The Bangladesh Power Development Board (BPDB), the country's single buyer of electricity, has been under sustained financial pressure from power generation, procurement and distribution. Growing dependence on private power plants has also meant that many of BPDB's own plants are not being used to their full capacity.
The government has adopted a five-year strategic plan for energy security, targeting increased LNG import capacity through new terminals, additional gas- and coal-fired power plants and another nuclear power project by 2031.
The roadmap also includes plans to build new gas pipelines, expand renewable power generation and address administrative and institutional inefficiencies in the gas and electricity sectors.
However, it does not clearly spell out how structural reforms will be carried out or how institutional efficiency will be improved through specific, time-bound action plans.
Experts say the government's approach appears to place greater emphasis on new infrastructure and large projects rather than fixing existing weaknesses.
Under the strategic framework, the government plans to build two new LNG terminals, or floating storage and regasification units (FSRUs), in Khulna and Barishal. It also plans a 400-megawatt gas-fired power plant using gas from Bhola, two large coal-fired plants in Matarbari and Payra, and another nuclear power plant.
While the government considers these projects important for meeting future energy demand, experts argue that the country's power and energy crisis cannot be solved simply by adding new capacity.
They say the priority should be to identify weaknesses in the existing system and reform them before undertaking more large-scale projects.
Growing dependence on imported energy
Bangladesh has already become increasingly dependent on imported LNG to meet its gas demand. The proposed FSRUs in Khulna and Barishal would further increase the country's import capacity.
Similarly, coal- and nuclear-based power generation will continue to depend on foreign technology, financing, equipment and fuel.
Experts warn that such dependence exposes Bangladesh to international market risks. A rise in global energy prices or disruptions caused by war, sanctions or geopolitical tensions could sharply increase the country's power and energy costs.
The energy crisis of recent years has already demonstrated the vulnerability of an import-dependent system, with the government having to spend large amounts of money to manage fuel and gas shortages.
Economists and energy experts say Bangladesh should instead learn from those experiences and formulate a strategy to reduce import dependence.
They recommend increasing domestic gas exploration and production, improving the efficiency of existing power plants, strengthening transmission and distribution networks and expanding renewable energy.
Without such reforms, they warn, new infrastructure could increase both import costs and the government's financial risks.
Questions over excess power capacity
Bangladesh's electricity demand is projected to grow by around 6% annually. With a 15% reserve margin, demand is expected to reach 25,714MW over the next five years.
Even after this capacity is utilised, a significant amount of generation capacity is expected to remain idle.
Yet the government is planning additional power plants.
The government's own roadmap identifies excess generation capacity as one of the major problems facing the power sector.
Because of this surplus capacity, the country is paying around $1.5 billion to $1.8 billion annually in capacity charges. Power plants can receive these payments under contractual arrangements even when they are not producing electricity according to demand.
The resulting financial burden is being borne largely through government subsidies.
Experts say that before building more plants, the government needs a clear plan to reduce excess capacity, determine which plants are economically viable and identify facilities that should be closed or restructured.
Otherwise, adding new capacity without resolving the existing problem could further increase the capacity-charge burden.
Economists also say electricity generation capacity should be aligned with industrial demand and the use of lower-cost fuels should be prioritised.
‘Reform should be the highest priority’
Dr Fahmida Khatun, distinguished fellow at the Centre for Policy Dialogue (CPD), said institutional reform was urgently needed in the power and energy sectors.
“An effective institutional structure and reform are needed first to eliminate inefficiencies in the power and energy sectors,” she said, adding that such reform had been discussed repeatedly in the past but had yet to materialise.
She said reform was no longer simply desirable but “absolutely urgent” given the current crisis.
According to Khatun, the strategic framework appears to have been designed primarily to address immediate energy challenges, while institutional reform should be given the highest priority alongside short-term measures.
“The government needs to prepare to address immediate problems while simultaneously beginning institutional reform,” she said.
BPDB's financial weakness adds to the pressure
Another major challenge is the financial weakness of the power sector.
BPDB has been relying on substantial government funding for years. Growing subsidies have weakened its financial position, forcing the government to regularly provide large amounts of money to keep electricity generation and supply functioning.
BPDB sources say national electricity demand is around 17,500MW, while installed generation capacity exceeds 29,000MW.
Maintaining such excess capacity while paying capacity charges has created a major financial burden. The government provided Tk52,000 crore in electricity subsidies in the 2024-25 fiscal year.
Energy expert and former BAPEX managing director Murtuza Ahmed Faruk Chishti said excess capacity was one of the main reasons for rising costs in the power sector.
He said power plant construction had often proceeded without adequately planning for fuel availability.
“The most urgent task now is to ensure that existing power and energy infrastructure can be operated efficiently,” he said. “If these problems are not resolved, costs will rise further and implementing the government's plans will become more difficult.”
Concern over another nuclear power plant
Chishti also questioned the plan to build another nuclear power plant.
Bangladesh's first nuclear power plant, built with Russian financing at a cost of Tk1.38 lakh crore, has yet to begin commercial generation. The plant was originally expected to start production in 2024, but its launch has repeatedly been delayed, raising uncertainty over when it will actually enter operation.
