The interim government handed responsibility for power, energy, and mineral resources to Adviser Muhammad Fouzul Kabir Khan after it took office in August 2024. He previously served as power secretary during the 2007–08 caretaker government, when Bangladesh began using rental power plants.
Awami League, now banned, returned to office in 2009 and expanded electricity generation under a special legislation that enabled quick rental plants and independent power producers. The process remained opaque, and the expansion outpaced demand. A review commissioned by the current interim government found that generation increased fourfold during Awami League’s 15 years in power, while costs jumped elevenfold. Bangladesh Power Development Board, or BPDB, emerged from that period in severe financial distress. Officials also signed numerous joint-venture contracts with foreign companies that lacked transparency.
A white-paper committee formed by the interim government later described the power sector as the most corruption-prone sector under the previous administration. Yet more than a year has passed with little sign of improvement. BPDB’s losses have not eased. System losses have edged higher. Bangladesh has made no visible progress on renewable energy despite Chief Adviser Muhammad Yunus’s “three zeros” pledge that includes zero carbon emissions. Ministry officials plan to present their reform plans and progress in the power and energy sector to the chief adviser next week.
BPDB has posted losses year after year. Experts argue that the organisation needs structural reform to reduce its burdens and restore financial health. Data shows BPDB failed to break even despite receiving BDT 620 billion in subsidies in FY 2024–25. Instead, it lost an estimated BDT 98 billion, according to figures now under audit. That deficit has left the organisation struggling to meet foreign payment obligations while accumulating large arrears to domestic plant operators. Previous arrangements still in effect remain unchanged.
Energy specialist Professor M Tamim told Bonik Barta, “I haven’t seen any meaningful shift in the power sector over the past sixteen months. Change would mean reduced financial pressure on BPDB, lower subsidies, and lower production costs. None of that has happened. If we think about what comes next, BPDB must explain what it is doing to cut costs. It must publish its plans. We don’t even know whether new plants are being built or when nuclear power will come online. One improvement has come in the clearing of overdue payments to foreign companies. But arrears to domestic operators remain large.”
“Many LOIs (letters of intent) for renewable power, issued under the previous government’s special law, have been cancelled. But investments have already been committed to several of those projects. Authorities are now talking about shifting from PPAs to merchant power, but the current market structure raises questions about whether that model can work. There has been no structural or procedural change in planning, implementation, or demand assessment. In my view, that required a thorough review.” —Professor M Tamim, Energy specialist
Bangladesh expanded capacity on a massive scale under the previous government. Yet a large segment of that capacity remains idle. Grid bottlenecks have also emerged as operators try to move generated power into distribution lines. Plant construction was put in focus while leaving distribution networks largely unchanged. Rural districts, as a result, have endured years of load-shedding. The interim government was expected to invest in distribution upgrades and modern technology to ease those outages. However, the sector received little attention, leading to rising system losses. Specialists say outdated transmission and distribution infrastructure remains a central cause of prolonged load shedding outside major cities. They argue that power division officials should have prioritised modernising the network.
“PGCB has been trying to reduce system losses in transmission. More development is coming. There is still room to upgrade the system. Distribution companies can explain their own system losses better.” —Dr. M Rezwan Khan, Chairman of Power Grid Bangladesh PLC
A senior PGCB official, speaking on condition of anonymity, said coordinated reform of transmission and distribution is essential and that significant work remains.
BPDB data shows system losses in transmission and distribution stood at 10.06 percent in FY 2023–24 and rose to 10.13 percent in FY 2024–25. Distribution companies continue to post losses of over 10 percent, although transmission losses have eased slightly. Global benchmarks, however, put acceptable system loss at around 2 percent.
The previous government faced heavy criticism for keeping state-owned plants idle while purchasing power from private operators. That pattern pushed BPDB deep into the red while allowing several private companies to flourish. Some operators collected rental payments from BPDB without running their plants at all.
BPDB figures show total generation from state-owned plants, private operators, and imports exceeded 100 billion kilowatt-hours in FY 2024–25. Private producers generated and sold 355.01 billion kilowatt-hours of the total. Output from state-owned plants fell to 347.28 billion kilowatt-hours, down from the previous fiscal year. BPDB increased production from its joint-venture plants, raising output from 106.8 billion kilowatt-hours in FY 2023–24 to 136.75 billion kilowatt-hours in FY 2024–25.
