In our latest policy brief, we expand on the recent Orthonitir Barota podcast discussion by analyzing the structural bottlenecks behind Bangladesh’s ongoing power and energy challenges.
Executive Summary
Bangladesh’s ongoing power and energy crisis is driven by primary fuel shortages (gas) and financial illiquidity rather than a lack of power plant capacity. While installed grid capacity stands at 28,919 MW, peak generation reached only 17,200 MW against an 18,000 MW summer demand forecast. Substituting cheap gas with liquid fuels like furnace oil (TK 27.50/kWh) inflates costs well above average retail tariffs (TK 10.63/kWh). Consequently, power subsidies reached TK 62,000 crore in 2024–25, outstanding arrears to power producers stood at TK 52,300 crore as of April 2026, and fixed capacity payments reached TK 48,261 crore in 2025–26 (39% of wholesale power costs). The Brief evaluates policy trajectories through June 2028 and outlines priority structural reforms spanning tariff trajectories, settlement arrangements, and competitive procurement.