Experts urge Bangladesh to scrap ‘unequal’ energy deals, cut import dependence

Energy experts, economists, lawmakers and security analysts on Sunday called for Bangladesh to reduce its dependence on imported fuel and expand domestic gas exploration.

They also call for taking policy to promote renewable energy, and examine legal options for challenging what they described as “unequal power agreements” inherited from the previous governments of Sheikh Hasina.

The recommendations came at a roundtable titled “Navigating the Energy Transition: Foreign Policy Alignment and Geopolitical Resilience,” organised by the Institute of Policy, Governance and Advocacy for Development (IPGAD) at the InterContinental Dhaka.

Speakers at the event focused on rising energy costs, capacity payments, dependence on imported fossil fuels, geopolitical vulnerabilities and the country's slow progress in renewable energy.

Professor Mushtaq Khan, an economist at SOAS University of London, said Bangladesh needed to distinguish between its immediate energy supply problems and the deeper structural problems affecting the sector.

“During the Awami League government, our power-generation capacity increased fourfold on paper. But in reality, our costs increased elevenfold and capacity charges rose twentyfold,” Professor Mushtaq said.

“This is not normal. Many power plants were approved simply to extract capacity charges or plant rents, even though there were no arrangements to supply them with fuel.”

Mushtaq said long-term sovereign power agreements presented a significant legal challenge, particularly contracts with terms of up to 25 years.

Citing the power purchase agreement with India's Adani, he warned against treating outstanding payments as an ordinary commercial arbitration dispute.

“If we go to ordinary international arbitration over outstanding bills, we will certainly lose because, under the contract, their claims are legally valid,” he said.

Instead, Mushtaq said Bangladesh would need to establish that corruption or serious irregularities occurred when such contracts were signed.

“We need to prove before an international court that there was extensive corruption and irregularity when the agreement was signed. In legal terms, this is ‘void ab initio’ — meaning the agreement was invalid or voidable from the outset.”

Mushtaq said lawyers of the calibre of King's Counsel in London had indicated that Bangladesh could have a strong chance of succeeding in such a case, but an internationally reputable investigation firm would need to gather evidence.

He also urged the government to prepare alternatives in case Adani threatened to suspend electricity supplies and use those alternatives as part of its negotiating strategy.

“This is not an ordinary bureaucratic exercise; it is literally a fight to save the country,” Mushtaq said. “The honourable prime minister must personally take charge of overseeing this crisis management. Otherwise, it will not be possible to uproot this deeply entrenched corruption.”

Lawmaker Mansura Alam said Bangladesh's energy policy needed to shift from an emphasis on adding generation capacity towards ensuring affordable and sustainable supplies.

“Our power sector has reached a critical juncture,” she said. “Until now, our sole objective was to increase generation capacity. But the challenge today is entirely different.”

Bangladesh now needed to determine how electricity could be produced sustainably, affordably and with lower environmental costs, she said.

Mansura said the government had set a target of generating 20% of electricity from renewable sources by 2030 and 30% by 2040, compared with the current share of around 5%.

She said Bangladesh's dependence on imported fossil fuels left its economy exposed to fluctuations in international energy prices.

“Duties and taxes on solar panels and other renewable-energy equipment must be reduced immediately,” Mansura said. “Energy sovereignty can only be achieved through sound policymaking and by attracting private-sector investment.”

National Citizen Party Joint Member Secretary Faridul Haque linked the country's energy problems to both daily hardship and national security.

He said households were facing gas shortages and power cuts even in Dhaka, raising questions about conditions elsewhere in the country.

“Our energy security has effectively been held hostage by foreign oligarchs or profiteers,” Faridul Haque said.

He alleged that agreements with companies such as Adani went beyond ordinary commercial arrangements.

“Electricity was purchased at inflated prices, and that additional money was used to buy the support of a particular country,” he alleged. “This is not merely corruption; it is a clear threat to national security.”

Faridul also questioned why the cause of a fire at the Maheshkhali LNG terminal remained unknown a month after the incident and called for the energy sector to remain fully under state control.

Lam-ya Mostaque, a research fellow at the Bangladesh Institute of International and Strategic Studies, said energy had become an increasingly important component of geopolitical strategy.

“Energy is no longer simply an economic commodity; it is a strategic asset,” she said. “The world has learned this very clearly since the Russia-Ukraine war.”

Mostaque said around 20% to 23% of Bangladesh's energy imports passed through the Strait of Hormuz, leaving the country vulnerable to disruption along a single major route.

She cited China's renewable-energy expansion as an example of a policy driven not only by climate concerns but also by efforts to reduce dependence on imported energy.

“China is not moving towards renewable energy solely to reduce carbon emissions; reducing import dependence is also one of its main objectives. Bangladesh needs to move in the same direction,” she said.

But Mostaque cautioned against replacing dependence on imported fossil fuels with dependence on imported renewable-energy equipment.

“Simply importing solar panels will not be enough. We need to expand our own production capacity and manufacturing base,” she said. “Otherwise, instead of escaping one crisis, we will fall into the trap of another.”

Mollah Amzad Hossain, editor of Energy & Power magazine, identified a lack of policy continuity and inadequate development of domestic resources as major weaknesses in Bangladesh's energy sector.

“At the end of the day, all major decisions are taken by politicians,” he said.

Mollah Amzad referred to Sheikh Mujibur Rahman's purchase of five gas fields for £4.5 million following the 1973 Arab-Israeli war, saying Bangladesh continued to benefit from those reserves.

He criticised successive governments for failing to sufficiently explore and develop domestic gas resources, pointing particularly to reserves in Bhola.

“There are substantial gas reserves in Bhola. Even though Petrobangla has 4 TCF of reserves in domestic gas fields, it is producing only 600-700 million cubic feet,” he said.

“Chevron, meanwhile, is supplying 900 million cubic feet of gas a day from reserves of just 1.1 TCF. This represents a major failure on our part.”

Mollah Amzad also said thousands of crores of taka had been wasted through quick-rental power plants and LNG imports.

Alongside increasing domestic gas production, he called for measures to curb electricity demand, including greater use of inverter air conditioners and BLDC fans in households.

The roundtable was moderated by IPGAD Executive Director Mostafa Hossain and attended by economists, lawmakers, energy specialists, academics and security analysts.

The discussions broadly converged on reducing Bangladesh's exposure to imported energy, accelerating domestic exploration, expanding renewable power and manufacturing capacity, and reviewing long-term agreements that speakers said had imposed excessive costs on the country.

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