15 years of Bangladesh’s power and energy sector: A failure story
As summer draws to a close, Bangladesh still continues to grapple with load-shedding and gas shortages. Hundreds of ready-made garment (RMG) and apparel factories have shut down or suspended operations because of inadequate gas and electricity supplies, while many more are on the verge of permanent closure.
Disruptions to global energy supplies following the war in the Middle East, coupled with a subsequent spike in international fuel prices, have been blamed for the mounting distress.
But the latest blow to Bangladesh’s economy goes beyond disruptions in the Strait of Hormuz and rising global fuel prices.
The crisis was foreseeable, and there is little indication that it will ease anytime soon. Bangladesh’s energy security has been severely undermined over the past 15 years, despite claims of numerical progress in the sector.
Once reliant on imports primarily for liquid fuels, the country now also depends on imported gas, coal and electricity. Meanwhile, electricity generation and gas production have increasingly come under the control of foreign and non-state actors.
During her 15 years in power, former prime minister Sheikh Hasina, who fled the country following a mass uprising, left Bangladesh increasingly dependent on energy imports and weakened the foundations of its energy security.
Asymmetric expansion of power generation
The Hasina government built around 100 new power plants without ensuring adequate supplies of primary energy to operate them. As a result, many of the newly constructed plants have been unable to run at full capacity because of shortages of gas, coal and oil, turning excess generation capacity into a major weakness in the power sector.
At the same time, the government continued to pay capacity charges to private and rental power plants even when they remained idle, placing an additional financial burden on the sector.
This left the Bangladesh Power Development Board (BPDB), the state-owned sole buyer of electricity, struggling with a persistent funding crisis for years.
Critics have alleged that the Hasina government deliberately structured its power-sector policies to benefit businesspeople loyal to the ruling party. There have also been allegations that commissions were paid in exchange for awarding power generation projects.
Summit Group, for instance, emerged as the largest private power producer during Hasina’s rule, operating more power plants than any other private company. The group is owned by Mohammed Aziz Khan, a sibling of Lt Col (retd) Muhammad Farooq Khan, who served as civil aviation and tourism minister in Hasina’s cabinet.
Similarly, Doreen Power is owned by the descendants of Nur-e-Alam Siddique, a former Awami League leader.
The owners of other major private power producers, including United Group, Orion Group and Desh Energy, also allegedly had political ties to Hasina’s government. Some served as lawmakers, while others maintained close links with the ruling party.
These companies benefited from capacity payments under power-generation arrangements, including payments to plants that remained idle. Allegations have also been raised that some of the money extracted from the power sector was channelled to Hasina in the form of gifts and donations.
From self-reliance to import dependence
In the 2009–10 fiscal year, when Sheikh Hasina returned to power, Bangladesh consumed around 703 billion cubic feet of natural gas, all of which came from domestic gas fields. The country was then self-reliant in meeting its gas demand, supplying everything from household consumption to power generation.
At the time, Bangladesh imported petroleum products, including crude and refined oil, diesel, jet fuel, kerosene and petrol, but did not depend on imported natural gas to meet domestic demand.
Over the years, however, the country has become increasingly dependent on imported liquefied natural gas (LNG), with more than 30% of total gas consumption now met by overseas supplies.
Bangladesh now imports almost every major category of primary energy, including petroleum products, coal and natural gas. This dependence has placed a growing financial burden on the economy and increased pressure on the country’s foreign exchange reserves.
Critics argue that the Hasina government neglected domestic gas exploration to serve the interests of the LNG import lobby. Despite Bangladesh’s extensive maritime territory in the Bay of Bengal, no new offshore gas well was explored during her 15-year tenure. As the government increasingly relied on imported LNG, exploration in both onshore and offshore gas blocks received less attention.
LNG imports have consequently become a major bottleneck for Bangladesh’s energy sector. Procuring LNG from international spot markets requires substantial foreign currency outflows, particularly in US dollars, putting additional pressure on foreign exchange reserves, especially during periods of high global energy prices.
In the 2024–25 fiscal year, Bangladesh spent $4.38 billion (Tk 53,946 crore) importing LNG to meet around 30% of its total gas consumption. By contrast, the cost of supplying the remaining 70% from domestic gas fields was just $565 million (Tk 6,956 crore).
The country also imports electricity from abroad. In FY2024–25, Bangladesh imported electricity equivalent to 16.21% of its total consumption, paying around Tk 19,225 crore for supplies from neighbouring countries, including India and Nepal.
During the same fiscal year, Bangladesh imported more than 2.7 million tonnes of coal to fuel its coal-fired power plants.
Once self-reliant and largely free from dependence on imported natural gas, Bangladesh’s energy sector has accumulated Tk 51,366 crore (US$4.18 billion) in subsidies over just eight years.
Budgetary support for the sector reached nearly Tk 16,480 crore (US$1.34 billion) in the outgoing 2025–26 fiscal year, driven in part by the fallout from the war in the Middle East, which forced Bangladesh to rely more heavily on costly spot-market energy purchases.
BPDB: From producer to buyer
In 2009–10, Bangladesh had an installed power generation capacity of 5,823 megawatts (MW). Of the total, around 68% belonged to the Bangladesh Power Development Board (BPDB), while private-sector producers—including independent power producers (IPPs), rental plants and quick-rental plants—accounted for just 32%, or 1,878 MW.
