domestic plant using imported coal can offer electricity at Tk 8.45 per kWh, there is little justification for paying nearly twice that amount for similar energy from across the border. Furthermore, Bangladesh's growing domestic capacity means that the country will soon have the option to reduce its reliance on external suppliers. This shift in energy self-sufficiency strengthens its negotiating hand.

Globally, many countries are rethinking their energy strategies in the face of fossil fuel depletion. China, the UAE, the United States and even India are expanding their nuclear power infrastructure. Nuclear power offers long-term stability and low running costs, advantages Bangladesh must make the most of through Rooppur and future projects. A forward-looking energy policy should focus on building domestic and sustainable sources, not tie the country to expensive and rigid deals born of short-term need.

The deal with Adani Power does not have to remain a long-term burden. With a clear strategy, Bangladesh can push to revise the deal, protect its economy, and make better use of its public funds.​

 

[Saif]

Undoing power sector damage

The full scale of mismanagement, waste and arbitrary decisions that characterised Bangladesh's power sector under the authoritarian Awami League regime is increasingly becoming more apparent. One deal after another, struck by the state-run Bangladesh Power Development Board (BPDB), stands out for p

thefinancialexpress.com.bd

Undoing power sector damage
Published :
May 18, 2025 00:33
Updated :
May 18, 2025 00:33

The full scale of mismanagement, waste and arbitrary decisions that characterised Bangladesh's power sector under the authoritarian Awami League regime is increasingly becoming more apparent. One deal after another, struck by the state-run Bangladesh Power Development Board (BPDB), stands out for poor judgment and disregard for national interest. The 718MW JERA Meghnaghat plant stands as a prime example of these problematic deals. Despite the project's completion, it remains idle due to an acute gas shortage and transmission bottlenecks, yet the government is liable to pay millions in capacity charges. This arrangement, signed under a long-term power purchase agreement (PPA), is indicative of the imprudence that has defined energy planning in recent years where contracts were awarded without due diligence, tariffs were inflated and foreign interests were accommodated at the expense of public funds.

The JERA Meghnaghat plant is merely the tip of the iceberg in the power sector's crisis. Across the industry, the country is burdened with expensive electricity from unsolicited projects awarded under the now-defunct Speedy Supply of Power and Energy (Special Provision) Act 2010. These contracts often bypassed feasibility studies and were exempt from public scrutiny. This has led to an oversupply of generation capacity -- largely dependent on natural gas -- even though Petrobangla cannot provide even half of the required supply to keep existing plants running. Idle plants continue to collect capacity payments, bleeding the BPDB's finances dry without delivering electricity to the grid. At Meghnaghat alone, three large LNG-based plants sit underutilized due to gas shortages and delays in substation construction. Meanwhile, the government is forced to pay these idle power plant owners through capacity charges, wasting significant taxpayer funds just to meet the costly contractual obligations.

Blame for this unsustainable mess rests squarely on the ousted Awami League government, which spent years pursuing power generation targets without securing fuel supply or transmission capacity. In many instances, contracts were awarded not on the basis of national demand forecasts or technical merit, but to serve political convenience, funnel money to individuals politically connected with Awami League, and cultivate foreign partnerships for short-term gain. This wilful neglect of prudent planning and financial discipline has saddled the nation with high-cost energy, undermined investor confidence and pushed public utilities like BPDB closer to insolvency. Experts have repeatedly cautioned against inflated demand projections and warned of the dangers of overcapacity, but such concerns were brushed aside. Instead of a stable, affordable energy system, the country has been left with one that is expensive, inefficient and shaped more by private interests than public need.

There is, however, a measure of hope that the current interim administration may begin to correct course. The initiative to renegotiate tariffs that started with the JERA plant is a step in the right direction. The incumbent adviser to the Ministry of Power, Energy and Mineral Resources Muhammad Fouzul Kabir Khan deserves a degree of appreciation for initiating this difficult and politically charged process. While his efforts cannot erase the consequences of a decade of misgovernance, they mark a crucial first step towards repairing the extensive damage inflicted upon the sector. To truly rectify the situation, the government must review all existing PPAs to assess fairness and economic viability one by one and phase out the unsustainable practice of capacity payments. Above all, long-term energy planning must be rooted in a reliable fuel supply chain and investment in transmission infrastructure. Bangladesh's energy future must not remain hostage to past mistakes. With a clear strategy and political will, the country can still build a power sector that truly serves its people.​

 

[Saif]

With cash in hand, US Co resurrects investment plan

With cash in hand, US energy giant Chevron assures state-run Petrobangla of resurrecting its held-back investment worth around US$65 million in Jalalabad compression project, insiders said, as the interim government cleared arrears in gas bill at one go. The Chevron Bangladesh company assurance ca

thefinancialexpress.com.bd

Govt pays off overdue Chevron gas bills
With cash in hand, US Co resurrects investment plan

M Azizur Rahman
Published :
May 18, 2025 00:10
Updated :
May 18, 2025 00:10

With cash in hand, US energy giant Chevron assures state-run Petrobangla of resurrecting its held-back investment worth around US$65 million in Jalalabad compression project, insiders said, as the interim government cleared arrears in gas bill at one go.

