United News of Bangladesh

The Centre for Policy Dialogue (CPD) on Saturday urged the government to halt new fossil fuel-based power projects, revise what it called inflated demand projections and bolster parliamentary oversight to put Bangladesh’s power and energy sector on a fiscally sustainable and climate-aligned path CPD said Bangladesh’s power and energy sector is at risk of fiscal stress, stranded assets and stalled renewable energy transition due to overestimated demand projections, fossil fuel lock-in and weak regulatory transparency. Presenting a research paper titled 'New Government’s Priorities in Addressing Socio-economic Challenges: Introducing Knowledge-based Decision Making in the Executive and Legislative Process' at CPD’s Dhanmondi office, CPD Research Director Khondaker Golam Moazzem outlined a series of structural weaknesses in the sector and recommended urgent reforms within the first 180 days of the new government. The study identified 'Power and Energy: Reviving for Energy Transition' as the seventh priority sector and found that procedural transparency, accountability, and implementation efficiency remain the weakest pillars of decision-making in this sector. CPD noted that existing master plans project electricity demand to reach 40-50 gigawatts (GW) by 2040, while independent estimates suggest a more realistic requirement of around 30 GW. The study warned that inflated GDP-demand linkages, rather than actual industrial consumption data, have been used to justify aggressive expansion targets. This could lead to massive surplus capacity that would be 'difficult to undo', increasing fiscal burdens through long-term contractual obligations. Spatial planning mismatch was also highlighted, with Dhaka receiving disproportionately high projections compared to emerging industrial hubs such as Chattogram and Sylhet. CPD recommended that Bangladesh Power Development Board (BPDB) and Power Cell adopt rigorous econometric forecasting methods and subject revised projections to independent validation and parliamentary review. The report underscored the structural burden of capacity payments to independent power producers (IPPs), even for idle plants. Despite recent tariff hikes reaching Tk 8.95 per unit in 2024 — fiscal stress persists. According to the study, plant-by-plant payment details and the rationale behind tariff adjustments lack transparency, while public hearings by the Bangladesh Energy Regulatory Commission (BERC) have often been bypassed. CPD recommended introducing a 'No Electricity, No Pay' clause in future Power Purchase Agreements (PPAs) to eliminate unconditional capacity charges. It also called for renegotiation of rigid 'take-or-pay' contracts, though acknowledging the legal complexity involved. The think tank warned of growing dependence on imported LNG and coal, raising concerns about stranded assets and fiscal instability. It said long-term price volatility impacts are systematically downplayed and that insufficient assessment has been conducted regarding risks associated with new LNG terminals and coal-based infrastructure. CPD proposed adopting a clear 'No New Fossil Fuel-Based Power Generation' policy and urged reassessment of planned coal projects, including Matarbari Phase 2, through parliamentary debate to ensure fiscal and climate accountability. The study also called for scaling up regional power trading with Nepal and Bhutan to import hydropower and balance solar intermittency. While the interim government approved the Renewable Energy Policy 2025, CPD observed that grid absorption capacity for variable renewable energy (VRE) remains capped at 20%, and smart grid implementation has been deferred to 2040-2050. Private renewable energy developers face bureaucratic hurdles in securing grid interconnection approvals, the report said. CPD recommended that Power Grid Bangladesh (PGB) conduct a technical grid stress test to determine upgrades required to absorb at least 30% renewable energy by 2030. It also proposed establishing an Independent System Operator (ISO) to separate grid management from BPDB and ensure institutional neutrality. A 'Resource-to-Grid Data Hub' integrating real-time renewable energy potential mapping across districts should be developed under parliamentary monitoring, the study added. In the primary energy segment, CPD highlighted a persistent daily gas shortage of around 1,200 million cubic feet per day (mmcfd), with total demand at 3,800 mmcfd against supply of just over 2,600 mmcfd, including LNG imports. The report argued that increasing LNG imports alone would deepen financial burdens and recommended prioritising domestic gas exploration instead. It stressed that overemphasis on new LNG infrastructure and domestic coal exploration reflects weaknesses in evidence-based analysis and stakeholder engagement. A central theme of the CPD study is embedding knowledge-based decision-making in both executive and legislative processes. The report called on the Parliamentary Standing Committee on Power and Energy to review all major generation, fuel mix and procurement decisions to ensure statutory compliance and transparency. It noted that suspension of the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 by the interim government is a positive step toward restoring competitive procurement and judicial oversight. CPD, however, warned that without institutional restructuring, real-time data transparency and structured parliamentary scrutiny, reform efforts may remain partial. Immediate and Long-term Priorities For the next 180 days, CPD recommended: 1. No approval of new fossil fuel-based power plants 2. Independent validation of revised demand projections 3. Introduction of “No Electricity, No Pay” clauses in future contracts 4. Engagement with export-oriented industries in designing a National Solar Rooftop Programme 5. Institutionalising parliamentary review of all major sectoral decisions Beyond 180 days, the study proposed grid modernisation, establishment of an Independent System Operator, zonal energy audits, smart grid pilots, and legislative-backed accountability frameworks. Moazzem said the success of the new government would depend on its ability to align fiscal prudence, climate commitments and energy security through transparent, evidence-driven policymaking. “Without structural reforms and parliamentary oversight, the sector risks repeating past mistakes of overcapacity, high tariffs and fiscal stress,” Moazzem added.

