The power sector, once a hotbed of controversy under the fallen Sheikh Hasina regime, is now grappling with a fresh set of challenges as the country transitions to a new administration. Officials within the Power Division acknowledge a state of inertia, with no significant decisions being made since the change in leadership. As a result, they are left managing power generation, transmission, and distribution as part of routine duties.
The Bangladesh Power Development Board (BPDB) is under considerable strain due to a confluence of issues, including unpaid dues to power plants, a critical shortage of US dollars, and dwindling fuel supplies. These challenges have created a perfect storm, threatening the stability of the sector.
Officials claim that during Sheikh Hasina's 15.6-year tenure, the power sector became deeply politicised. Sheikh Hasina herself held the position of Minister of Power, Energy, and Mineral Resources, viewing it as a critical ministry, with all major decisions regarding the sector made from the Prime Minister's Office (PMO).
Nasrul Hamid, the recently former state minister for power, energy and mineral resources, along with Dr Tawfiq-e-Elahi Chowdhury, the former prime minister’s energy advisor—both known as close associates of Sheikh Hasina—had established strong influence within the sector.
Those favoured by them controlled the sector, with widespread allegations of irregularities and corruption. Following the shift in higher order, these officials are now reportedly concerned.
However, while other state institutions have undergone significant reshuffling following the change in government, the power sector has experienced little to no such adjustments.
Corruption, rising costs, & uncertain reforms
According to BPDB data, significant changes were made across several sectors, with the power sector being a major focus after Sheikh Hasina's administration assumed office in 2009. Since then, 156 power plants have been constructed, compared to 34 in 2009, with over 50 more currently under construction.
However, none of these plants were constructed through an impartial tender process, leading to widespread allegations that those close to Sheikh Hasina secured ownership of these projects.
There were also significant allegations of corruption in the construction of large coal-fired power plants built by both domestic and foreign contractors. Some officials within the Power Division believe that considerable irregularities and a lack of proper procedures in constructing the Rampal, Payra (Units 1 and 2), and Matarbari power plants have resulted in costs exceeding Tk 35,000 crore.
Furthermore, a report by the Centre for Policy Dialogue (CPD) indicates that businesses with close ties to the Awami League have received over Tk 1 lakh crore in capacity payments from the power sector over the past decade without generating electricity.
Experts argue that widespread corruption during Hasina's tenure has transformed BPDB from a profitable entity into a debt-ridden institution, prompting the government to implement repeated electricity price hikes at the consumer level and increase subsidies, both of which have drawn significant criticism from all levels of society. Even so, Sheikh Hasina’s administration struggled to manage BPDB’s mounting debt.
Discussions with multiple BPDB officials suggest that while the interim government has yet to make any decisions, significant reforms in the power sector are likely. It is almost certain that electricity prices will not be raised again, making transparency crucial in managing the sector's debt and liabilities.
The Nasrul-Tawfiq duo syndicate
After forming the government following the one-sided 2014 election, Nasrul Hamid was appointed to oversee the Ministry of Power, Energy, and Mineral Resources. Meanwhile, after assuming power in 2009, Sheikh Hasina appointed Tawfiq-e-Elahi Chowdhury as her power and energy advisor.
Insiders allege that Nasrul Hamid, leveraging his close relationship with and the trust of Sheikh Hasina, swiftly expanded his influence over the power and energy sector. He stands accused of appointing foreign contractors without tender, controlling the energy business through his uncle, Kamruzzaman Chowdhury, and appointing corrupt, incompetent officials to top positions in exchange for bribes. He is also alleged to have handed over power plants and energy businesses to influential industrial groups.
There are further allegations that Nasrul Hamid, along with Sheikh Hasina's son, Sajeeb Wazed Joy, controlled the liquefied natural gas (LNG) business. A senior official from Bashundhara Group reportedly admitted that the company received permission for oil imports in exchange for special favours.
Several officials have also claimed that Eastern Refinery Limited, Unit 2 (ERL 2) was deliberately kept non-operational to benefit the controversial S Alam Group of Chattogram. Additionally, Tawfiq-e-Elahi Chowdhury faces multiple allegations of extorting money by awarding contracts to foreign companies without a tender process.
A BPDB director, speaking on condition of anonymity, told The Business Post that the Nasrul-Tawfiq syndicate’s grip on the power sector is formidable. Despite the shift in government bringing changes across all sectors, corrupt officials in this sector remain firmly in place, retaining the power to create challenges for the new administration.
India's sudden legal shift on Adani's power
India, known as one of the strongest supporters of Sheikh Hasina's regime, currently exports 2,760 MW of electricity to Bangladesh, with 1,600 MW supplied by Adani Group’s Godda Thermal Power Station, a coal-fired plant specifically designated for this purpose. The contract between the BPDB and Adani Group stipulated that all electricity generated by this plant would be sent to Bangladesh.
However, a sudden amendment to India’s electricity export regulations by the Modi government has removed barriers, allowing Adani Group’s Godda power to be redirected to the Indian market.
According to a memo issued by India’s Ministry of Power on August 12, the 2018 regulations governing Adani’s power supply to neighbouring countries have been revised. The amendment states that if the full or partial capacity of a power plant is not utilised, the Indian government may permit its connection to the domestic grid, enabling the sale of electricity within India. The memo further specifies that in cases of payment delays, permission may be granted to sell electricity to the local grid.
BPDB’s Company Affairs division reported that approximately $450 million is now owed to Adani Group. Due to the shift in government and the ongoing dollar shortage, BPDB is currently unable to make this payment. Meanwhile, one of Adani Group’s units was shut down for maintenance on August 14.
Engr Md Shamsul Alam, a member (Company Affairs) of BPDB, stated that the contract clearly outlines when Adani Group can and cannot halt electricity exports. “Since the import of Adani’s power began in 2022, arrears have accumulated. We do not understand why this decision was suddenly made after the fall of the government,” he said.
Intensifying fuel and dollar crisis
BPDB officials report that power plants are currently owed Tk 45,000 crore by BPDB. Of this, about Tk 22,000 crore was paid off by Sheikh Hasina's government through bonds. However, power companies continue to press for the remaining amount. BPDB is struggling to meet these demands due to the ongoing dollar crisis and high exchange rates.
The Company Affairs division has revealed that the ousted, as well as the interim government, have been providing funds to BPDB for power companies at an exchange rate of Tk 111 per dollar. However, companies are unable to secure dollars with this money, preventing them from importing fuel. Consequently, many power plants remain shut down, and power company officials are persistently lobbying BPDB.
Meanwhile, the arrival of Summit Group's LNG terminal, which was damaged by cyclone Remel, has been significantly delayed, and it is still not operational. According to sources in the Energy and Mineral Resources Division, experts from Singapore are needed to bring the terminal online. However, due to the current political situation, they are unable to travel to the country, exacerbating the gas crisis in the power sector.
The Power Division on August 14 urgently requested the Energy and Mineral Resources Division to provide at least 100 MMCFD of gas. The letter stated that several power plants are being forced to remain idle due to the gas shortage, resulting in the generation of at least 4,000 MW of electricity using liquid fuel. This has increased the cost of power generation, further adding to BPDB's liabilities.
Khondkar Mokammel Hossain, a member (Generation) of BPDB, said that to reduce BPDB's expenses, the first step is to cut back on power generation from liquid fuel. “At the same time, highly efficient baseload power plants need to be brought online. However, the cost burden must be reduced, and the new administration must increase the supply of gas and coal to address this issue,” he added.