The Chevron Bangladesh company assurance came during a joint-management committee meeting recently following a request from Petrobangla to resume the multinational's stalled investment after clearing all overdue payments.

Chevron Bangladesh had put on hold the Jalalabad compression-project investment proposal through a letter to the state corporation on April 4, 2024.

In the letter, Chevron Bangladesh President Eric M walker wrote on deferment of the project until the overdue -payment balance was fully cleared by Petrobangla.

Prior to sending the letter, the arrears in payment to Chevron Bangladesh rose as high as to $280 million.

The international oil company (IOC) Bangladesh outfit had a plan to initiate the compression project in 2023 and it had then approved a budget worth $65 million to implement the project.

But Petrobangla was struggling to make payment to Chevron Bangladesh over the past several years following global economic turmoil caused by the ongoing war between Russia and Ukraine that led to deep currency devaluation.

According to information provided by Chevron a couple of years back, upon completion of the project, it will be possible to extract an additional 352 billion cubic feet (Bcf) of gas from the Jalalabad gas field, said one source.

"Hence, after the implementation of the project, it will arrest the declining production trend significantly," said a senior Petrobangla official.

The failure to complete the project in time will result in a significant reduction in gas production, which will undermine the main purpose of the second extension of production period for blocks 13 and 14, he said.

But sources fear that gas production from Jalalabad field wouldn't be as large as Chevron had projected a couple of years back as the field's reserves shrank from the previous level due to continuous sucking.

"Bangladesh has been facing a significant challenge in foreign -currency issue since June 2022. As a result, Petrobangla was unable to pay regular invoices despite its keenness," a recent Petrobangla letter to the Chevron Bangladesh president clarified the reason why such delay in payment.

Regardless of the constraints, Petrobangla shows its testament of good intention and commitment towards the repayment plan, the Petrobangla letter, issued by its Director (finance) AKM Mizanur Rahman, reads.

Due to the present government's fair, transparent, accountable, and effective policies and activities, the foreign-currency-availability situation has changed, it said.

In these circumstances, Petrobangla has cleared all outstanding arrear balance, including regular invoices, within the timeframe, it also said.

"It translates that Petrobangla always remains dedicated to its commitment. We further expect that it will continue in the future, too," the government side says in the letter.

Asked about the investment plan, Chevron Bangladesh Media and Communications Manager Shaikh Jahidur Rahman said, "As part of our ongoing efforts to support the government in maintaining uninterrupted gas supply, the team is always evaluating various opportunities."

He hastens to add: "As a matter of policy, we do not comment on specific commercial matters."

Mr Rahman, however, hails the government gesture in clearing all the arrears in payments. "We greatly appreciate the efforts of the interim government, energy ministry, and Petrobangla to resolve this issue."

Separately, another investment proposal of Chevron Bangladesh worth around $500 million to develop Bangladesh's onshore hydrocarbon block-11 and attain exploration rights over an extended area of block-12 in the Surma basin is currently pending with Petrobangla for approval.

Chevron plans to explore these blocks to discover fresh gas, a move that would augment supplies to meet the country's insatiate energy needs.

The gas-rich Surma basin is situated in the country's northeast, and the region contributes much of the natural gas in the national gas grid.

Chevron had previously invested around $500 million under its Bibiyana project during 2012-2015. It included a gas-plant expansion, new development wells, and an enhanced liquid-recovery unit, Platts reported previously.

If new gas is discovered, Chevron would be able to supply natural gas within the shortest possible time using the same processing plant it uses to process Bibiyana gas, sources familiar with the situation said.

The multinational could ramp up natural gas production by up to 1.35 billion cubic feet per day from Bibiyana gas field and the new areas using the currently operational Bibiyana process plant, they added.

Petrobangla officials have said the company has not yet made any decision on Chevron's hydrocarbon exploration and its investment plan.

Chevron Bangladesh is currently the largest producer of natural gas in Bangladesh with its output of around 1.08Bcf per day from three of its onshore fields - Bibiyana, Jalalabad, and Moulavi Bazar, which are in blocks 12, 13, and 14, respectively, according to official Petrobangla data as of Saturday.​

 

[Saif]

Bangladesh plans additional spot LNG import in early July amid energy crisis

The government is considering importing one more spot liquefied natural gas (LNG) cargo in early July to meet the country’s natural gas demand during the upcoming monsoon. State-run Rupantarita Prakritik Gas Company Ltd (RPGCL) aims to purchase the spot LNG cargo for delivery within the July

thefinancialexpress.com.bd

Bangladesh plans additional spot LNG import in early July amid energy crisis
FE ONLINE REPORT
Published :
May 19, 2025 18:54
Updated :
May 19, 2025 18:54

The government is considering importing one more spot liquefied natural gas (LNG) cargo in early July to meet the country’s natural gas demand during the upcoming monsoon.