The US-based Institute for Energy Economics and Financial Analysis in a briefing note released on Monday called Bangladesh government’s target to install 3,000-MW solar capacity in public buildings’ rooftops by the end of this year overly ambitious. The Bangladesh Power Development Board announced the rooftop solar project on July 7. Bangladesh has been battling an acute energy crisis for years. This is the second rooftop solar initiative introduced in the country. The first initiative required new buildings to have rooftop solar to get connected to the national power grid. Many of those rooftop solar installments ended up becoming stranded assets, leaving banks and other financial institutions with a negative impression on rooftop solar, creating a major financing challenge, the note said. The combined power demand in government offices, hospitals, educational and religious institutions is 1,500MW, half the target, said the IEEFA briefing note. “The Sustainable and Renewable Energy Development Authority should assess and document rooftop solar potential in these buildings,” Shafiqul Alam, IEEFA’s lead energy analyst for Bangladesh and the author of the note, was quoted in a media release issued on the occasion of releasing the briefing note. Rooftop solar panels may influence urban temperatures: Study    “Furthermore, fund allocations for various projects, tendering, evaluation of bidding documents, issuing work orders and project implementation will likely require an extension of the December 2025 deadline,” said Shafiq. The note stated that achieving new rooftop solar capacity of 3,000MW in less than six months implies scaling up installations to more than 12 times the capacity of 245MW built so far until June 2025. The note highlighted that only 15-20 high-quality Engineering, Procurement and Construction companies operate in the country, and they may not have enough capacity to install 3,000MW in less than six months. Under Bangladesh’s new rooftop solar programme, government offices will roll out installations via the CAPEX model supported by public funds, while hospitals and educational institutions will operate under the OPEX model with no upfront cost, said the press release. Poor coordination, lack of maintenance, and rushed developer selection stand in the way of implementing the government’s rooftop solar plan under the CAPEX model. On the other hand, the OPEX model ensures quality, but offers lower savings, and could face financing hurdles and risks from load-shedding in rural areas. “If projects are small and scattered in rural areas, they may fail to attract companies to invest in the OPEX model,” said Shafiq. Chinese solar panel giant Longi to invest in Bangladesh: Ambassador Yao The note also underscored that utilities should find a way to address load-shedding in rural areas. The advice is for Bangladesh to draw on the experience of its neighbouring countries like India, Pakistan and Sri Lanka, which boast of a greater share of renewable energy in the power mix, ranging from 47% to 63%. For instance, Pakistan’s rooftop solar sector success is an example that push factors, such as energy supply crunch and unaffordable power tariffs, can spearhead change. In Sri Lanka, the government addressed financing barriers to expand rooftop solar, supported by a multilateral agency, the note said. Later, the government provided funds for rooftop solar on public buildings. Similarly, India’s rooftop solar capacity of more than 18 gigawatts in May 2025 can be attributed to the consistent policy and regulatory support extended by the government. China wants to invest in solar panels manufacturing; deepen ties with Bangladesh Shafiq also called for establishing an independent monitoring mechanism to ensure the implementation of the government’s rooftop solar programme.

