The government has drawn up a five-year energy security roadmap focused on expanding LNG import capacity through new terminals, building gas- and coal-fired power plants and adding a second nuclear facility. The programmes are expected to be implemented by 2031.
The roadmap also includes new gas pipelines, a major expansion of renewable generation and measures to address administrative and institutional inefficiencies long plaguing the gas and power sectors. But it sets out no concrete strategy or time-bound action plan for structural reform or for strengthening institutional capacity.
Economists and energy specialists say the government is more inclined to pursue new infrastructure and large-scale projects under the banner of energy security over fixing weaknesses in the existing system.
The plan includes two floating storage and regasification units (FSRUs) in Khulna and Barisal, a 400-megawatt gas-fired power plant fuelled by gas from Bhola, two large coal-fired plants at Matarbari and Payra and a second nuclear facility. Officials view the projects as central to meeting future power and energy demand, but experts argue that the sector’s crisis cannot be solved by construction alone and that failures in existing systems must first be fixed.
Bangladesh already relies on imported LNG to meet domestic gas demand, and the two new FSRUs would deepen that dependence. The coal and nuclear projects would similarly depend on foreign technology, financing, equipment and fuel.
The biggest risk is exposure to volatile international markets. Rising global energy prices, conflict, sanctions or geopolitical disruption could quickly drive up power and fuel costs. Recent crises, during which the government was forced to spend heavily to secure gas and fuel supplies, highlight that risk.
Energy experts and economists say the government should have used that experience to reduce its reliance on imports. Instead, the new terminals and power plants risk entrenching it. Priority should instead go to expanding domestic gas exploration and production, improving the efficiency of existing plants, fixing transmission and distribution bottlenecks and scaling up renewable energy, according to experts. Without such reforms, they warn, new infrastructure will only drive up future import costs and deepen financial exposure.
The country’s domestic gas reserves could form the cornerstone of its energy security, but the key question is whether the government has a credible long-term strategy for expansion. Experts say that before building new terminals, authorities must set clear targets for domestic gas reserves, determine how quickly they can be explored and establish how output from existing fields can be boosted.
Electricity demand is projected to grow by 6 percent a year. Including a 15 percent reserve margin, demand would reach 25,714 megawatts within the next five years. Yet even at that level, the power sector would still hold surplus generation capacity. New plants have nevertheless been approved.
The government’s own roadmap identifies excess generation capacity as one of the sector’s most pressing problems.
Figures from the Bangladesh Power Development Board (BPDB) show peak national demand at about 17,500 megawatts against installed capacity of more than 29,000 megawatts. This idle capacity generates hefty capacity charges, which the government absorbs through annual subsidies. Electricity subsidies reached BDT 520 billion in the 2024–25 fiscal year alone.
The resulting overcapacity costs between $1.5 billion and $1.8 billion a year in capacity charges, which utilities are contractually bound to pay even when plants sit idle. The financial strain on the sector is consequently mounting.
Experts stress that the government should first determine how to reduce the existing surplus capacity, identify which plants remain economically viable and decide which should be closed or restructured before adding new capacity. If the underlying problem is left unaddressed, new projects will only push capacity charges higher in the years ahead.
Economists argue that this burden cannot be lightened unless generation capacity is aligned with industrial demand and low-cost fuel is secured. Any decision to build new plants should therefore be paired with a clear policy to phase down excess capacity.
Dr Fahmida Khatun, distinguished fellow at the Centre for Policy Dialogue, told Bonik Barta that effective institutional frameworks and reform were prerequisites for eliminating inefficiencies in the power and energy sectors.
“We have said this repeatedly in the past. But that reform has yet to happen. Reform is not just necessary, it is now absolutely urgent, especially given the crisis we are in,” she said.
Khatun added that while the strategic framework may have been designed as an emergency response during better times, institutional reform should now take precedence. “We need to prepare to manage immediate problems while simultaneously pursuing institutional reform.”
Financial fragility is another major weakness in the power sector. The BPDB has for years relied on heavy government funds to remain operational. As subsidies have mounted, the utility’s financial position has deteriorated, forcing the government to inject substantial funds regularly to keep power flowing. The BPDB, in turn, uses those subsidies to pay power producers and fuel suppliers. Experts say the sector requires structural financial reform, not merely new projects.
Murtuza Ahmad Faruque Chishty, former managing director of BAPEX, told Bonik Barta that excess capacity was driving up costs, partly because fuel supply was poorly planned when the plants were commissioned.
“The most urgent task now is to ensure the existing power and energy infrastructure is operated efficiently. If these problems are not resolved, costs will rise further and government plans will become harder to implement,” he said.
Regarding the proposed second nuclear facility, Chishty noted that the country’s first nuclear plant was already facing complications despite not yet having begun commercial operations. “Such projects require accounting for loan repayments, operating costs and security,” he said. “The government should also first assess whether it has the financial capacity to build another nuclear power plant.”
