State-owned and autonomous organisations operating in key sectors such as power, energy, transport, construction, telecommunications, water supply, healthcare, and agriculture are facing serious structural and financial challenges. The Finance Division’s recent assessment found that 81 percent of the country’s state-owned enterprises (SOEs) are currently exposed to moderate to very high levels of financial risk. Among them, major public service entities such as BPDB, DESCO, DPDC, BAPEX, Titas Gas, Jamuna Oil, TCB, BRTC, and Biman Bangladesh are classified as being at high to very high risk.

Relevant stakeholders believe that years of irregularities, inefficiency, bureaucratic control, and political influence have led these organisations to operate in the interest of particular groups rather than on a commercial basis, resulting in persistent losses over many years.

Despite state-owned enterprises playing a critical role in maintaining macroeconomic stability and supporting revenue management in Bangladesh, they have increasingly become a major source of structural and financial risk. Several large SOEs in the power, energy, and transport sectors have been operating at continuous losses. Every year, these institutions require substantial financial support from the national budget in the form of subsidies, grants, or loans, creating significant pressure on government revenue management. In most cases, the government provides sovereign guarantees against loans taken by state-owned enterprises. If these institutions fail to repay their debts, the liability ultimately falls on the government, creating a major hidden risk for fiscal management.

The growing volume of unpaid loans taken by government institutions from state-owned and some commercial banks has contributed to rising non-performing loans in the banking sector and has deepened liquidity pressures. Years of mismanagement, favouritism, and weak governance have severely undermined the capacity of state-owned enterprises. Compared to the private sector, SOEs have limited adoption of modern technologies and significantly lower labour productivity. Their production and operating costs are comparatively high, making it difficult for them to compete in the market.

In many cases, the prices of essential goods and services such as electricity, fuel, and fertiliser are set below production costs. Due to political and social considerations, prices are often not adjusted in line with market realities, causing these institutions to become chronically loss-making entities.

The country’s mega project-driven economic model has relied heavily on foreign borrowing. Given the current pressure on foreign exchange reserves and the slowdown in export earnings, the capacity to repay these external debts and their associated interest obligations has come under serious risk.

The Medium-Term Macroeconomic Policy Statement for FY 2026–27 to FY 2028–29, prepared by the Finance Division, includes an assessment of the financial risks facing the country’s state-owned enterprises. The evaluation examines specific contingent liabilities arising from sovereign loan guarantees provided to these institutions, indirect liabilities stemming from the potential need to recapitalise loss-making entities, and the opportunity cost associated with the lack of returns on government equity investments.

The risk assessment was conducted using seven financial indicators based on the institutions’ profitability, liquidity, and debt-servicing capacity. Risks were measured on a scale of 1 to 5. Financial reports of 122 state-owned enterprises and agencies were analysed for the assessment. Among them, 50 institutions were classified as facing moderate risk, 30 as high risk, and 19 as very high risk. Altogether, the total liabilities of these 122 institutions amount to around BDT 8.33 trillion, of which 62 percent is concentrated in 49 entities categorised as high- to very high-risk.

Former Senior Secretary of the Finance Division Mahbub Ahmed told Bonik Barta, “There’s no economic justification for the state to continue operating loss-making sugar mills, jute mills, or textile mills. These facilities should be closed, and the government could utilise the vast amounts of valuable land under their control for more productive purposes. But it would be self-destructive to hand over critical sectors such as electricity, energy, water services (WASA), essential public transport (BRTC), or emergency market stabilisation mechanisms (TCB) entirely to the private sector. Even in developed countries, ownership of such public-interest institutions remains in government hands. There are no sound economic reasons behind the losses or financial risks faced by these organisations. The real problems are managerial inefficiency, bureaucratic control, and political interference.”

Referring to DESCO as an example, the former senior secretary said, “Only a few years ago, DESCO was a highly profitable company and one of the leading firms in the capital market. But the institution has come under risk because professionals were replaced by joint secretaries from ministries or politically connected individuals appointed as chairman and managing director. In the power sector, flawed policy models, such as purchasing electricity from private producers at high prices, have forced many institutions into losses. In many cases, excessive staffing beyond operational requirements has further increased losses.”

He added that there are two main solutions to the crisis: “First, commercially unviable and unnecessary mills and factories should be closed or privatised. Second, strategically important and sensitive institutions should be free from bureaucratic and political influence and operated on a fully commercial basis by independent and competent professionals.”

The long-loss-making Bangladesh Power Development Board (BPDB) is currently categorised as being at very high financial risk. The organisation scored 4.83 out of a maximum risk score of 5. BPDB has accumulated substantial financial deficits by purchasing electricity at high prices and selling it at lower rates. As of the end of FY 2024–25, the board’s accumulated losses totalled approximately BDT 1.12 trillion. During the fiscal year under review, BPDB incurred a net loss of BDT 170.21 billion, compared with BDT 87.64 billion in FY 2023–24.

