Bangladesh’s per capita primary energy use stands at 3,048 kilowatt-hours in 2024. Per capita electricity consumption is 661 kilowatt-hours for FY 2024–25. The country uses far less energy and electricity than advanced economies and even peers with similar economic size. Yet the government now spends about one-third of its revenue just to secure that limited supply. Consumers face steady price increases to cover import bills. Petrobangla’s finances have weakened under an import-dependent policy. On the other hand, power generation capacity kept climbing over the past 15 years even as demand lagged. The Bangladesh Power Development Board (BPDB) cannot cover the mounting capacity charges for unused plants, and it relies on government support to close the gap. This mix of import dependence and flawed policies has pushed business costs higher across the economy. Entrepreneurs say the rising burden has hurt existing investments and deterred new ones, while households face constant price pressures. The ousted Awami League government left behind large unpaid bills in the energy sector, and the interim government has not been able to clear them.
People working in the sector say these policy failures have created a significant drag on the county’s broader economy. They note that the interim government has been in office for almost 18 months. Yet the financial strain in the power and energy sector has barely eased. Consumers had expected reforms that would cut import dependence, curb corruption, and streamline operations. Although the government has made some legal changes, it has not delivered significant financial relief. They also point out that the authorities have taken no visible action on the irregularities, mismanagement, and corruption that plagued the sector in earlier years.
The ousted Awami League government drafted the first Power System Master Plan in 2010. Seven years later it released the Gas Sector Master Plan 2017. Both plans were meant to strengthen domestic and sustainable energy management. Instead, implementation saddled the electricity and energy sector with heavy liabilities. The push to expand generation capacity, slower-than-projected growth in electricity use, and rising fuel imports amid gas shortages all forced repeated increases in gas and power prices. Households and businesses absorbed the cost.
Experts have criticized these policies and choices for years. After the interim government took office, expectations rose for better governance and structural reforms that could stabilize the sector and ease pressure on public finances. Energy specialists say those opportunities remain largely unmet.
Bangladesh’s economy faces its heaviest pressure from imported fuel and electricity. The country brings in a vast volume of petroleum every year, and that import bill now accounts for roughly 19 percent of the national budget. The final estimate for FY 2025–26 is still pending, but the Bangladesh Petroleum Corporation (BPC) imported at least BDT 760 billion worth of fuel in FY 2024–25. The global market offered a rare opportunity in 2025 as crude prices fell below 60 dollars a barrel under the West Texas Intermediate (WTI) benchmark, the lowest level in five years. Bangladesh could not seize that opening. The country lacks storage and refining capacity, so it continues to buy refined fuel at higher prices. Consumers see no relief or price decrease.
The county’s gas shortage has dragged on for years. Industry depends on gas, yet supply constraints have cut output across key sectors, especially textiles. Business owners say the previous government raised industrial gas prices with promises of reliable supply that never materialized. The interim government has not solved it either.
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told Bonik Barta, “Gas supply was the sector’s biggest problem for years. Past governments raised prices on the claim that uninterrupted supply would follow, and factory owners paid. We expected the interim government to clean up corruption and bribery in gas distribution. Instead, the only real reform we saw was in labor. Gas shortages have cut factory output by 35 to 40 percent. Gas remains the main obstacle. There was an expectation of stable supply, which hasn’t been met.”
Officials have discussed fixing the gas shortage for years, but the problem persists. Industry has faced repeated price hikes instead of solutions. Mohammed Amirul Haque, managing director of Premier Cement Mills PLC, told Bonik Barta, “Increasing gas prices is often shown as a quick fix, but supply has only tightened. Long-standing promises went unfulfilled while planning gaps and flawed strategies created deep uncertainty across industrial production.”
Plans for the power sector centered on expanding generation capacity. Officials increased capacity each year on the assumption that demand would rise. It never matched those projections. Yet capacity kept climbing. Total installed capacity now stands at 28,949 megawatts across on-grid and off-grid systems. However, actual generation peaked at 16,794 megawatts even during periods of heavy demand. The gap forced the government to pay capacity charges for idle plants year after year. Between FY 2009–10 and FY 2023–24, those payments totaled BDT 1.33 trillion. Several plant owners collected the payments without running their facilities. The government spent BDT 2.37 trillion on subsidies for the sector over 16 years.
Officials have long discussed reducing fossil fuel use and expanding renewable energy. The previous government expressed that ambition largely on paper. Fossil fuels still dominate the sector. The interim government scrapped a special provision meant for quick enhancement of electricity and energy supply, which canceled the preliminary approvals of power plants issued under it. The government said it would expand renewable projects through open tender. Developers, however, have shown little interest. That shift slowed renewable growth. Energy analysts argue the government needed a clearer strategy and faster policy decisions. They say two factors continue to drive financial pressure in power and fuel: the failure to cut primary fuel imports and the lack of structural reform.
