Energy experts are raising alarms over critical issues in Bangladesh's power and energy sectors, which they link to the authoritarian rule of the fallen Awami League (AL) government.
These experts, urging immediate reforms, said that the AL government's policies have facilitated the looting of billions of dollars through unaccountable and misguided development projects. This has left the power and energy sector mired in domestic and foreign debt, creating unbearable conditions for the general public.
They urge immediate reforms, including the adoption of power and energy policies rooted in social justice, under a new interim government, to restore accountability and transparency.
A decade of controversial policies
According to the Power Division, when the Awami League government took power in 2009, the country's electricity generation capacity was just 4,000MW. In a bid to rapidly expand this capacity, the government enacted the Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act 2010, a law that granted immunity to all activities within the power and energy sector.
This law has been sharply criticised by experts, who describe it as a "black law" that opened the door to widespread corruption and financial mismanagement.
Prominent energy expert Professor M Shamsul Alam stated that the implementation of this law effectively introduced a system of plunder into the sector. He highlighted that thousands of crores of taka were looted through the establishment of non-competitive power plants, which were often awarded to businesspeople and politicians with close ties to the government.
The Power Division reported that Bangladesh's power generation was initially gas-based, however, the government later awarded contracts for oil-based power plants to its “close associates”, bypassing competitive processes through a controversial law. These contracts led to the creation of rental and quick rental power plants, sparking widespread criticism among all stakeholders.
In response to public discontent, the AL regime then introduced Independent Power Producers (IPPs) to replace rental plants. However, experts argue that these new arrangements were also marred by irregularities and corruption, especially in power plant constructions and machinery imports.
The highly controversial capacity payments, awarded to the IPPs even when plants did not produce electricity, totalled over Tk 1,00,000 crore in the past decade, with Summit Group reportedly receiving the most, according to the Center for Policy Dialogue (CPD).
Increased spending & rising debts
During this period, the government significantly increased power sector spending, privatising and importing foreign coal to establish base-load power plants, despite strong opposition from environmentalists and experts. Electricity imports from India also surged.
This high spending, coupled with low electricity prices, led to unsustainable subsidies amounting to thousands of crores of taka. To cover costs, the government repeatedly hiked electricity prices, sparking public outrage. The AL government's ambitious targets of generating 40,000MW of electricity by 2030 and 60,000MW by 2041 continued unabated.
While the government declared 100 per cent electrification in 2022, fuel shortages soon caused power plant shutdowns and severe load-shedding. Despite the crisis, electricity prices continued to rise.
That same year, a 42 per cent increase in fuel prices triggered rampant inflation, and the government amended the Bangladesh Energy Regulatory Act of 2003 to allow energy prices to be set by executive order.
All revolves around LNG
An analysis of the Energy Division’s projects reveals a shift in focus towards LNG, which is cent per cent imported, leading to significant investments in constructing terminals and pipelines. The government is undertaking large-scale projects to secure LNG primarily from Qatar, the world’s largest producer, as well as from Oman and the spot market.
However, these high costs have plunged Petrobangla, a state owned gas company, into a severe financial crisis, sighed officials. Once financially robust, the state-owned entity is now burdened with debt due to its heavy reliance on expensive LNG imports.
Petrobangla data shows that while the country’s daily gas demand is at around 4,000 million cubic feet, the maximum supply is only 3,000 million cubic feet, with 1,100 million cubic feet being imported.
Despite the financial strain caused by rising gas import costs, the AL regime has focused on further increasing the imports, including plans for a pipeline with India and land-based LNG terminals. Meanwhile, experts point out that investment in domestic gas exploration has been very minimal.
Challenge ahead
Sector insiders report that as debt in the power and energy sector mounts, the government has sought loans from the International Monetary Fund (IMF) and the Islamic Trade and Finance Corporation (ITFC) to cover the blatant energy expenses.
Professor Shamsul Alam also highlighted that misguided development policies have worsened the debt crises, leading to the authoritarian price hikes that further increase the public’s burden.
According to the Ministry of Power, Energy, and Mineral Resources, Bangladesh owes approximately $5 billion to both domestic and foreign companies, posing a major challenge for the new interim government.
BUET Professor M Tamim pointed out that the dwindling domestic energy sources have made the sector heavily reliant on imports. He stressed that the interim government's primary challenge will be securing energy and financial resources to stabilise the sector.
Professor Shamsul Alam emphasised the urgent need to repeal all "black laws" in the power and energy sector. He also urged the interim government to establish a permanent and fair election system, free from partisan control, expressing hope that a people's government would ensure good governance and protect citizens' rights in the energy sector.