Bangladesh’s power sector stranded assets are increasing by leaps and bounds, exposing a new Achilles heel of Bangladesh Power Development Board (BPDB), which bled fiscally dry after pursuing a flawed energy policy during the 15-year rule of the past Awami League government. With large power plants awaiting commissioning for months or sitting substantially idle after launch, the stranded asset problem is more pronounced than ever before. Newly-built or under-construction fossil fuel-based power plants worth about 7,000MW are set to add to BPDB’s financial burden, energy experts said. The 2,400-MW nuclear power plant expected to join the power fleet by next year might deepen the problem even more, energy experts pointed out, rendering many power plants currently in use redundant amid a rather dull economic scenario with no increase in power demand for almost a year. “Stranded assets might become a significant burden for the BPDB over the next three years,” said Shafiqul Alam, lead energy analyst, the US-based Institute for Energy Economics and Financial Analysis. assets are investments that have stopped yielding return before the expiry of their economic life.With an installed power generation capacity of 28,132MW, the peak power demand this year barely touched 16,000MW, marking a drop in the demand compared with last year. The decline in the power demand is due to industrial consumption declining. There were widespread power outages during this summer as for one reason or the other about half of the installed power production capacity could not be used. Mounting stranded assets imply an increase in capacity charge payment. The BPDB paid over Tk 1 lakh crore in capacity charge, a sum payable by the government to private power producers regardless of electricity produced, guarantying the investors 16 per cent return. The payment of huge capacity charge, often in dollars, incurred the BPDB astronomical losses while draining Bangladesh’s foreign currency reserve. An acute fuel shortage, owed to factors such as the dollar crisis and inadequate import infrastructure, was to a great extent responsible for creating stranded assets. Machinery problem was also a reason behind some power plants going frequently out of order. “Some power plants regarded as stranded assets were dropped from the official list over the last several years,” said Hasan Mehedi, member secretary, Bangladesh Working Group on External Debt, a platform of green activists. BPDB moves to meet this summer’s power demand with capacity production at gas-based plants   Energy experts believe the need to scrap more power plant will become more evident over the next few years to keep overcapacity from further growing to reduce energy subsidy. Years of arbitrary energy project implementation without any tender, protected under a controversial indemnity law, bred power projects that would remain under use or unused within years of or immediately after their costly construction. Some Scrapped Power Plants Performance Record At least seven power plants worth 582MW were scrapped since 2013. Three of the scraping took place after the incumbent government took over last year. power plants included some of the most controversial business groups with a shady record of doing business under Awami League rule.Two of the power plants - Bosila 108MW and Jamalpur 95MW - were scrapped in September last year after passing of only 50 per cent of their supposed lifetime. Based on furnace oil, Bosila 108MW power plant, which commenced operation on 22 February 2017 for 15 years, was supposed to retire on 21 February 2032. The plant did not generate any electricity in the three years prior to itsscrapping. The Jamalpur power plant, also based on furnace oil, was supposed to retire on November 28 in 2031 after running for 15 years. Jamalpur had also been out of operation for a while before it was scrapped. Companies owning both the power plants were at the center of shady loan deal scandal, one of them involving Tk 1,732 crore. Independent private power plants contracted to supply uninterrupted electricity for 15 years are allowed to have time off for maximum 17 per cent of their lifetime for repair and maintenance. The power purchase agreement with a power plant is liable for termination for willful and unexcused abandonment for 30 consecutive days without BPDB’s consent. Failure to return to operation for 30 days after repair and maintenance also makes a power plant eligible to be cancelled, among other reasons. An analysis of official data revealed that the furnace oil-based Kathpotti 52 MW (Sinha) power plant was scrapped in December last year, more than five years before it was supposed to retire. The plant produced no power in a year before it was scrapped. BPDB's tender floating for 10 key grid-connected plants faces setback The diesel-based 110MW Bheramara power plant scrapped in June 2013 after three years of operation gave its best output in 2011-12 with 26.7 per cent of its generation capacity used. In the three years of operation, the power plant took away over Tk 510 crore in capacity charge. Despite poor power generation record, the purchase deal with the power plant had been extended for eight years until December, 2018. The furnace oil-based 105MW Nawapara power plant was scrapped months after its tenure was extended for eight additional years after the completion of its initial deadline in early 2014. power plant used sub-standard machines. The Nawapara power plant’s best production record comes with the use of 16.7 per cent of its capacity in 2011-12.Brand New Large Power Plants Facing Stranded Asset Risk The gas-based 800MW power plant in Khulna’s Rupsha has been awaiting commission since early 2024. There was no gas even to test-run the power plant, built with $1.14 billion, mostly given as loans by the Asian Development Bank, the Islamic Development Bank, and the Japan Fund for Poverty Reduction. The fuels crisis is unlikely to be over soon with domestic gas reserve fast depleting. Bangladesh’s capacity to import gas is also limited because of infrastructure shortage. Construction of new infrastructure to raise liquefied natural gas import capacity from the existing 1000mmcfd could take three to six years, given the type of infrastructure – floating storage and regasification unit and land-based LNG terminal. No such infrastructure construction is currently going on. Constructed with $235 million given by the ADB, the 225MW dual-fuel Khulna power plant, commissioned in 2013-14, has been running at a reduced capacity on diesel as there is no gas supply. In 2019-2020, the plant factor of the Khulna power plant plunged to 0.3 percent, producing a unit of electricity for a staggering Tk 533. BPDB to prepare position paper on its financial and economic condition within a week The best use of the power plant – at 50.5 per cent of its capacity – was recorded in 2017-18. Gas shortage delayed the commissioning of the 718MW JERA power plant at Meghnaghat in Narayanganj, built with $200million ADB loan. Following commissioning, the JERA power plant often remained shut down due to gas shortage. Similar situation caught the two large gas-based Meghnaghat power plants - 583MW and 584MW. The public sector is building four new gas-based power plants worth 1,865MW which are set to be operational by the start of 2027. During the time, another private gas-based power plant worth 590MW will come online beside a 1,247MW coal-based power plant. On August 13, Power Grid Company data showed, power generation peaked at 15956MW at 9:00pm, with 36 percent generated from Gas, 19 per cent from furnace oil, 28 per cent from coal, and 15 per cent from import. The day’s peak generation was achieved using less than 50 per cent of the installed gas generation capacity, 55 per cent of the installed oil generation capacity, and 78 per cent of installed coal generation capacity. Energy transition, replacing fossil fuels with renewable energy, threatens to add to Bangladesh’s stranded asset capacity over time amidst forecast of coal and gas power generations becoming too costly – financially, physically and environmentally, compared with new technologies. “The problem highlights the mismatch between forecast and reality,” said Zahurul Islam, member, generation, BPDB. “Careful planning is needed to deal with the stranded asset problem,” he said, explaining, “Industrial power consumption will have to be increased and construction of new power plants in the pipeline will have to be delayed or cancelled for the time being."

The state-owned Bangladesh Power Development Board (BPDB) has failed to float an open tender for setting up 10 grid-connected solar power plants in the private sector, despite a top-level decision by the Power Division as part of renewable energy promotion. “The officials concerned have not been able to complete their preparations to float the tender, even though the decision is being given the utmost priority by the interim government,” said a source wishing anonymity. Earlier, the Power Division directed the BPDB to float the tender for the development of 10 grid-connected solar power plants in the private sector, each with a capacity of 50 MW, totalling 500 MW. Sources said the move came against the backdrop of the interim government’s decision not to sign any further contracts under the Enhancement of Power and Energy Supply Act (Special) Act, 2010. As a result, the future of 34 proposed private-sector grid-connected solar power plant projects, for which the BPDB had previously issued Letters of Intent (LoI) under the previous Awami League government, has become uncertain. BPDB had selected these firms through the process of ‘unsolicited offer’ under the Speedy Enhancement of Power and Energy Supply Act (Special) Act, 2010. Under this law, the government can award the contract of a project to any private firm without a tender process. Energy experts have criticised this Special Act as the root cause of all corruptions and irregularities in the power and energy sector during the Awami League tenure. Read: BPDB likely to invite tender for setting up 10 grid-connected solar power plants They alleged that many underqualified private companies were awarded power plant projects, significantly increasing costs and contributing to an annual sector loss of Tk 70,000 crore. As a result, after the fall of the Awami League government in a mass upsurge, the Dr Yunus-led interim government assumed office and decided to suspend the law and not sign any further contracts under the Speedy Enhancement of Power and Energy Supply Act (Special) Act, 2010. The interim government’s Energy Adviser Dr Muhammad Fouzul Kabir Khan announced the decision soon after assuming office in the Power and Energy Ministry, saying that all future projects will be implemented through an open tender process. This decision, however, put the private sponsors, who pursued the 34 solar projects, in great difficulty as they had already spent huge amounts of money to procure land and secure the LoI. In such a situation, they expressed their interest to get these projects through a competitive bidding process and secure the contract through open tender. Read: BPDB to prepare position paper on its financial and economic condition within a week “We have decided to initially float a tender for setting up a good number of location-wise 50 MW solar projects. It will help those who have already procured land to get the project through a competitive bidding process,” Senior Secretary to the Power Division Habibur Rahman told UNB about 10 days ago. He said the government is trying to implement solar power projects as part of renewable energy promotion. The private sponsors will set up the plants at their own cost and the BPDB will purchase electricity from the private plants for a specific period of time. “The BPDB will soon float the tender for a number of grid-connected solar projects, each of 50 MW capacity. Mostly, those locations will be selected where power evacuation facilities are available with grid substations,” said the power secretary. He, however, did not provide details of the locations. Read more: Interim govt contemplating new bond issuance to clear BPDB’s dues with pvt power producers  A senior official of the BPDB mentioned that mainly the Independent Power Producer (IPP) Cell-1 has been working on preparing the tender document and site selection. Despite repeated calls over the mobile phone, Director of the IPP Cell-1 Shamsuzzoha Kabir did not respond to queries in this regard.

