Desk Report
Oniket Desk
Bangladesh’s power sector presents one of the most consequential paradoxes in the country’s development story: a system that has achieved near-universal electrification while simultaneously engineering a fiscal crisis of structural proportions. The core problem is no longer megawatts – it is governance, human capital, and the institutional capacity to manage what has already been built. To analyze this, we utilize some important data collected from BBS, IMF and leading daily newspapers of Bangladesh.
Since 2009, installed generation capacity has grown from under 5,000MW to more than 30,000MW. Yet a reserve margin of approximately 61.3 percent means that on any given day, most of this installed capacity sits idle while drawing capacity payments, contractual obligations to power producers regardless of whether their plants generate a single unit of electricity. The consequences are fiscally devastating. Annual losses of the Bangladesh Power Development Board rose from Tk 5,468 crore in FY2015 to Tk 50,565 crore in FY2025. The average unit generation cost of approximately Tk 12.35 against a bulk supply tariff of around Tk 6.63 means the sector loses more than Tk 3 on every unit it sells- a structural subsidy burden that between FY2020 and FY2024 alone totalled over Tk 1,26,700 crore. Capacity grew fourfold over fifteen years; costs grew elevenfold. This disproportion is not an accident of circumstance; it is the arithmetic outcome of procurement decisions made without adequate financial analysis or regulatory scrutiny.
Compounding this is the failure to apply merit-order dispatch, the elementary principle of operating cheaper plants first. Where commercial logic is subordinated to political or contractual considerations, operational efficiency becomes impossible regardless of installed capacity. Load-shedding persists not because Bangladesh lacks generation infrastructure, but because decision-making authority is misaligned with the technical and economic competencies required to exercise it well.
The imminent commencement of fuel loading at the Rooppur Nuclear Power Plant financed by an $11.38 billion Russian loan, marks a significant technical milestone. However, the receipt of a commissioning licence must not be conflated with operational readiness. The plant requires approximately 1,600 trained engineers for safe long-term operation; current domestic capacity falls well short of this threshold. Bangladesh will remain structurally dependent on Russian expertise for the plant’s initial operational years, with attendant implications for safety accountability, operating costs, and strategic autonomy. A nuclear facility operating under conditions of foreign technical dependency is a sovereign liability, not merely a management inconvenience.
The most urgent short-term priority is the renegotiation or structured exit from uneconomic power purchase agreements, particularly with idle capacity plants whose continued capacity payments are indefensible at current reserve margins. This requires equipping a cadre of regulators and energy economists with contractual and financial expertise to conduct rigorous PPA reviews- a capability that presently does not exist at adequate scale within public institutions. Without this, the subsidy burden will continue to compound.
Merit-order dispatch must be enforced as a non-negotiable operational standard, insulated from political interference. This requires both regulatory codification and the installation of leadership within the dispatch authority that possesses genuine energy economics expertise. Where seniority-based appointment structures obstruct this, targeted institutional reform is warranted.
On human capital, the medium-term imperative is the accelerated development of the Bangladesh Power Management Institute into a fully functional national training centre, capable of scaling annual throughput from current levels to tens of thousands of certified professionals. Certification frameworks must be grounded in verifiable competency assessment rather than attendance-based qualification. The consolidation of BPMI, BPDB’s training directorate, SREDA, and Power Cell into a unified national framework, rewarding demonstrated expertise over bureaucratic tenure -would concentrate resources and eliminate the institutional fragmentation that currently dilutes training effectiveness.
Bangladesh has demonstrated that it can build at scale. The test now is whether the institutional determination exists to govern, renegotiate, and optimise what has already been constructed, before the fiscal trajectory becomes irreversible.