The organisation also received BDT 370 billion in government subsidies in FY 2025–26, according to BPDB sources. In the previous fiscal year (FY 2024–25), the subsidy amount stood at BDT 620 billion. Since FY 2007–08 through the last fiscal year, BPDB has received a cumulative BDT 2.4 trillion in subsidies.

A significant portion of BPDB’s expenditures is spent on capacity charge payments. Despite successive increases in electricity tariffs, the organisation has been unable to escape its cycle of losses. Nearly 40 percent of the wholesale selling price per kilowatt-hour (unit) of electricity is currently allocated to capacity charge payments.

BPDB Chairman Engineer Md Rezaul Karim told Bonik Barta: “The financial crisis in the power sector, particularly at BPDB, has existed for a long time. To help the organisation overcome this situation, we’ve reviewed the tariffs of government-owned power generation companies. A committee is also working on reviewing the tariffs of jointly owned companies. Work is ongoing regarding the Independent Power Producers (IPPs) as well. This situation didn’t develop overnight, and we’re trying to address it.”

Other organisations classified as facing very high financial risk include: Maddhapara Granite Mining Company Limited, Dhaka Leather Company Limited, Shyampur Sugar Mills Limited, Joypurhat Sugar Mills Limited, Rajshahi Sugar Mills Limited, Natore Sugar Mills Limited, Kushtia Sugar Mills Limited, Mobarakganj Sugar Mills Limited, Pabna Sugar Mills Limited, Faridpur Sugar Mills Limited, Renwick Jajneswar & Company Limited, National Tea Company Limited, and Bangladesh Road Transport Corporation (BRTC).

An additional six institutions in the power sector are facing high financial risk. Among them is Dhaka Power Distribution Company Limited (DPDC). DPDC purchases electricity from BPDB and supplies it to consumers in parts of Dhaka and Narayanganj. In a proposal submitted to the Bangladesh Energy Regulatory Commission (BERC) seeking electricity tariff adjustments, the company stated that it has continued to incur financial losses due to electricity purchase costs and foreign exchange rate fluctuations, despite reducing its overall operations and maintenance expenses to reasonable levels.

According to DPDC, net loss after tax in FY 2022–23 was BDT 6.43 billion, BDT 3.03 billion in FY 2023–24, and BDT 1.37 billion in FY 2024–25.

In its report submitted to BERC, DPDC warned that unless electricity tariffs are increased, declining revenue, rising operating costs, and foreign exchange-related losses would gradually turn the company into a financially distressed institution. But BERC has already approved electricity tariff increases for all power-sector entities.

Another company on the list of organisations facing high financial risk is DESCO, which is responsible for electricity distribution in another part of Dhaka. The company has spent substantial amounts on projects aimed at upgrading its power distribution network, including the implementation of SCADA systems, prepaid meters, ERP systems, and several other initiatives. Its sole source of revenue is electricity sales to consumers. Retail electricity tariffs have not risen at the same pace as wholesale electricity prices have increased over the past several years, resulting in reduced income, according to the company.

Other power-sector entities at high financial risk include Ashuganj Power Station Company Limited (APSCL), Electricity Generation Company of Bangladesh PLC (EGCB), West Zone Power Distribution Company Limited (WZPDCL), and Northern Electricity Supply Limited (NESCO).

The financial risks are not confined to the power sector. Seven organisations in the energy sector are also facing high financial risk. Among them, the state-owned Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) is categorised as being at very high risk. The company is engaged in gas exploration and production within the country. But the volume of gas it currently produces has made it increasingly difficult to sustain its operations through generated revenue.

Under the government’s 50-well drilling programme, BAPEX is responsible for drilling approximately one-third of the wells. To finance these activities, the company has purchased drilling rigs and relied on funding from the Gas Development Fund (GDF) as well as loans from various foreign organisations.

Other financially vulnerable entities in the energy sector include Jamuna Oil PLC, Titas Gas Transmission and Distribution Company, Bangladesh Gas Fields Company Limited, Bakhrabad Gas Distribution Company Limited, Gas Transmission Company Limited (GTCL), and Jalalabad Gas Transmission and Distribution System Limited.

Another institution identified as facing high financial risk is the national flag carrier, Biman Bangladesh Airlines. Since its establishment, Biman has benefited from extensive government support, including infrastructure development assistance, aircraft acquisition financing, sovereign guarantees, and exclusive rights to provide ground-handling services at the country’s airports. Despite receiving these advantages, the airline has not succeeded in establishing itself as a high-quality carrier over its 54-year history. Instead, the organisation continues to face significant financial challenges due to recurring losses, large debt burdens, and substantial liabilities.

The airline currently carries BDT 74.78 billion in debt, according to information from Biman’s audit report for FY 2024–25. It also owes approximately BDT 80 billion to the Bangladesh Petroleum Corporation (BPC) and the Civil Aviation Authority of Bangladesh (CAAB). Biman has also signed an agreement with Boeing to purchase 14 new aircraft, with the total contract value exceeding BDT 450 billion.