The country’s first nuclear plant, built with Russian financing at a cost of BDT 1.38 trillion, has yet to generate electricity. Originally scheduled for commissioning in 2024, the deadline has been repeatedly pushed back, and doubts persist over whether it will come online in 2026. Questions over how the plant will be operated, how its auxiliary power needs will be met and how the loan will be repaid remain unanswered. Former energy officials describe plans for a second nuclear facility as ill-conceived.
While the government’s energy security roadmap also includes plans to build two more LNG terminals within five years, state-owned Petrobangla is already struggling to finance gas supplies, plant maintenance, system repairs and LNG imports from its two existing terminals. Experts question how the state agency can absorb the additional financial liabilities of new terminals and higher import volumes.
Bangladesh’s annual energy import bill has already climbed to between $13 billion and $14 billion. Economists warn that new LNG terminals and increased import volumes could push it beyond $20 billion.
Petrobangla officials estimate that LNG imports could cost more than BDT 900 billion in the current 2026–27 fiscal year, while government import subsidies could surge three- to four-fold from the previous fiscal. Figures from Petrobangla show that Bangladesh spent roughly BDT 2.77 trillion on LNG imports from the start of imports through the 2025–26 fiscal year, on top of BDT 480 billion in subsidies. Former energy officials argue that these figures, alongside the high capital and maintenance costs of LNG infrastructure, must be weighed before approving further terminals.
Industry insiders also point to glaring inconsistencies in the management of domestic resources. About 1.5 trillion cubic feet of gas has been discovered in the island district of Bhola, but a pipeline project to connect the field to the national grid has stalled over a BDT 6 billion funding shortfall. The government now plans to build a 400-megawatt gas-fired plant in Bhola to consume the gas on site.
Experts, however, say piping Bhola’s gas into the national grid would supply existing, underutilised power plants in Khulna and surrounding regions, making far better use of existing assets while integrating domestic reserves into the national system.
BPDB, the power sector’s single buyer, has long operated under severe financial strain. Its growing reliance on independent private power producers has left many of its own state facilities underutilised, even as it continues to shoulder the capital costs of those assets alongside a bloated workforce.
Sector specialists say the state utility requires sweeping reforms to its cost structure, technical capabilities and workforce skills if it is to manage modern grid networks, renewable integration and decentralised generation.
Dr Khondaker Golam Moazzem, president of the Knowledge Hub Institute, said the government’s push for energy security was positive, particularly its emphasis on utility-scale renewables, but stressed that the capacity of the institutions responsible for implementing the policy would be critical.
“State energy entities still rely on workforces accustomed to legacy fossil-fuel systems. Institutions such as the BPDB, PGCB, BERC, Petrobangla and BPC need skills development and structural reform. As renewable energy projects expand, these legacy workforces will struggle to adapt to modern technology, leading to operational disruptions,” Moazzem told Bonik Barta.
The government also plans to add 10,000 megawatts of solar capacity, backed by incentives for utility-scale projects, net-metered consumer purchases, and substantial policy and tax concessions. Yet industry insiders warn that expanding fossil-fuel imports and adding further conventional generation capacity will only drive up costs and compound financial risks.
Hasan Mehedi, chief executive of the Coastal Livelihood and Environmental Action Network, told Bonik Barta: “Building more coal-fired power plants, LNG terminals and nuclear power plants as a means of securing energy supplies is not a sustainable strategy. We are already having to bear the financial and management burden of infrastructure built in the past. Financial and management constraints also mean that we cannot make full use of the capacity already in place.”
“Against this backdrop, further increasing the government’s reliance on energy imports and expanding fossil-fuel-based power generation would do more harm than good. The government has taken several positive steps to promote renewables. But those initiatives have yet to gain momentum, either because of bureaucratic friction or a lack of political will,” he added.
Mehedi stressed that priority should instead be given to maximising existing capacity and improving operational management, warning that there was no alternative to structural reform and cost-cutting measures in the energy sector.
Planning ministry officials defend the roadmap, describing it as a high-level five-year strategic outline, which is why it omits institutional or structural reforms. They contend that such granular detail does not need to be spelt out in the strategy paper.
Dr Monzur Hossain, member secretary of the General Economics Division, told Bonik Barta: “The strategic framework doesn’t specifically address structural institutional reform in the energy security context. It sets out priorities; it’s a guideline. The relevant ministries and divisions will then prepare separate action plans based on these strategic priorities, and Planning Commission divisions will draft their own sectoral plans.”
He said reform measures could be addressed in greater detail during implementation, when the government could identify bottlenecks and determine necessary changes.
“But planning or reform alone won’t solve all the country’s problems,” he added. “Institutional capacity, efficiency, coordination and overall governance matter greatly during execution.”
Addressing the broader energy crisis, Hossain said the government had ordered an increase in renewable generation and a reduction in import dependence to build a sustainable system. “If institutional reform is required to achieve that, it will be done,” he said.