Questions also remain over its operating costs, the arrangements required to keep the supporting power infrastructure ready and how the large loan will be repaid.
Against this backdrop, Chishti said the government's plan for another nuclear plant should first be evaluated in terms of its financial feasibility.
LNG import costs raise concerns
The government also plans to build two additional LNG terminals in Khulna and Barishal within the next five years.
But Petrobangla is already under financial pressure from LNG supply, technical problems, maintenance costs and the financing required for imports through the existing two terminals.
Experts are therefore questioning how the government will manage future financial liabilities if LNG imports are increased further.
Bangladesh's annual energy import bill has already exceeded $13 billion-$14 billion. Economists fear that the cost could rise above $20 billion if LNG imports increase alongside new terminal infrastructure.
According to Petrobangla officials, LNG import costs could exceed Tk90,000 crore in the current fiscal year. Government subsidies for LNG imports could also rise three to four times from the previous year.
Petrobangla estimates that Bangladesh spent around Tk2.77 lakh crore on LNG imports between the beginning of LNG imports and the 2025-26 fiscal year, in addition to around Tk48,000 crore in subsidies.
Former energy-sector officials therefore recommend that the government carefully assess the financial implications of new LNG terminals before approving them.
Bhola gas highlights planning inconsistency
Experts also point to inconsistencies in the government's approach to domestic gas resources.
Around 1.5 trillion cubic feet (TCF) of gas reserves have so far been discovered in Bhola. An initiative was taken to build a pipeline to connect the gas to the national grid, but the project has failed to progress because around Tk600 crore in financing has not been secured.
At the same time, the government is considering a new 400MW gas-fired power plant in Bhola to use the island district's gas locally.
Industry stakeholders say bringing Bhola's gas into the national grid would allow power plants in Khulna and other parts of the country to use the resource. This could help utilise existing generation capacity while integrating Bhola's gas into the wider national energy system.
BPDB needs structural reform
As the country's single electricity buyer, BPDB remains central to the generation, procurement and distribution system.
Its increasing dependence on private power producers has left many of its own plants underutilised, while the board continues to bear the costs of those facilities and a large workforce.
Sector experts say BPDB needs major reforms in its cost structure, workforce efficiency and technological capacity.
The organisation also needs to strengthen its ability to adapt to modern power management, renewable energy and decentralised generation systems.
Dr Khandaker Golam Moazzem, president of Knowledge Hub Institute, said the government's efforts to improve energy security were positive, particularly its emphasis on expanding renewable energy.
However, he said institutional capacity would be critical to implementing the plans.
He noted that many employees in state-owned energy institutions remain accustomed to traditional fossil-fuel-based systems.
Institutions including BPDB, Power Grid Bangladesh PLC, Bangladesh Energy Regulatory Commission (BERC), Petrobangla and Bangladesh Petroleum Corporation (BPC) need capacity building and structural reforms, he said.
According to Moazzem, this is particularly important as renewable energy projects expand and existing personnel need to adapt to newer technologies.
Renewable energy target faces implementation challenges
The government has set a target of developing 10,000MW of solar power generation capacity.
Measures include incentives for utility-scale solar projects and electricity purchases from consumers through net metering. The government has also introduced policy and tax benefits to support the sector.
However, many stakeholders remain concerned that continued investment in fossil-fuel imports and additional generation capacity could increase costs and risks in the energy sector.
Hasan Mehedi, chief executive of the Coastal Livelihood and Environmental Action Network (CLEAN), said building more coal-fired power plants, LNG terminals and nuclear facilities was not a sustainable solution to the country's energy-security challenges.
Bangladesh is already struggling with the financial and management burden created by infrastructure built in the past, he said, while existing capacity remains underutilised because of financial and management constraints.
He argued that increasing import dependence and expanding fossil-fuel-based generation could ultimately cause more harm than benefit.
Mehedi welcomed several government initiatives in renewable energy but said bureaucratic complications and a lack of political commitment had slowed implementation.
He said the government's priority should be to ensure energy security through maximum utilisation of existing capacity and more efficient management.
Government says strategic framework is only a guideline
Officials at the Planning Ministry say the strategic framework is designed to establish priorities for the next five years and is not intended to provide detailed institutional reform plans.
Dr Manzur Hossain, member (secretary) of the General Economics Division (GED) of the Planning Commission, said the framework deliberately focuses on strategic priorities rather than detailed structural reforms.
“The relevant ministries and divisions will have to prepare separate action plans based on these strategic priorities,” he said.
He added that the Planning Commission's relevant divisions would also formulate sector-specific plans. Detailed reform requirements could become clearer during implementation, when authorities identify operational problems and determine what changes are needed.
Hossain also stressed that simply adopting a plan or carrying out reforms would not automatically resolve all problems.
Institutional capacity, efficiency, coordination and overall governance would be crucial to implementation, he said.
He added that the government had instructed authorities to increase renewable energy generation while reducing import dependence and building a sustainable energy-security system.
“If institutional reform is necessary for that, it will also have to be carried out,” he said.
For Bangladesh, the central challenge is therefore not simply how much new electricity and gas infrastructure can be built, but whether the existing system can be made financially sustainable, efficient and less dependent on imported energy.
Experts say solving those old problems should come before adding another layer of expensive new capacity.
