Bangladesh Defense
Saif
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Cleaning up the power sector mess
A lack of long-term power and energy policy, penchant for quick fix and governance issues are responsible for leaving the country's power forever crisis-prone. So, when Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood observes that power deals signed during the previous Awami
Cleaning up the power sector mess
FE
Published :
Feb 28, 2026 00:56
Updated :
Feb 28, 2026 00:56
A lack of long-term power and energy policy, penchant for quick fix and governance issues are responsible for leaving the country's power forever crisis-prone. So, when Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood observes that power deals signed during the previous Awami League government pose a threat to national sovereignty, he actually states the obvious. Energy and power are strategic assets, and any lopsided binding agreement that makes a country dependent on a single foreign supplier is bound to have serious geopolitical and economic repercussions. The experience of European countries following the Russia-Ukraine war is a stark reminder of this fact. Excessive dependence on Russian gas exposed them to severe energy shortages, unprecedented price hikes, soaring inflation and industrial disruptions. Governments were compelled to spend hundreds of billions of euros on energy subsidies and emergency support measures to shield households and businesses from escalating costs.
Similarly, the deposed Awami League government left Bangladesh in a precarious situation by signing a host of long-term power purchase agreements with both local and foreign entities. Among these, the deal with Adani Power Ltd of India stands out as one done in utter disregard for national interest. According to the findings of a National Review Committee formed by the interim government, the pricing mechanism of the deal is so unfair against Bangladesh that Adani is extracting an additional $400-500 million annually. Over the 25-year contract period, this excess payment could amount to nearly $10 billion. It is outrageous that the regime gave the country such a raw deal while taking credit for expanding power generation capacity. In reality, the country was made dependent on Adani for a significant portion of its energy consumption. In 2025, Adani supplied roughly 15 per cent of Bangladesh's total electricity demand. Whenever Adani reduces supply, it triggers significant power shortages in the country. This dependence gives Adani an undue leverage to pressure Bangladesh into settling electricity bills at much higher rates by reducing or threatening to suspend supply. It clearly raises concerns about a threat to national sovereignty. Finding a way to get out of this unfair deal will be one of the biggest challenges in the power sector for the new government.
However, the damage done to the power sector extends far beyond the Adani deal. Nearly a hundred private power plants - independent power producers (IPPs) and rental power plants - were awarded power purchase contracts at inflated rates under political considerations, while public-sector stations were left idle. By fast-tracking private power plants, power generation capacity has been increased to around 28,166 MW against a peak demand of around 18,000 MW, resulting in over 38-40 per cent excess capacity. Worse still, under these agreements, private power plants are entitled to receive capacity charges even when they remain idle. This massive overcapacity, without ensuring fuel and transmission line, costs the government billions in "capacity payments" for unused plants.
To correct the course, the government must conduct a comprehensive review of all existing power purchase agreements (PPAs) and assess their fairness and economic viability, and gradually phase out the unsustainable practice of capacity payments. It is crucial to examine why such excessive power generation capacity was created and who has been benefiting from it. Above all, a long-term energy planning is needed, grounded in a reliable fuel supply chain and backed up by investment in transmission infrastructure. With a clear strategy and firm political will, Bangladesh can still develop a power sector that efficiently meets the country's needs, safeguards national sovereignty and serves the people rather than private interests.
FE
Published :
Feb 28, 2026 00:56
Updated :
Feb 28, 2026 00:56
A lack of long-term power and energy policy, penchant for quick fix and governance issues are responsible for leaving the country's power forever crisis-prone. So, when Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood observes that power deals signed during the previous Awami League government pose a threat to national sovereignty, he actually states the obvious. Energy and power are strategic assets, and any lopsided binding agreement that makes a country dependent on a single foreign supplier is bound to have serious geopolitical and economic repercussions. The experience of European countries following the Russia-Ukraine war is a stark reminder of this fact. Excessive dependence on Russian gas exposed them to severe energy shortages, unprecedented price hikes, soaring inflation and industrial disruptions. Governments were compelled to spend hundreds of billions of euros on energy subsidies and emergency support measures to shield households and businesses from escalating costs.
Similarly, the deposed Awami League government left Bangladesh in a precarious situation by signing a host of long-term power purchase agreements with both local and foreign entities. Among these, the deal with Adani Power Ltd of India stands out as one done in utter disregard for national interest. According to the findings of a National Review Committee formed by the interim government, the pricing mechanism of the deal is so unfair against Bangladesh that Adani is extracting an additional $400-500 million annually. Over the 25-year contract period, this excess payment could amount to nearly $10 billion. It is outrageous that the regime gave the country such a raw deal while taking credit for expanding power generation capacity. In reality, the country was made dependent on Adani for a significant portion of its energy consumption. In 2025, Adani supplied roughly 15 per cent of Bangladesh's total electricity demand. Whenever Adani reduces supply, it triggers significant power shortages in the country. This dependence gives Adani an undue leverage to pressure Bangladesh into settling electricity bills at much higher rates by reducing or threatening to suspend supply. It clearly raises concerns about a threat to national sovereignty. Finding a way to get out of this unfair deal will be one of the biggest challenges in the power sector for the new government.
However, the damage done to the power sector extends far beyond the Adani deal. Nearly a hundred private power plants - independent power producers (IPPs) and rental power plants - were awarded power purchase contracts at inflated rates under political considerations, while public-sector stations were left idle. By fast-tracking private power plants, power generation capacity has been increased to around 28,166 MW against a peak demand of around 18,000 MW, resulting in over 38-40 per cent excess capacity. Worse still, under these agreements, private power plants are entitled to receive capacity charges even when they remain idle. This massive overcapacity, without ensuring fuel and transmission line, costs the government billions in "capacity payments" for unused plants.
To correct the course, the government must conduct a comprehensive review of all existing power purchase agreements (PPAs) and assess their fairness and economic viability, and gradually phase out the unsustainable practice of capacity payments. It is crucial to examine why such excessive power generation capacity was created and who has been benefiting from it. Above all, a long-term energy planning is needed, grounded in a reliable fuel supply chain and backed up by investment in transmission infrastructure. With a clear strategy and firm political will, Bangladesh can still develop a power sector that efficiently meets the country's needs, safeguards national sovereignty and serves the people rather than private interests.