The government of Bangladesh urgently needs to review the deal with India’s Adani Group, for the sake of the power sector in the current cash crunch. Most officials of the state-owned Bangladesh Power Development Board (BPDB) strongly believe this, noting that the government needs to pay $100 million every month to import electricity from the Adani power plant in Jharkhand. “If the Adani deal is reviewed, and the tariff is reduced, the government can save upto 50 percent of the money it now pays to Adani,” a senior BPDB official told UNB, requesting anonymity as the issue is highly sensitive. The government signed a 25-year power purchase agreement (PPA) in November 2017 with Adani Power under an unsolicited offer, to buy electricity from its 1600 MW power plant in Godda of Jharkhand. It started importing electricity from the plant in April 2023. Besides the Adani plant, Bangladesh has also been importing about 1160 MW of electricity from India, of which about half is from the Indian private sector and the other half through the government arrangement. All are from coal-fired, or thermal power plants. Read more: No reason to get affected ties with India: Foreign Affairs Adviser BPDB officials said currently this import costs about Tk 5.50 per unit (kilowatt hour) from Indian state-owned plants, Tk 8.50 per unit from Indian private sector while Adani’s power costs about Tk 15 per unit. “It means import of electricity from Adani’s power plant costs almost double compared with the average cost of the import under the Indian government’s arrangement,” said the BPDB official. If the government wants to review the deal, this is the time to do the job, he added, saying that the review will bring huge financial benefits for Bangladesh. Many energy experts in Bangladesh have also been criticising Adani's deal. They said that currently, the BPDB needs to pay over $1.2 billion a year and over 25 years, the payment will be $30 billion. If the deal is reviewed, and the tariff is halved, the BPDB can save $15 billion in 25 years. At present, the outstanding bills of the BPDB amount to Tk 45,000 crore because of its purchase of electricity from the private sector and also import from India at a higher rate. Read more: Adani Group seeks new investment opportunity in Bangladesh Energy expert and vice president of Consumers Association of Bangladesh (BPDB) M Shamsul Alam said that the government should immediately take measures to review all unsolicited deals, including Adani’s one. Sources said that after huge criticism in Bangladesh, last year the Adani Group agreed to reduce the power tariff in exporting electricity. But the arrangement was made on an ad-hoc basis and every month the BPDB has to negotiate with the Indian company to set the power price. “But we need a permanent solution to this deal through a review,” the senior BPDB official told UNB.

