The Bangladesh Power Development Board (BPDB) requires large monthly subsidies to bridge the deficit between generation costs and sales revenue. In March, the Finance Division released BDT 20.67 billion to clear overdue bills owed to independent power producers (IPPs) and rental plants. The conditions prohibit using the money for imported electricity, restrict payments to the bills of 94 IPPs and rental plants, and exclude any plant lacking approval from the Cabinet Committee on Government Purchase. Power Division and BPDB officials say these restrictions will compound the strain on supply management, layered as they are onto heavy payment arrears and fuel shortages.

The Finance Division has also ordered BPDB, as a condition for future subsidies, to bring capacity charges to a rational level, adjust the current tariff, maintain separate monthly loss accounts for IPPs, rental and quick-rental plants, and submit a dedicated report from May on the subsidy tied to purchasing and selling electricity from those plants.

The instructions were set out in a letter signed by Deputy Secretary Md Zakir Hossain of the finance ministry and sent last week to the power division secretary, with a copy to BPDB Chairman Md Rezaul Karim.

The letter confirmed that financial losses of private and rental plants up to February had been settled, and that the March allocation under the revised budget for the 2025–26 fiscal year was earmarked for 85 IPPs and nine rental plants. It listed 13 conditions, restating the bar on payments for imported electricity and the exclusion of two plants that lack cabinet committee approval.

Power Division and BPDB officials said the gap between generation cost and sales revenue remains vast, and arrears have continued to pile up even after the monthly subsidy. Outstanding bills across state-owned, private and joint-venture plants now exceed BDT 523 billion. To keep generation steady, BPDB normally uses its own revenue and the monthly Finance Division releases to offset bills across power companies. But officials warned that, with large arrears, the new subsidy conditions would further strain supply management, disrupting payments for imported electricity and raising the risk of a supply crisis.

Bangladesh holds a 2,760 MW import agreement with Adani Power and is currently drawing about 2,000 MW. By April, unpaid import bills stood at BDT 38.92 billion, the bulk owed to Adani Power. Adani has already written to the Power Division and BPDB demanding payment and warning it would curtail supply if the arrears remain unsettled.

BPDB officials explained that the subsidy and its own revenue are normally pooled to offset bills across generation companies. The new restrictions will halt any payment for imported electricity, which means the routine partial settlement of arrears might now stop.

Two new plants have entered service: a 160 MW unit at Sherpur owned by BR Power Gen, and a 1,320 MW coal-fired plant in Patuakhali built by RPCL–NORINCO International Power Limited (RNPL) with Chinese financing. The Power Division has already said the RNPL plant will begin supplying at full capacity in the first week of May. BPDB is currently offtaking power from one unit, and bills for that output are swelling each month. The Finance Division, however, has barred the use of the subsidy fund to settle RNPL’s bills because the plant lacks approval from the cabinet committee.

The Finance Division further stipulated that BPDB must attach a breakdown of which companies’ bills were paid with each monthly release to the subsequent month’s subsidy proposal. To ease subsidy calculation, the board must also report separately on losses arising from the purchase–sale price gap for IPP and rental power, from its own mixed-fuel usage, and from wholesale sales depressed by low tariffs.

A senior Power Division official, speaking on condition of anonymity, told Bonik Barta on April 25, “The Power Division has never before faced such conditions on a subsidy release. We have repeatedly told the Finance Division that subsidies are rising because we have to import fuel to generate power; and now they are attaching conditions that will make generation and supply management much more challenging.”

Asked about the matter, BPDB Chairman Md Rezaul Karim told Bonik Barta: “Conditions of this kind will seriously affect power generation and supply management. Meeting them at a time of acute national demand will be extremely difficult.”

The board, he said, juggles the subsidy and its own revenue to keep plants operational, settling bills around the 12th to 15th of each month. “We’re trying to keep the oil- and coal-fired plants running with the money we get, and paying the others in limited amounts just to keep them alive. It’s very hard to sustain operations under these restrictions. We’ll take the matter to the finance ministry.”

The power subsidy for the current fiscal year stands at BDT 370 billion. The Finance Division releases between BDT 30 billion and BDT 35 billion each month; through February it had disbursed a total of BDT 260 billion. The Power Division has now requested an additional BDT 20 billion every month from March through December. If the extra amount is provided for the remainder of this fiscal year (March to June), the full-year subsidy will reach BDT 450 billion. That would still be at least BDT 170 billion less than the subsidy booked in FY 2024–25.

To keep supply steady, Petrobangla imports huge volumes of liquefied natural gas every month. The Middle East war has nearly doubled the import price for LNG — the largest share of which is burned for power generation. Furnace oil is also being procured at elevated prices. Those fuel costs have driven up generation expenses. Against that backdrop, the Finance Division’s stiff conditions could add severe strain to the sector — though the ministry insists the flow of funds will not be disrupted.

Iqbal Hasan Mahmud Tuku, the minister for power, energy and mineral resources, told Bonik Barta: “The finance ministry always attaches some conditions like these when it releases funds, but it still releases the money. This is an internal ministry matter. We have discussed it. I don’t expect any difficulty given the current situation.”