Zero carbon emissions form one pillar of the chief adviser’s “three zeros” agenda, now widely discussed as a global climate goal. Renewable energy is essential to that goal. Yet Bangladesh has made little progress after years of delay. After the interim government came to office, it cancelled all renewable power letters of intent issued under special legislation. The move prompted concern regarding losses in foreign investment, according to project officials. Specialists argue that authorities could have renegotiated tariffs and advanced the projects rather than scrapping them outright.
“Policy was the first requirement for expanding renewable capacity. Those policies have been issued, even if late. But the government cancelled a large number of projects without detailed assessment. Very few projects now remain under implementation. Authorities must ensure new approvals, contracts, and other procedures do not delay delivery or undermine targets. They also need to address investors’ concerns.” —Shafiqul Alam, Lead Analyst for Bangladesh (Energy), Institute for Energy Economics and Financial Analysis
Senior government officials maintain they are pushing the sector forward through several initiatives. They say Bangladesh has adopted a coherent plan for renewables and approved the necessary policies.
“I don’t think it is realistic to ask a government that has been in office for only a year how far it has advanced on renewables. Even so, I can say with confidence that government has taken a firm and determined position. It has set a 30 percent target. Unlike previous targets, this one has come with action. Rather, it is starting the journey of installing solar panel on the roof of every government office.” —Syeda Rizwana Hasan, Adviser, Ministry of Environment, Forest & Climate change, and Ministry of Water Resources
Explaining the government’s approach, Adviser Rizwana added, “Could we shift from gas-fired power to solar within a single year? Coal plants are no longer being built. Gas is a domestic natural resource. Until we secure the full plan and financing for renewables, which cannot be done in twelve months, we still have to supply power and gas. Government must act according to need. It has issued a dedicated policy for renewables. It considers that policy realistic and has begun work accordingly. That marks a major shift from earlier policy.”
Data from the Sustainable and Renewable Energy Development Authority shows Bangladesh now has 1,689 megawatts of renewable capacity, both on-grid and off-grid combined. Of that, 1,059 megawatts feed directly into the grid while the country’s total grid capacity stands at 28,359 megawatts.
“Irregularities and corruption in the power sector under the previous government needed proper investigation. Those who used the special law to build plants and profit from them should have had their contracts disclosed. This government didn’t do that. People pay for electricity. They have a right to know whose interests were protected. Beneficiaries of the previous administration still work across the sector. They remain embedded in various energy and power projects. These matters required investigation. But this government failed to act.” —Iqbal Hasan Mahmud Tuku, Former State Minister for Power, and BNP Standing Committee Member
He added, “A large volume of overdue bills has been cleared. Payments to foreign companies are moving. Since bills are being paid under questionable contracts, we need to know how much these operators are actually owed. Prepaid meters (for gas and electricity) are issuing phantom charges. We still do not know why. These issues required thorough investigation. The government talks about reform across sectors, but where is that reform? What benefit are people seeing? Nothing is visible.”
According to the Ministry of Power, Energy and Mineral Resources, the government has spent the past year pushing subsidy control and cost reduction as its main tools for cutting losses in the power and energy sector. Subsidies stood at BDT 620 billion in FY 2024–25. They have been reduced to BDT 370 billion for the current FY 2025-26. BPDB has launched a wide set of reforms aimed at trimming costs by 10 percent, saving BDT 15 billion already. Service charges on liquid fuel imports have been cut from 9 percent to 5 percent, a move expected to save BDT 4.7 billion this year.
Officials added that tariffs at the Matarbari coal plant have been set lower, saving BDT 25 billion. Ten expired or outdated IPP and rental plants have been shut down, which has saved BDT 5.25 billion. Lower tariffs across state-owned power companies have generated an additional BDT 26.3 billion in savings. A specialist committee is now investigating whether irregularities or corruption occurred in power plant construction under the special law. The panel is due to submit its report to the ministry in mid-January 2026.
Attempts to reach Adviser Muhammad Fouzul Kabir Khan for comment on the overall situation were unsuccessful. He did not respond to calls or to messages sent via WhatsApp.
In remarks published by Bonik Barta on November 29 in a report titled “Bangladesh faces major economic pressure from misguided fuel and power policies”, Adviser Muhammad Fouzul Kabir Khan said, “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.”
[The November 29 report titled Bangladesh faces major economic pressure from misguided fuel and power policies was originally published in Bangla, which was then rewritten for the English edition. Click here to read the original report.]