A move is underway to acquire a 50-acre piece of land by the Dhaka North City Corporation (DNCC) to develop a modern waste management facility alongside the existing Landfill Site (LFS) in the city’s Amin Bazar area. According to official sources, the new site will be an expansion of the current LFS, which was also developed on 50 acres of land.   The current LFS in Amin Bazar is close to being filled up with the waste collected from the areas under DNCC. “The LFS in Amin Bazar is overfilled and went to 80 feet high from the level. Now it has become risky for workers to further fill the land with waste,” Captain Mohammad Fida Hasan, Chief Waste Management Officer of the DNCC, told UNB. DNCC completes sacrificial animal waste removal on second day of Eid He said the DNCC has completed all the necessary procedures to receive the land from the district administration once the allotted fund is released by the Finance Ministry. The DNCC will need Tk 450 crore from the GoB (Government of Bangladesh) fund to acquire the land. Fida Hasan also informed that the new LFS will be developed alongside the establishment of the proposed 42.5 MW Waste-to-Energy power plant which is expected to start power generation from July 2026. When such a power plant is being developed as part of the waste management system, why is such a new LFS required?-responding to such a question, the DNCC Chief Waste Management Officer said that the new site will have different facilities like electronic waste management, medicate waste treatment, and solid waste management. This will require new land to develop the facilities, which also include establishment of a training centre and vehicle parking area. Currently, Dhaka city is collecting 3,000 mts of solid waste from different areas which is about 80 percent of the total waste. DNCC completes 100% removal of sacrificial animal waste within deadline As per a plan, this total waste will be supplied to the Waste to Energy project daily while CMEC will set up an incineration plant to generate 42.5 MW power and BPDB will purchase the electricity from the plant at US21.78 Cents, equivalent to Tk 18.295, per kilowatt hour (each unit) over a period of 25 years. But DNCC officials said if any additional wastes are collected, those will be filled in the new modern LFS. They also said this new system will be developed under its “New Clean Dhaka Master Plan 2018–2032” which was envisioned to introduce “Environmentally Advanced City with Integrated and Sustainable Solid Waste Management: Toward Zero-Waste”. According to the Master Plan, the core target of the DNCC is collecting more waste generated at households by increasing the collection capacity, reducing waste by introducing waste separation and recycling, and minimizing the volume of the remaining waste that goes to the LFS with intermediate treatment so that the lifespan of LFS can be extended. This Master Plan highlights four indicators: waste collection, waste reduction, recycling, and to quantitatively monitor landfill disposal. Read more: E-Waste Crisis: Effects of Electronic Waste on Environment and Human Health

Bangladesh Power Development Board (BPDB) is going to bear the brunt after recent enhancement of US Dollar rate as it will have to spend an additional amount of over Tk 7,300 crore to purchase electricity from the private sector. According to official sources, the BPDB's annual spending was roughly calculated as Tk 104,000 crore for purchasing electricity from the independent power producers (IPPs) for the fiscal year 2023-24. The total expense will now go up to about Tk 1,11,300 crore, according to officials familiar with the estimate this week. But after the increase in the rate of USD by the central bank through the introduction of a crawling peg system, the BPDB has been a great victim of such a decision. The Bangladesh Bank on May 8 unveiled the crawling peg exchange rate system and allowed banks to buy and sell US dollars freely near Tk117, as well as letting go of its regulatory power of the Smart rate, and hiking the repo rate. 360 MW Haripur unlikely to get extension despite low cost electricity: Sources Under this system, a crawling peg mid rate (CPMR) has been set at Tk117 per US dollar with immediate effect. Scheduled banks may purchase and sell US dollars freely around the CPMR with their customers and in interbank deals, the notice also said. A crawling peg system is a method of exchange rate adjustments that allows a currency with a fixed exchange rate to fluctuate within a band of rates. It is a hybrid of fixed and floating exchange rate systems. "The payment mode of the power purchase agreements (PPAs) with the IPPS is in USD. So, we have to incur a huge financial loss when the USD rate goes up", a top official of the BPDB told UNB. As the issue is very sensitive, preferring anonymity, he said the BPDB's loss will be enormous this year as the dollar rate went up in one go by Tk 7 to Tk 117 from the Tk 110. He said the extra burden of paying Tk 7,300 crore will complicate the situation when the International Monetary Fund (IMF) has been insisting on reducing government's loss in buying electricity from the private sector. Differing reserve figures stirring market instability and consumer price hikes He noted that The BPDB has to spend over Tk 12 in each unit of power generation while its average selling rate is about Tk 8.95 with incurring over Tk 3 per unit. "The IMF has repeatedly been putting pressure on the BPDB to raise the electricity tariff to reduce the financial loss. Now, after enhancement of the USD rate, the financial loss will be tough to manage", said another official of the BPDB. He, however, said despite the pressure from the international lending agency, the BPDB has not taken any decision to raise the tariff shortly. Power and energy sector likely to get Tk 804 billion allocation in next two fiscal years "The Power Division and the BPDB have been making their own calculations about the impact of the USD rate enhancement. The final decision will come from the government if any decision is taken politically to raise the power tariff", added. The BPDB annual report reveals that as the single buyer in the power sector, the organisation's operating expense was Tk 93,797.37 in the fiscal year 2023-24.