“The financial burden in the power and energy sector has not eased through recent reforms,” said energy expert Professor M Tamim. “The main pressure still comes from primary fuel imports. Local supply has not expanded. The government managed some legal reforms, cleared arrears, and tightened spending. But those steps have not changed the fundamentals.”
Bangladesh borrowed heavily from foreign lenders to build large power plants, including the 1,200-megawatt Matarbari coal plant and facilities in Rooppur, Rampal, and Payra. Critics have long alleged that significant sums from those loans were siphoned off through corruption and irregularities. Similar allegations surround the Adani power project. The interim government formed committees to investigate the claims, but it has yet to show visible progress on any of the cases.
After the Awami League was ousted, the sector’s biggest challenge was its accumulated debt. The interim government said the previous administration left at least $3.2 billion in arrears, which it has reduced to roughly $600 million. Those payments drew broad criticism. Even as the government cleared a large share of the dues, it never examined whether the amounts claimed by companies were justified.
Foreign arrears have now been settled, but domestic dues to local power producers have climbed again and exceeded BDT 270 billion.
Bangladesh now depends heavily on imported fuel. The gas sector, in particular, relies on large volumes of imported LNG each year. Officials once spoke of investing in exploration to expand domestic supply and gradually cut LNG imports. Instead, imports kept rising. LNG purchases over the eight fiscal years from FY 2018–19 to FY 2025–26 total BDT 2.56 trillion. That outflow of foreign currency has weakened Petrobangla to the point of near insolvency.
Poor planning has created a mismatch across the energy sector. Power capacity expanded while gas shortages deepened. BPDB prolonged the shutdown of gas-fired plants because it could not supply fuel and paid rent on idle units for years. Those payments pushed BPDB into financial distress. The interim government suspended the special provision that enabled fast-track power deals, but it cannot cancel most of the projects approved under the ousted Awami League. As a result, at least 7,100 megawatts of new capacity will come online by 2028. Although some plants will retire over that period, most of the new units are coal- or gas-based. The government has not laid out how it plans to supply gas to them.
The country’s fertilizer factories have struggled for several years because the government diverted gas to keep the power system running. Low domestic output forced large fertilizer imports. The government has now raised gas prices for fertilizer plants to more than BDT 13 per unit, saying it wants to restore supply. Sector analysts argue that the government could have retired several inefficient gas-fired power plants and redirected that fuel to fertilizer factories under a clearer and more deliberate plan.
Mostafa Kamal, chairman and managing director of Meghna Group of Industries (MGI), said his company has invested more than 600 million dollars in the Cumilla Economic Zone. Speaking to Bonik Barta, he said, “We are not the only ones, many local and foreign investors have approached us with plans to commit large sums, but they backed away because they could not get firm assurances on gas supply. Years have passed, yet the zone still lacks basic utilities like gas and electricity. When investors put money into an economic zone, they expect the government to provide essential services. That was the government’s commitment. But it has not been honored. We are asking for foreign investment while our own industries struggle with fuel shortages. We cannot start production because gas and power remain uncertain, but the interest on our project loans keeps piling up. How are we supposed to absorb these losses?”
Power generation has increased. But weak transmission and distribution networks still make it difficult to deliver electricity across large parts of the country. Reliable service in those areas could have helped small and cottage industries grow, which in turn would have supported economic activity and boosted government revenue. The sector’s long-term planning allowed room for that. However, the opportunity was never fully used.
The government says it has carried out several legal and procedural reforms and sees room for more. Senior officials argue that an integrated plan now in development will help stabilize the sector and put it on a sustainable footing.
Regarding the issue, Muhammad Fouzul Kabir Khan, adviser to the Ministry of Power, Energy and Mineral Resources, told Bonik Barta, “The previous government left behind a set of plans whose logic was widely questioned. That is why the sector accumulated such a large volume of liabilities. When we took charge, outstanding dues stood at 3.2 billion dollars. They are now down to roughly 500 to 600 million. We are preparing an integrated master plan for power and energy. We are drafting it ourselves and will incorporate views from domestic and international experts. The chief adviser will review the plan on the fifteenth of next month. We want to show how we found the sector, where it stands now, and where it should go next. We intend to lay out a clear roadmap so the next government can follow it. We have already introduced several reforms (in the power and energy sector). While we cannot do everything, the roadmap will identify the areas that need further work.”
After taking office, the interim government suspended the special provision that governed fast-track power and energy projects. It also revoked an executive order and restored the Bangladesh Energy Regulatory Commission’s authority to set gas and electricity prices. The government formed a national committee to review the contracts signed under the ousted Awami League’s special law. It removed secretaries from their roles as board chairs of state-owned energy and power companies, changing the governance structure. It also moved to review tariffs for private power plants, especially furnace oil units. At the same time, it began work to carry out the Awami League-era plan to drill 100 exploration wells for gas.