ENERGY AND POWER: Reforming a broken sector

by Mowdud Rahman

THE energy and power sector in Bangladesh has always attracted millions of dollars in investment, especially over the last few decades, when the surge in demand has continuously been rising more and more, mainly due to industrial growth and the mechanisation of our way of life. Consequently, this sector has long been an easy prey for corrupt governments. Regardless of which party was in power, no one missed the chance to turn the sector into a gold rush where oligarchs and the government scratched each other’s backs, while the state economy collapsed under the burden of fuel and machinery imports, and people suffered from ever-increasing gas and electricity tariffs and prolonged power cuts. After a long struggle, when the people of Bangladesh were finally able to bring an end to the Awami League government at the cost of thousands of lives during the July mass uprising, it was not unrealistic to hope for a redirection of this sector toward the right path, if only to set a reference point for future political governments. However, the current government appears to be more concerned with maintaining relationships with companies, corporations, and global powers rather than recognising the overwhelming support they received from the masses, at least in the immediate aftermath of the July uprising. They should hold themselves accountable to the people, rather than resorting to the same tired rhetoric the public has heard for decades without any meaningful outcome.

Built to collapse

THE country’s energy and power sector policy planning has, so far, been more or less dependent on foreign experts. It doesn’t mean international assistance should always be rejected. But when a country is run by authoritarian power and all sectors are exposed to extortion, what happens is exactly what we see in our energy sector. For example, Japanese experts and companies were entrusted to prepare our latest master plan, named the Integrated Energy and Power Master Plan 2023. These experts didn’t even hide their interest in selling their technologies and electric vehicles, building ports, and making Bangladesh’s energy and power sector increasingly dependent on Japan.

Isn’t it a matter of national sovereignty that our energy policy — from preparing our master plan to delivering power plants and other component — is making us dependent on a single country? It may serve the business interests of Japan, but is there any guarantee that we’ll gain a true competitive advantage? We can pray for their goodwill, but recent experiences are far from promising. A consortium of three Japanese companies has received the contract to build the Matarbari coal-fired power plant, with an estimated construction cost that is reportedly 8 to 10 times higher than that of a similar plant in China. And this is just one example (Ghee Pee, Institute of Energy Economics and Financial Analysis, ‘Japan-funded Matarbari coal plant in Bangladesh costs 8 to 10 times more than comparable plants in China,’ June 1, 2022) 

No government in its earlier tenures, including the last one, worked to strengthen the national gas mining capacity, despite Bangladesh having vast potential in different parts of the country, especially in offshore areas. Rather, they mostly acted as puppets of foreign companies who aimed to export natural gas abroad, depriving the country’s own people. They were often desperate to award contracts to foreign companies to explore and extract gas from our own mines under highly unequal terms, while the strengthening of Bangladesh’s state-run company, Bangladesh Petroleum Exploration and Production Company Limited-BAPEX existed mostly rhetorically. For example, in 2020, the government did not award BAPEX the contract to drill gas wells in Bhola, even though BAPEX could have completed the work at a cost of Tk 65 crore to Tk 80 crore per site. Instead, the contract was awarded to a Russian company, despite their quote of Tk 180 crore per well for drilling each of the three gas wells there (Prothom Alo, 22 November 2020). 

Such corrupt and ill-motivated policy directions have consistently steered the country’s power and energy sector toward an import-heavy, ever-dependent, and costly path. Meanwhile, the people of the country have continued to suffer from repeated price hikes, irregularities, and load shedding, while those who entered this business discovered Aladdin’s genie. As a result, the country’s true strength has never been explored or developed. Past governments worked hard to keep us daydreaming, and we almost took it for granted that our cheap labour force would continue to sacrifice themselves either abroad or within the country and that the state exchequer would always brim with foreign reserves, either in the form of remittances or garment exports.

Accordingly, in the last energy policy, it was estimated that the proposed electricity generation and energy supply model would require the import of approximately 35, 39, and 43 million tonnes of coal by 2030, 2041, and 2050, respectively, while the country imported less than 7 million tonnes in 2019. Similarly, LNG imports were projected to reach 7, 16, and 22 million tonnes by 2030, 2041, and 2050, respectively, compared to just 5 million tonnes in 2021–22. No thought was, however, given to how this huge import burden on the national economy would be managed. There was no consideration of the potential impacts on our lives, ecology, and environment either.

Over the past 15 to 16 years, the government has paid more than Tk 1 lakh crore in capacity charges for idle power plants. Summit and its subsidiaries alone profited Tk 10,000 crore from government subsidies. Its chairman, Muhammad Aziz Khan, renounced Bangladeshi citizenship after the July uprising and became a citizen of Singapore. He has consistently been named one of the top 50 wealthiest individuals in that country in recent years (Bonik Barta, December 26, 2024). Is this merely a coincidence, or has our government deliberately crafted a crony system to hand over the wealth of the masses to a select few — creating a massive hole in the power and energy sector?

Potential way out

THERE is no silver bullet to rectify what has already been done. The accumulative chaos in this sector is so vast that remedial measures may sound highly ambitious. But how long will we continue digging our own graves? Our inaction will only make the situation worse.

All the mismanagement and flawed planning by almost every past government have led us here. Perhaps the only silver lining is that the energy and power sector has become a textbook example of how things shouldn’t be done.

The government now needs to take the right initiatives to develop the local industry that can support renewable energy growth, which currently accounts for less than 4 per cent of the total 27,424 MW installed capacity (BPDB website, accessed on 21 July 2025).