State-run Rupantarita Prakritik Gas Company Ltd (RPGCL) aims to purchase the spot LNG cargo for delivery within the July 2-3 window, a senior RPGCL official told The Financial Express on Monday.

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

The successful bidder 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 and regasification units located on Moheshkhali Island.

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

The country may also seek to purchase more spot LNG cargoes in late July, the official added.

Bangladesh has so far purchased three spot LNG cargoes for June deliveries.

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

Bangladesh recently awarded a spot LNG cargo in a buy tender to Gunvor Singapore Pte Ltd for the June 26-27 delivery window at $12.18 per MMBtu.

Previously, the country awarded a July 2-3 delivery window spot LNG cargo to Vitol Asia Pte Ltd at $11.57 per MMBtu.

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

The country has been facing an acute energy crisis as its natural gas output declines.

Bangladesh has been rationing gas supplies to industries, power plants, and other high-demand sectors to manage the rising demand.​

 

[Saif]

Petrobangla looks to go without subsidy

The state-run Petrobangla is upbeat about withdrawal of value-added tax (VAT) on the import of expensive liquefied natural gas (LNG) as it would help reduce overall LNG cost and free this state-entity from any subsidy from the government, said sources. Top officials of the Energy and Mineral

thefinancialexpress.com.bd

Possible withdrawal of VAT on LNG import
Petrobangla looks to go without subsidy
M Azizur Rahman

Published :
May 22, 2025 00:32
Updated :
May 22, 2025 00:32

The state-run Petrobangla is upbeat about withdrawal of value-added tax (VAT) on the import of expensive liquefied natural gas (LNG) as it would help reduce overall LNG cost and free this state-entity from any subsidy from the government, said sources.

Top officials of the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) and Petrobangla already held several meetings with the officials of National Board of Revenue (NBR) over the issue, they said.

"We are expecting that the NBR will withdraw 15 per cent VAT on the import of LNG as the value of this imported fuel is not added, rather reduced, as it is blended with local gas," Petrobangla's director for finance AKM Mizanur Rahman told The Financial Express on Wednesday.

When it comes to the current market price and the volume of LNG imports, Petrobangla would be able to reduce the overall LNG import cost by around Tk 65-69 billion annually.

Petrobangla received state-subsidy worth around Tk 60.35 billion during the fiscal year 2023-2024.

Currently, Petrobangla's LNG import cost from spot market is around US$14 per million British thermal unit (MMBTu) and the cost of that from long-term LNG suppliers is around US$10.50 per MMBTu, said Mr Rahman.

Petrobangla has been importing around 98 LNG cargoes - 56 from long term LNG suppliers and 42 from spot market annually.

If the country imports an increased volume of LNG, the overall cost reduction would be higher, said the Petrobangla official.

Petrobangla would be able to increase import of more cargoes with the money saved from the current VAT, which will increase the country's overall natural gas supplies and reduce the gas crisis facing industries, power plants and other gas-guzzling consumers.

According to sources at the Ministry of Finance (MoF), the government paid subsidies worth around Tk 25 billion in FY '19, Tk 35 billion in FY '20, Tk 34.97 billion in FY '21, Tk 60 billion in FY '22, and Tk 63.32 billion in FY '23 as state subsidies on account of LNG imports to Petrobangla.

Currently, LNG import faces double taxation - 15 per cent VAT at the import stage and another 15 per cent at the consumer level without any actual value addition.

It violates the core principle of VAT, it has been alleged.

Besides, the NBR slaps an additional 2.0 per cent advance tax (AT) and a 5.0 per cent source tax, inflating further the overall LNG import costs.

Bangladesh blends imported LNG with local natural gas after its re-gasification.

According to Petrobangla, the cost of blended natural gas during FY '23 was Tk 19.09 per cubic metre (cm) and it soared to Tk 23.85 per cm in FY '24 and Tk 29.39 per cm in FY '25.

The weighted average sales price of gas, however, was Tk 11.91 per cm in FY '23, Tk 22.87 per cm in FY '24 and remained the same at Tk 22.87 per cm in FY '25.

The price gap between the cost of blended natural gas and its weighted average sales price was Tk 7.18 per cm in FY '23. It came down to only Tk 0.98 per cm in FY '24 following several rounds of hike in tariffs including the highest ever rate of 178.88 per cent.

Following the significant hikes, the price gap between the cost of blended natural gas and its weighted average sales price widened again to 6.52 per cm in FY '25, according to Petrobangla.

The overall costs of gas rose to Tk 75.72 per cm in the current FY, Petrobangla has estimated.​