Haripur 360 MW combined cycle power plant (CCPP), which generates electricity at lowest cost, is unlikely to get extension after completion of its 22-year initial contract period. According to official sources, the power plant, established by leading US company AES Corporation in 2001, completed its successful operational period in November 2023. Since then, the government has not taken electricity from the plant.    The AES Corporation developed two large base-load power plants—Haripur 360 MW CCPP in 2001 and Meghbaghat 450 MW CCPP in 2002—with the highest efficiency, but lowest cost.   As per the power purchase agreement (PPA), state-owned Bangladesh Power Development Board (BPDB) had been purchasing electricity from the two first generation independent power producer (IPP) plants. BPDB officials said that initially, Haripur's power tariff was Tk.1.56 per unit, which is the lowest not only in Bangladesh, but also in the world. According to a World Bank document publicly disclosed on June 24, 2014 which compared the power generation cost of different IPPS, shows that when the Khulna Power Company Limited was selling electricity to the BPDB at Tk 16.03 per unit in 1998, NEPC at Tk 20.20 per unit in 1999, Haripur was selling it at Tk 1.56 per unit and Meghbaghat was selling power at Tk 2.33 per unit. Read more: Bangladesh to provide 190 acres of land in Kurigram for Bhutanese investors; discussion to import hydropower underway Currently, the average generation cost is over Tk 10 per unit. Through a gazette notification issued on March 1, the government set the retail tariff of electricity at Tk 8.95. Officials said, until last year BPDB was buying electricity from the plant at Tk 3.32 per unit which was the lowest among all other private power plants. But in November 2023, the PPA expired and BPDB suspended purchasing electricity from the plant. The BPDB’s such move surprised many as it was unlikely on the part of the government that it unilaterally stopped buying electricity from the most efficient and lowest cost power when it continued purchase of electricity from high cost plants belonging to Summit Group and other plants. “Actually, there was no strong lobby on behalf of the Haripur plant to pursue the government to renew its contract with the BPDB. That’s why the country will be deprived of the low cost electricity,” a top official of the BPDB told UNB requesting anonymity. He, however, said the government can offer the owner-company of the Haripur plant to buy it and operate under the BPDB management. Read more: Power cuts plague Sylhet: Frustration growing among residents and businesses Sources said the USA-based AES Corporation developed the Haripur and Meghnaghat power plants, after a number of changes into their ownership. Now Malaysian Pendekar Energy Limited owns and operates the two plants.          In 2003, AES sold the plants to the UK company CDC Globeleq, which sold the plants to Malaysia-based Pendekar Group in 2007. Official sources said the government had to pay Tk 50-55 crore a month to purchase electricity from the Haripur power plant for its 360 MW electricity. “But from November 2022, the operator of the plant has not been receiving any bills from the BPDB for which it lost interest to continue its operation”, said another source. He also mentioned that BPDB is also not interested to extend its operation as it has  contractual obligation to buy electricity from newly established plants like Summit Group’s Meghnaghat Plant, Unique Group’s Meghnaghat plant and also some coal –fired power plants which electricity cost is between Tk 6.50 to Tk 30 per unit. Read more: First private sector solar project in Bangladesh secures $121.55 million funding from ADB

Bangladesh's State Minister for Power, Energy and Mineral Resource Nasrul Hamid has said that each of the companies of the Petrobangla will be given target to drill wells in the gas fields for hydrocarbon exploration and if they fail, the officials concerned will be removed from  their posts. “Nobody will be speared and no persuasion will be accepted against any failure”, he told a seminar titled: “Gas Demand-Supply Scenario; Scope of Seismic Survey and Enhancement of Drilling Activities to Expedite Hydrocarbon Production” organised by Petrobangla at its auditorium in the city on Thursday (February 15, 2024). Expressing frustration over the activities of the Petrobangla, he said that there is huge deficiency in the organisation and its subordinate bodies to work as a team. “They don’t work in a coordinated manner. As a result, sometimes gas is found in a well, but processing plant remains unprepared  to supply the gas to the national grid,” he said. Read: Dhaka’s air quality still 'unhealthy', 2nd most polluted in the world this morning  “Sometimes it takes 4 years to get gas supply from a well to the national grid,” he added. He said Bangladesh Power Development Board (BPDB) and other entities in power sector have been successful in achieving the goal of 100 percent electricity access as they worked as a team. The seminar, with Petrobangla chairman Zanendra Nath