Outstanding electricity bills owed by the government to domestic and foreign power producers have surged past BDT 500 billion. Depending on the company, payments of between six and fourteen months are in arrears. Private power producers, in particular, face acute financial strain: they can neither import fuel nor service mounting bank debt.

Industry insiders trace the backlog to the tenure of the deposed Awami League government and say it has only intensified since. The subsequent interim government discharged some of the liability, but disbursements have again grown erratic since July last year. The Power Division has now requested more than BDT 200 billion in additional subsidy to contain the fallout.

Data from the Power Division and the Bangladesh Power Development Board (BPDB) show that overdue bills — owed to both state-owned and private plants — reached roughly BDT 503 billion through February this year. March invoicing is still underway and will swell that total further.

Experts caution that a liability of this scale threatens electricity supply during the coming summer. Should fuel deliveries to furnace-oil-fired plants falter during peak hours, generation shortfalls and intensified load-shedding would follow.

The bulk of the funds released for the power sector is now consumed by payments for imported electricity. Settling dues for supplies from India — particularly those from Adani and under government-to-government accords — absorbs the lion’s share. Power Division sources indicate the most recent disbursement to Adani totalled $30 million.

At least two private power plant entrepreneurs describe a clear disbursement hierarchy once the finance ministry releases subsidy funds. Private generators receive priority; thereafter the sequence moves to coal-fired plants, then to furnace oil-based units, and finally to gas-based facilities.

Private operators also report that companies have begun submitting their March bills, which will add at least another BDT 35 billion to the ledger. The current pace of repayment, they note, covers neither loan obligations nor the costs of fuel imports and day-to-day operations.

Financial strain is mounting in Bangladesh’s power sector. Global fuel market turbulence, climbing generation costs, and the commissioning of new plants have combined to deepen the predicament. Against this backdrop, the power division has requested an additional BDT 201.36 billion in subsidy for the ten months through December this year.

Current monthly subsidies total roughly BDT 32.5 billion — a sum officials deem inadequate. The division has therefore sought a further BDT 20 billion each month. A recent submission to the finance ministry states the extra funds are needed urgently to clear arrears on new generation units and to absorb rising costs of primary fuel.

A leading private operator reports that its outstanding receivables from BPDB for electricity supplied from gas- and furnace oil-fired plants now approach BDT 45 billion. This backlog began accruing under the past Awami League administration. The government trimmed it several times through special bond issues, but disbursements again turned irregular last July and the arrears resumed their climb.

The company contends that BPDB is using its subsidy allocation to settle only a fraction of the overdue sums. Continuing plant operations under these conditions is becoming untenable, and doubts are mounting over the sector’s ability to sustain uninterrupted generation.

United Group, another private power producer, is owed BDT 30 billion by BPDB for electricity supplied. Senior company officials warn that the scale of the arrears now exposes the firm to going into default and has crippled its ability to import fuel at required volumes.

Shamim Mia, head of regulatory at United Group, told Bonik Barta: “Banks are refusing to issue fresh letters of credit because BPDB hasn’t settled our dues. Each company’s LC limit is tied to its asset base. Our loan liabilities are mounting and our LC headroom is contracting. We simply can’t service the debt. That in turn erodes our capacity to deliver the power BPDB demands. That’s because we no longer have the facility to borrow for fuel imports.”

The country’s power generation now averages about 14,000 megawatts, of which furnace oil-fired plants contribute roughly 3,000 megawatts. Arrears owed to those oil-based plants alone stand at approximately BDT 140 billion, equivalent to eight to ten months of billing. Owners say the backlog has made continued operation untenable.

Since the newly elected BNP-led government assumed office, private generators have formally flagged the issue. They have pressed for immediate disbursement of at least 60 percent of the overdue sums to secure fuel imports ahead of the summer peak. That money has yet to arrive, industry figures confirm.

David Hasanat, president of the Bangladesh Independent Power Producers’ Association, said the association has repeatedly apprised the Power Division of the mounting receivables. Particular emphasis has been placed on swift repayment to furnace oil-based plants to safeguard an uninterrupted supply. BPDB, he added, has been unable to comply.

Hasanat told Bonik Barta: “The government is disbursing only a sliver each month from its subsidy allocation. Operating a power plant on that basis has become extraordinarily difficult. The fuel stocks now held by private oil-fired stations can’t sustain generation for much longer. We remain in contact with the government. But even if funds were released today, importing new stocks of fuel would take until mid-May. We’re trying to ration output from furnace oil-based plants down to roughly 1,000 megawatts to stretch supply through to that point.”

Peak electricity demand this summer is projected to approach 18,000 megawatts. Meeting it will leave BPDB heavily reliant on coal, fuel oil, and imported power. Yet the turmoil in the Middle East has sharply inflated fuel import costs, compounding the fiscal pressure on the government and driving generation expenses higher still. The financial health of the sector has consequently grown more precarious.

Industry sources note that no clear directive has emerged on how the enormous arrears will be settled. Neither BPDB nor the power division has articulated a firm position.

In May 2024, under the Awami League administration, overdue bills in the power sector exceeded BDT 550 billion. Special bonds favouring banks were issued to retire a portion of that liability, but even that intervention failed to clear all outstanding obligations to the generating plants.

BPDB identifies irregular bill settlement as the principal driver of the accumulating arrears — a practice that took root under the Awami League government. Its officials explain that the board repays overdue sums almost exclusively from the subsidy it receives from the government. When those subsidy flows falter or fall short, the backlog swells faster. The interim government made modest headway, paring arrears down to three months’ worth of dues. But disbursements stopped after July last year and conditions have since relapsed.

The government, acting on advice from the International Monetary Fund, resolved to trim power-sector subsidies to curb expenditure. It allocated BDT 620 billion for the 2024–25 fiscal year but has slashed the figure to BDT 370 billion for the current year. Power Division officials concede that the twin pressures of reduced subsidy and steeply higher fuel import costs render current allocations insufficient to sustain generation. That conclusion prompted the letter to the finance ministry seeking additional funds.

BPDB Chairman Engineer Rezaul Karim told Bonik Barta: “We’re continuing our efforts to clear the arrears. BPDB relies on the disbursed subsidy. We received the February tranche and have apprised the finance ministry regarding March. There is, however, ongoing litigation with private power producers over withheld liquidated damages, and any court directive involving financial accounting must be observed. Still, we’re striving to maintain the flow of bill payments.”

The backlog of unpaid power bills is now reverberating through the banking sector. Private power producers borrowed heavily to build plants and import fuel. With government disbursements stalled for months, the financing banks are coming under acute strain.

Senior executives at several banks report that the practice of withholding payments to power plants began under Sheikh Hasina’s administration. Unable to settle the dues in cash, that government sought to manage the crisis by issuing bonds. The arrears owed to power producers are climbing steadily once more. Loan instalments are growing harder to collect.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, told Bonik Barta: “Alongside the power-plant receivables, other government subsidies and incentives including export incentives had also been blocked. After the current governor took office, we requested the release of the withheld incentives for exports and remittances. Exporters themselves also met with the governor to press for payment. Some funds were indeed disbursed before Eid-ul-Fitr. But the power-sector arrears are mounting by the day. There has been no discussion yet from the government side about settling those sums. Any further delay in releasing these funds will only deepen the strain on the banking sector.”