Bangladesh power board posts record losses, signalling a deepening energy crisis

New data show the PDB’s losses have nearly doubled in a year, even as subsidies swell and experts warn that without big structural change, the power sector’s financial crisis will only deepen

The numbers tell a stark story.

In the 2024–25 financial year, the Power Development Board (PDB) slid deeper into the red than ever before, its losses swelling to levels unseen since the country’s modern power sector took shape.

For energy economists, the figures are not a sudden shock but the latest chapter in a long-running crisis -- one rooted in political choices, costly contracts and an enduring reluctance to confront structural flaws.

According to data released by the state-owned utility, which plans and manages Bangladesh’s electricity system, the PDB’s losses at the end of the last financial year exceeded Tk 170 billion, almost double the Tk 87 billion recorded in the financial year 2023–24.

The figures, detailed in the PDB’s Auditor’s Report, come alongside an interim government subsidy bill exceeding Tk 386 billion -- slightly higher than the previous year.

Bangladesh’s power sector has long been under financial strain, battered by overcapacity, inefficient consumption patterns, high production costs and heavy dependence on imported fuel.

Energy experts say these problems are not accidental. They trace them to deeply flawed power and energy planning, much of it allegedly deliberately shaped during the Awami League’s years in office to benefit politically connected business groups.

Containing these losses has emerged as one of the central challenges facing the interim government, which replaced the Awami League administration after it was toppled by a student-led mass movement on Aug 5, 2024.

“The present government has apparently failed to make the systemic change needed to fix the power sector,” said Ijaz Hossain, an energy expert and former BUET teacher.

He said there are only two realistic ways to rein in losses -- cut production costs or raise retail electricity prices, either together or separately. But the government, he noted, pledged soon after taking office not to raise power tariffs.

“That decision was political rather than economic,” he said, pointing out that production costs remain stubbornly high.

During the previous government’s 16-year tenure, repeated hikes in power and energy prices failed to curb losses. Energy experts consistently described the approach as “predatory”, arguing that it ignored the sector’s deeper “structural problems”.

By “structural”, they meant contracts and arrangements that allowed certain local and foreign companies to earn guaranteed profits regardless of performance. Central to this was the capacity charge -- a provision that assured investors a return, often around 15 percent, on power plants they built, whether or not those plants actually generated electricity or contributed to economic growth.

Because of mismatches between the rapid expansion of generation capacity and slower growth in distribution, consumption and economic output, many plants frequently sat idle. Yet capacity charges continued to flow.

Private investors also succeeded in shifting fuel supply risks onto the government. When plants failed to operate during crises such as the COVID-19 pandemic or the Russia–Ukraine war, the state remained obligated to pay them anyway.

“It was more or less following in the footsteps of the past Awami League government,” said Hasan Mehedi, member secretary of the Bangladesh Working Group on Ecology and Development.

“Actions taken since the July Uprising manifest the government was much willing to move away from the mistakes made in the past,” he added.

Energy experts, however, say the record tells a different story. They note that the government ignored calls to scale back liquefied natural gas expansion, cancel older, inefficient plants, and allow fossil fuel-based power deals to expire without renewal.

Promised reforms -- such as reducing reliance on oil-fired generation and expanding renewable energy -- have also failed to materialise.

Under the Awami League, power and energy deals were signed arbitrarily under an indemnity law passed in 2010, shortly after the party returned to power. The law allowed contracts to be awarded without tender and shielded those involved from accountability.

Former prime minister Sheikh Hasina oversaw the process as power, energy and mineral resources minister.

Many economists blame today’s economic crisis and foreign exchange depletion on these “predatory” power sector expenses.

Since January 2024 alone, fossil fuel-based plants totalling more than 2,500MW have come online, further inflating capacity charge payments. Over its tenure, the Awami League paid about Tk 1 trillion in capacity charges.

Capacity charges vary by fuel type: Tk 3 per megawatt for gas-based plants, Tk 3.30 for coal-fired plants, and Tk 2.5 for oil-based facilities.

Shafiqul Alam, lead energy analyst at the Institute for Energy Economics and Financial Analysis, said the PDB’s overall revenue loss in the last financial year exceeded Tk 556 billion.

“The revenue shortfall represents the sum needed to run the PDB in addition to its income from selling power,” he said. In 2023–24, the shortfall stood at Tk 470 billion.

Households, which consume electricity at subsidised rates, account for about 55 percent of total demand. Industries pay more than production costs, but rely less on the national grid, generating much of their own power through captive plants fuelled mainly by gas.

More than a year after taking office, the government pledged to reduce dependence on oil-based generation. Yet Shafiqul’s analysis found oil still accounted for 11.50 percent of total production between January and November -- only marginally lower than the 12 percent recorded over the same period a year earlier.

Elsewhere in the region, reform has taken sharper turns. Pakistan, facing similar challenges, has moved to renegotiate contracts to lower power rates and has backed private investment in battery energy storage systems to support renewable energy integration.

Bangladesh, by contrast, continues to pursue further fossil fuel expansion and even costlier technologies such as hydrogen, ammonia co-firing and carbon capture and storage -- options experts say could deepen financial risks.

Before 2009, when power generation was largely state-run, electricity shortages were severe but the PDB’s official losses remained low. After the Awami League’s ambitious expansion drive, installed capacity increased more than fivefold by 2024, heavily reliant on imported fuel. Losses crossed Tk 10 billion for the first time in 2010–11 and have been recorded for the past 17 years.

PDB Chairman Rezaul Karim said losses surged partly because the government declined to subsidise power imports from India and electricity purchased from the Adani Power Plant, amounting to about Tk 87 billion. Newly commissioned plants also added to the burden, he said.

Still, he noted, steps taken since the incumbent government assumed office have saved the utility more than Tk 8 billion.