By the 2023–24 fiscal year, when Sheikh Hasina fled to India following a mass uprising, the BPDB’s share of installed generation capacity had fallen to 23%.
Meanwhile, the combined share of other public- and private-sector producers, joint ventures, rental plants and imported electricity had risen to 77.4%, equivalent to 21,748 MW.
Over the years, the BPDB gradually transformed from the country’s principal power producer into the sole buyer of electricity from an increasingly diverse pool of suppliers. Its role increasingly centred on purchasing electricity from private producers and seeking budgetary support from the Ministry of Finance to cover capacity payments and energy bills owed to private entities.
The White Paper on the State of the Bangladesh Economy found that the government had paid Tk 115,000 crore in capacity payments to private and rental power producers.
To bridge the widening gap between electricity purchase costs and revenue from sales, the government injected more than Tk 200,000 crore into the power sector between 2010 and 2025.
Growing dependence on India
In 2018, during a press conference following a visit to India, Sheikh Hasina responded to a question by saying, “India should remember forever what we have given to it.”
During her more than 16 years in power, Hasina’s government pursued energy arrangements that deepened Bangladesh’s dependence on India for electricity and fuel, while expanding the role of Indian public- and private-sector companies in the country’s power and energy sector.
Soon after her party returned to power in 2009, Hasina decided to import electricity from India. The plan materialised in October 2013, when Bangladesh began importing Indian electricity, just three months before the January 2014 national election.
Her government subsequently opened up the power and energy sector to Indian companies, signing several major agreements with Indian public- and private-sector entities. These included arrangements linked to the Rampal coal-fired power plant, the Adani power plant in Jharkhand and the India-Bangladesh Friendship Pipeline.
Some of these agreements were signed ahead of the 2018 national election, deepening bilateral energy ties. Critics have argued that growing dependence on Indian energy supplies also strengthened New Delhi’s leverage over Dhaka during Hasina’s tenure.
Bangladesh now relies on imported Indian electricity for a substantial share of its annual consumption. In FY2024–25, electricity imports accounted for 16.21% of the country’s total consumption, making cross-border supplies an increasingly important component of grid management. This dependence exposes Bangladesh to potential supply disruptions while adding to the pressure on its foreign exchange reserves.
The financial burden is also substantial. In FY2024–25, Bangladesh paid Tk 19,225 crore for electricity imports from India. During the same fiscal year, the Bangladesh Petroleum Corporation (BPC) paid Tk 573 crore to India’s Numaligarh Refinery Limited for diesel imports.
New gas field discoveries: An eyewash?
Between 2009 and 2024, the Sheikh Hasina government reported the discovery of six new gas fields: Sundalpur, Srikail, Rupganj, Bhola North, Zakiganj and Illisha in Bhola.
Of these, Rupganj was discovered in 2014 and began production in March 2017. However, production dried up within nine months, and the field was subsequently declared abandoned. Despite having remained shut since then, it has continued to appear on the list of fields in production.
Bhola North and Illisha, two other discoveries announced during Hasina’s tenure, are located within eight kilometres of each other. Experts say the two structures could potentially be considered part of a single gas field, but they have been listed as separate discoveries, allegedly to bolster the government’s record.
Only Sundalpur and Srikail, among the six fields, have contributed to commercial gas production. Even their output remains modest: Sundalpur produces around 1.2 million cubic feet (mmcf) of gas per day, while Srikail produces approximately 11.8 mmcf daily.
Compared with established gas fields such as Titas, Shahbazpur and Bibiyana, the fields discovered during Hasina’s tenure have yielded considerably less gas in terms of both production and reserves.
100% electrification: A costly failure?
To bring electricity to homes in off-grid and remote areas, the BNP government led by Khaleda Zia launched the Solar Home System (SHS) programme in 2003 under the supervision of Infrastructure Development Company Limited (IDCOL), a government-owned non-bank financial institution.
Similar initiatives were subsequently undertaken by other government agencies, including through the Test Relief (TR) and Kabita programmes of the Department of Disaster Management.
By 2015, around 5.357 million solar home systems had been installed or distributed by IDCOL and other government and non-government organisations. The programme received international recognition for expanding access to electricity among marginalised communities.
However, the programme began to lose momentum after Hasina’s government launched an aggressive campaign in 2016 to achieve universal electrification by extending the national grid to remote areas. As grid electricity reached rural communities, many households abandoned their solar home systems in favour of grid connections.
By 2022, when Hasina announced that the country had achieved 100% electrification, solar home systems—which had once been the primary source of lighting in many remote areas—had largely fallen into disuse, with many left idle or discarded.
Yet proper maintenance and management of these systems could have helped mitigate the ongoing load-shedding caused by shortages of primary energy sources, including gas, coal and oil.
The policy shift and rapid expansion of grid electricity also left many rural households unable to fully benefit from their earlier investments in solar power.
Unless Bangladesh discovers new gas fields with substantial reserves, develops additional crude oil refining capacity and achieves its renewable energy generation targets, the country risks facing a similar or even more severe energy crisis in the coming years.
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***Abu Anas is a journalist and researcher with more than 10 years of experience in the field.