The state-run Bangladesh Power Development Board’s net loss ballooned to BDT 170.21 billion in FY 2024–25, an increase of more than 94 percent from the BDT 87.64 billion loss recorded the previous year. The surge came despite a series of interventions by interim government’s power, energy and mineral resources adviser, Muhammad Fouzul Kabir Khan. His measures included pushing cost savings, repealing a special law for the power sector, boosting output at state-owned plants, and renegotiating tariffs. Yet none eased the sector’s severe financial strain. Instead, with net losses of the power sector’s single buyer BPDB increasing, the influence of the private sector has grown stronger as output from state-owned power plants has declined.
The ousted Awami League government left a heavy burden of debt and liabilities for the power sector. To address this, the interim government provided nearly BDT 600 billion in subsidies last fiscal year, including BDT 274.39 billion in arrears carried over from earlier periods. Even after this level of state support, average power generation costs continued to rise. Meanwhile, average system losses across transmission and distribution networks increased.
Experts offer a bleak assessment, arguing that initiatives billed as reforms have failed to reduce the sector’s financial burden. They contend that without structural overhauls, the crisis cannot be resolved. Continuing on the present course, they warn, will deepen losses; adding further excess capacity will push the sector towards even greater financial peril. Several immediate and difficult decisions were required to restore balance, according to their analysis. These included reassessing unnecessary and high-cost power plants, cutting capacity payment burdens, renegotiating long-term contracts and ensuring generation plans are strictly demand-driven. But the interim government and its power division failed to take these steps.
Energy expert and vice-chancellor of Independent University Bangladesh, Professor M Tamim, told Bonik Barta, “There’s no question of costs coming down in the power sector. That’s because no work has been done that would amount to structural reform. Some contracts have been cancelled, and a merchant power policy has been formulated to move away from the PPA (power purchase agreement) model. These are matters for the future. For the power sector to emerge from financial losses, it must move away from BPDB’s monopoly. The Power Division implements the plans and decisions drawn up by BPDB itself. The processes through which the agency generates, purchases, and sells electricity, and how rational these are, need to be thoroughly scrutinised by the Power Division. As long as the sector remains within this process, it won’t be able to come out of losses.”
During FY 2024–25, BPDB spent over BDT 1.21 trillion to supply electricity nationwide. Sales revenue amounted to roughly BDT 693.83 billion. To cover the gap, the finance division provided a subsidy of BDT 386.36 billion. The board still posted a net loss of BDT 170.21 billion.
The sector’s deep losses stem from a persistent gap between power purchases and sales, excess capacity far beyond demand, capacity charges paid for idle plants, and large system losses. Introducing structural changes to address these problems formed part of interim government’s reform agenda to make the sector profitable.
For years, allegations have persisted that BPDB buys high-cost power from private independent power producers. A key criticism is that large volumes are purchased from IPPs while government-owned gas-based plants remain underused, further driving up costs. Despite repeated official claims of cost-cutting reforms, the reality is different. Data shows that in FY 2024–25, electricity purchases from IPPs cost BDT 720.71 billion — the highest on record and BDT 146.94 billion more than the BDT 573.77 billion spent the previous year. This sharply contradicted the national budget for the period, which had projected private sector power purchases would fall to BDT 439.87 billion.
Power purchased from private sector in FY 2024–25 totalled 100,309 million kilowatt-hours. Per-unit cost rose to BDT 14.45, up BDT 1.4 from the previous year. The increase directly lifted average power production costs, which climbed to BDT 12.1 per unit from BDT 11.35.
Persistent losses across transmission and distribution add another cost burden. A core aim of the reform programme was to bring these losses down to standard levels. Despite repeated claims of reducing system losses in transmission and distribution, overall average system loss rose to 10.13 percent in 2024–25 from 10.6 percent the year prior, remaining well above global benchmark of 8 percent.
While the current government has pledged to gradually withdraw subsidies to curb financial drain, official figures show a sharp discrepancy. BPDB’s accounts record a subsidy of BDT 386.36 billion for 2024–25, while a Power Division document puts the figure at BDT 596 billion.
Interim government has argued that higher subsidies help pare legacy debts. Official data shows government cleared $3.2 billion, about BDT 390 billion, in the power and energy sectors’ overdue payments last year, including a large sum owed to Adani. Over the same period, however, arrears to private power companies rose by about BDT 270 billion. Authorities have said BDT 200 billion of these dues will be cleared to ease load-shedding during summer months.
BPDB purchases fuel oil and gas from the international market and supplies it to power plants. Global fuel prices have recently hit a three–year low, with oil trading at about $60 a barrel and gas fluctuating between $10 and $12 per MMBtu. Yet BPDB’s power generation costs continue to rise, a paradox its officials could not explain.
BPDB Chairman Rezaul Karim was unavailable for comment and did not respond to messages. A senior board official, speaking anonymously to Bonik Barta, said, “Highest costs come from oil–based generation and purchases from private plants. Oil–based production is inherently expensive and carries capacity charges. Because of gas shortages, BPDB cannot run a large share of its own plants and must rely on private producers, which pushes up costs.”
Experts warn that mounting losses are forcing government into ever larger subsidy commitments. They argue that durable solutions require firm action on generation structure, contract management, and long–term policy reform.
Shafiqul Alam, lead energy analyst at Institute for Energy Economics and Financial Analysis, outlined government’s main targets. “Key goals for power sector reform were increasing competition, reducing costly oil–based power purchases, and cutting subsidies through major savings from eliminating waste,” he told Bonik Barta. “Yet at end of the 2024–25 fiscal year, overall use of oil–based power had not fallen. Instead, utilisation of government plants declined and transmission system losses rose. As a result, projected savings were not achieved, while higher average generation costs compared with previous year intensified the sector’s financial strain.”
Alam further said, “To reduce subsidies and losses in the power sector, electricity purchases from the most expensive sources must be cut, the use of renewable fuels increased, and utilisation of state-owned cost-effective power plants expanded. At the same time, current system losses exceeding 10 percent must be reduced to the global average of around 8 percent. Adopting plans alone is not enough; effective implementation is crucial.”
Attempts to contact Muhammad Fouzul Kabir Khan, the power, energy and mineral resources adviser, for comment on sector reforms and losses were unsuccessful.