Sarker in the chair, was also addressed by Energy Secretary Md Nurul Alam. Bakhrabad Gas Distribution Company’s Managing Director Anwarul Islam and Petrobangla’s general manager Meherul Hasan made presentation on the topic of the seminar. Nasrul Hamid said the Petrobangla planned to drill 48 wells to produce 500 million cubic feet per day (mmcfd) while the country’s demand will go up by 2000 mmcfd. Read: New executive committee of BSFA pays homage to Bangabandhu  “We’re all looking at Petrobangla to see effective results of its plan…, there is huge prospects in the gas sector,” he added. He said the country has many inefficient captive power plants which efficiency is 20 percent when some new power plants installed with 62 percent efficiency. “If we can divert gas to those efficient new power plants, power production cost will come down by 70 percent,” he noted. In the presentation the Petrobangla officials showed that it has planned to drill 100 wells across the country from which 1500 mmcfd gas will be produced by 2027 when gas demand will go up to 6000 mmcfd. Read more: Nasrul Hamid seeks ADB's help to create regional power market

The government of Bangladesh is caught up in a dilemma in choosing the right option to reduce the gap between the cost of power production and revenues generated from sales. “Top policymakers are divided over whether the government should go for increasing the power tariff further or issuing more bonds through the banking system,” said a top official at the state-owned Bangladesh Power Development Board (BPDB). He said if the government wants to raise the power tariff, either it has to do it before Ramadan or after Ramadan - these are the questions almost every day that are being discussed at the policy level. They are also analysing the impacts of floating more bonds to reduce the burden of soaring losses on the part of BPDB, he added. Read: Retail power tariff hiked 5% to Tk0.19 per unit for lifeline consumers, Tk0.36 on average for others According to official sources, currently, the production of each unit of electricity costs about Tk 12 while it sells at a rate of about Tk 6.7. It means the government has to bear the brunt of Tk 5.3 per unit, a top BPDB official told UNB.      The BPDB’s Annual Report 2022-23 shows, the BPDB, as a single buyer, generated 87,024 million kilowatt hours of electricity in 2022-23 fiscal at a total cost of TK 98,646.42 crore. Its per unit production cost was at Tk 11.33 while it was selling electricity at Tk 6.7 per unit incurring a loss of about Tk 4.63 per unit. The bulk tariff was last raised by 8.06 percent to Tk 6.70 from Tk 6.20 per unit on January 31 with effect from February 2023.  Read more: Over 10,000MW power in 29 projects in the pipeline, despite yawning overcapacity Against this, its revenues were Tk 50,858.25 crore, incurring a loss of Tk 47,788.17 crore, showed the BPDB Annual Report. With this huge loss, the government has been in great trouble as it has to purchase electricity worth Tk 82,778.25 from private sector power producers while it generates electricity worth Tk 13,306.62 crore from its own generation plants. The annual report also shows that the BPDB’s average per unit production cost from its own plants is Tk 7.63, while it is Tk 14.62 at the independent power producers or IPPs (private sector), at rental plants Tk 12.53, at public plants Tk 6.85 and imported power from India at Tk 8.77. The government purchases electricity from the private sector and India in dollars. Read more: Power generation capacity increased by almost 20% to cross 30,000MW in 2023 According to official sources, the government's cumulative outstanding bills have now jumped to about $5 billion, of which the backlog amount in the power sector is about $4 billion (about Tk 43,093 crore), and the remaining $1 billion is in the energy sector. State Minister for Power, Energy and Mineral Resources Nasrul Hamid also admitted the severity of the crisis. “Actually the crisis is not of local currency. Somehow we can manage it. But the main crisis is the dollar. We’re not getting dollars from Bangladesh Bank as per our needs,” he recently told UNB. He noted that the power and energy sectors need at least $1 billion a month to meet payment obligations. Read: Govt to raise retail power tariff this month In such a situation, the government recently introduced a number of bonds through Bangladesh Bank to facilitate the BPDB to clear some dues. “Initially, we have floated bonds worth Tk 5000 crore and it may go up to Tk 12,000 crore,” said a BPDB official on condition of anonymity, adding that it will not be enough to cover the losses, although the government is providing subsidies on a regular basis.     “That’s why the government will have to go for raising power tariff further or introducing more bonds,” he said adding, if more bonds are floated, it may squeeze the private sector’s credit from the banking sector.  But a final decision on what they would do still remains pending. Read more: Power, energy sectors are saddled with $5 billion outstanding payment amid dollar crisis: Sources