The state-owned transport operator Bangladesh Road Transport Corporation (BRTC) incurred a loss of BDT 880 million from its bus and truck operations during FY 2024–25. The corporation currently has BDT 14.86 billion in long-term debt, according to its audit report.

BRTC has become a chronically loss-making organisation due to operational inefficiencies, an ageing fleet of buses and trucks, excessive staffing relative to operational needs, and the inability to utilise its assets effectively.

BRTC Chairman Abdul Latif Molla acknowledged the organisation’s continuing losses and growing financial pressure. Speaking to Bonik Barta, he said: “Since its establishment, BRTC has received approximately BDT 110 billion in loans from the government at different times. New vehicles were added to the fleet through foreign-financed projects in 2004, 2012, and most recently in 2018–19. On the one hand, no new vehicles are being added, while on the other, the corporation is facing substantial financial and manpower pressures.”

“During the previous government’s tenure, a lack of foresight and expectations of future fleet expansion led to the recruitment of excess personnel. As a result, monthly salary and allowance expenditures for officers and employees increased from BDT 80 million in FY 2022–23 to BDT 120 million last year. Following a government decision to raise salaries by 20 percent, the monthly expenditure has now reached nearly BDT 140 million,” he further stated.

He added: “If salaries increase by another 50 percent in the future, BRTC will find it impossible to bear the additional burden without acquiring new vehicles. Increasing revenue is the only viable option available to the corporation.”

Another organisation classified as facing high financial risk is the Bangladesh Inland Water Transport Authority (BIWTA). BIWTA incurred a total loss of BDT 5.32 billion while conducting its operations during FY 2024–25, according to its audit report. The authority’s long-term liabilities currently stand at BDT 10.13 billion.

Several state-owned fertiliser factories have also been identified as facing high financial risk. Shahjalal Fertilizer Company Limited recorded a loss of around BDT 1.34 billion in FY 2024–25, according to the Ministry of Industries’ annual report. Besides, Chittagong Urea Fertilizer Limited (CUFL) incurred a loss of BDT 332 million during the same period.

The ministry’s report attributed these losses to several factors, including failure to receive natural gas continuously at the required pressure and volume specified in plant design; rising prices of production inputs and raw materials; increasing expenditures on spare parts and maintenance; shortages of working capital; and higher transportation costs. These challenges have significantly affected the operational and financial performance of the state-owned fertiliser manufacturing sector.

State-owned sugar mills, which have been incurring losses for years, are also classified as facing high financial risk. According to the Bangladesh Sugar and Food Industries Corporation (BSFIC) under the Ministry of Industries, the 15 sugar mills under its control recorded a combined loss of around BDT 6.79 billion in FY 2024–25. These mills have been continuously generating substantial losses for the government over a prolonged period.

Several other entities have also been identified as being in the high-risk category. These include Chatak Cement Company Limited, Dhaka Leather Company Limited, Atlas Bangladesh Limited, Khulna WASA, and Trading Corporation of Bangladesh (TCB).

The Finance Division has emphasised the need to shift away from traditional economic models to make state-owned enterprises (SOEs) profitable and sustainable. It has called for a rigorous reassessment of the quality of assets and the magnitude of liabilities of these institutions. Key recommendations are removing unnecessary legal complexities to create a business-friendly and competitive environment, ensuring accountability under commercial principles for state-owned enterprises, restructuring boards and management with professional, depoliticised leadership, ensuring full transparency in financial transactions and debt management, and preventing wastage of public tax money.

The division also noted that several of the 122 SOEs assessed were unable to submit financial reports within the stipulated time. Many have also been accused of failing to prepare audited financial statements. The Financial Reporting Council (FRC) had earlier instructed 392 state-owned companies, agencies, corporations, authorities, and institutions to submit financial reports. But 284 institutions failed to comply. FRC officials suspect that many of these entities may not have prepared proper financial statements at all.

Dr Mostafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (INM), told Bonik Barta that nearly all state-owned enterprises in the country are chronically loss-making. He stated: “This isn’t a new problem. Historically, they’ve been on a trajectory of decline due to corruption, abuse of power, and poor management, and have survived mainly on government subsidies.”

He argued that to build a dynamic “new Bangladesh,” it’s not feasible to move forward while carrying such a heavy financial burden. He further added, “Now is the time to take a final decision on this issue. Under a comprehensive policy framework, we must clearly assess which institutions should remain in the public sector and which should not. For example, even in our region, including countries like Pakistan (e.g., PIA), privatisation has been undertaken to address losses in state-owned airlines. If private airlines or sugar mills can operate profitably in the same market, why should state-owned entities continue to incur losses year after year? The problem clearly lies in management. So institutions that remain in the public sector must be freed from bureaucratic control and operated on a fully commercial basis. Those that can’t be sustained should, if necessary, be transferred to the private sector.”