The current capacity of BAPEX must no longer be underestimated. With adequate training, capacity building, and integration of knowledge flow from technical universities and vocational institutions, BAPEX must be empowered to become a world-class entity, capable of leading all onshore and offshore exploration and drilling efforts. There is immense potential for us to be self-sufficient in this regard. And until BAPEX becomes fully equipped and capable, foreign companies should be onboarded through a competitive and transparent bidding process, with a mandatory provision that, throughout their operational period, they build the capacity of Bangladeshi technicians and engineers before handing over any project after a defined timeframe. According to some estimates, there is a potential to discover 30–65 TCF of gas in both onshore and offshore areas, while currently only 8 TCF remains across 29 gas fields (US Geological Survey Bulletin, Petrobangla Annual Report 2022–23). So, drastic action is needed to avoid becoming more import-dependent in the coming days.

It’s not just the supply side that demands attention; we must also double our efforts in demand-side management as well. All industries must adopt energy-efficient technologies. A new building code must be introduced so that no building consumes electricity beyond a set threshold, based on its size and purpose. The energy and power sector is heavily subsidised from the state exchequer, funded by taxpayers across all income levels. Yet the current system allows the wealthy to consume as much electricity as they please, while the poor suffer and remain deprived. This is unjust and unsustainable, which must be changed.

Every questionable project, whether ongoing or planned, must be reviewed. If any are found to be harmful to the country’s economy, ecology, or environment in the long run, they must be scrapped even if it means paying indemnity fees to other companies to whom the contracts have already been awarded. And this is not unheard of. Just last year, Kenya cancelled over USD 2.5 billion in deals with Adani after a US indictment (Al Jazeera, November 21, 2024). However, such payments must come from confiscating the assets of the decision-makers and kingpins responsible for signing those detrimental agreements.

What has been done so far?

RECENTLY, the interim government published a report highlighting all of its reform initiatives so far, including actions taken in the power and energy sector.

One of the most significant steps has been the repeal of the notorious Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010, which had centralised all decision-making power at the ministerial and prime minister’s level, bypassing all other regulations and laws. This Act had essentially paved the way for cherry-picking the near and dear ones to hand out lucrative, wasteful quick rental power plant contracts and energy supply deals. Even worse, the same act had granted indemnity to decision-makers, declaring that no one could be brought to justice in the future for any action taken under its authority.

Even though the current government has repealed this notorious indemnity act, it has simultaneously validated all previous decisions and projects made under it, confirming the continuation of activities initiated before the repeal. That’s not much different from the legacy of previous corrupt political governments who, despite having the opportunity, failed to tap into the trust of the masses and instead chose to maintain the status quo.

This government has also amended the Bangladesh Energy Regulatory Commission Act, which had previously concentrated tariff-setting powers within the Prime Minister’s Office. The BERC can now independently regulate energy prices through public hearings, which is definitely a positive move. But it would only be truly effective if the government ensures BERC’s real independence, rather than simply declaring it so on paper.

The government is also revising contracts with Independent Power Producers to eliminate the ‘capacity payment’ clauses, which had forced payments even when no electricity was generated. Additionally, it has cancelled 31 Letters of Intent issued by the previous regime for purchasing renewable energy through unsolicited proposals.

These are, more or less, the key reform actions this current government has undertaken so far. We must ask: Have these been enough so far? Are these really sufficient steps for a sector that has almost single-handedly crippled the country’s economy, not to mention the devastating cost to our ecology and environment?

What’s the excuse now?

CLIMATE change is real, and it’s happening. Countries all over the world are struggling with climate emergencies at different levels, which bring extreme heat, excessive flooding, the destruction of crops, and the death of livestock. Yet, there has been a tendency among our country’s political leaders to portray the effects of climate change as a distant reality. In doing so, they repeatedly side with companies and corporations that have vested interests in open-pit mining, the coal business, fossil fuel–based power plants, and so on.

Of course, Bangladesh is largely a victim of the reckless actions of other countries that have produced and consumed without regard for carbon footprints or environmental degradation. However, can we deny what scientists have already established—that the Rampal coal power plant would cause irreversible damage to the Sundarbans, for example? Or the immense risks that the Rooppur nuclear power plant poses to densely populated neighbouring districts and water bodies? Or the harsh truths revealed in various estimates about the devastation that open-pit coal mining in Phulbari would inflict on local lives, livelihoods, and the economy? These are just a few of the many projects that have already been identified as potentially harmful to people, the environment, and the national economy almost unanimously across the country except by all previous governments, corporations with vested interests, and a handful of paid individuals disguised as experts. Successive governments have used the excuse of ‘local development’ to justify pushing these harmful projects. But what excuse can the current government offer, one that came to power with a promise of reform across sectors?

Have we seen this government acknowledge any of these notorious projects as harmful and disastrous? Have they disclosed the relevant documents, agreements, and Environmental Impact Assessment reports of Matarbari, Banshkhali, Rampal, and Rooppur, many of which have already been exposed by media and researchers as rife with corruption and looting?

People placed their trust in this government after overthrowing the previous regime through fifteen years of struggle and a blood-stained uprising. This government had a golden opportunity to establish a culture of transparency and truth-telling, something no previous government had done, and in doing so, set a reference point for future governance. There may still be time to shift gears. Otherwise, the energy and power sector might continue to spiral into the same cycle of mismanagement and corruption.

And if a government born out of such immense public sacrifice cannot tell the truth to the people, then who will? If not now, then when?

Mowdud Rahman is a researcher and writer.