However, with another intense summer approaching, the immediate challenge for the interim government is stabilizing the country’s energy supply, which has remained inconsistent over the past three years.
Additionally, with the interim government proposing the next general election for December 2025 or January 2026, a crucial question arises: Can it address existing inefficiencies in the power and energy sectors and lay the groundwork for clean energy expansion that the next administration can build upon?
Public Expectations
Citizens demand affordable, reliable, and uninterrupted energy. While the International Monetary Fund (IMF) has pressured Bangladesh to increase power and energy tariffs as part of a US$4.7 billion loan agreement, multiple price hikes between January 2023 and February 2024 have done little to reduce subsidies or ensure adequate energy supply. Instead, these increases have intensified inflationary pressures, reducing industrial output due to energy shortages. Before implementing further price hikes, the government must initiate a nationwide discussion to ensure inclusivity in decision-making.
Actions for the Interim Government
Key areas requiring attention include ensuring uninterrupted energy supply, minimizing gas transmission losses, increasing budget allocations to the energy sector, and formulating policies that support renewable energy development.
- Ensuring a steady energy supply during the upcoming summer is critical. Apart from the disruptions caused by the Russia-Ukraine war in 2022, both the power and energy divisions had ample time to prepare for demand surges in 2023 and 2024 but failed to do so. Since energy consumption typically rises in March and peaks in April, the interim government must plan ahead and allocate funds to maintain supply. Delayed funding can lead to payment backlogs, forcing private power producers to reduce their operations, thereby limiting power availability. Moreover, postponing payments results in additional surcharges, further straining government finances. Load-shedding, though a stopgap measure, is counterproductive—it increases capacity charges and hampers industrial productivity, ultimately weakening foreign currency reserves.
- Bangladesh Oil, Gas, and Mineral Corporation (Petrobangla) reported that 7.04% of the total natural gas supply in fiscal year (FY) 2022-23 was classified as Unaccounted for Gas (UFG) due to transmission losses and pilferage. Despite some improvements, 70.6 billion cubic feet (Bcf) of gas failed to reach consumers in FY2022-23. Additionally, gas supply to the power sector declined by 66.5 Bcf between FY2019-20 and FY2022-23 due to reduced domestic production.
Reducing UFG could enhance gas availability for power generation, thereby minimizing load-shedding. Limiting UFG to 3% could save 40.51 Bcf of natural gas annually, boosting gas-fired power generation by approximately 10%. Alternatively, this reduction could save US$442 million annually in liquefied natural gas (LNG) import costs, based on a conservative spot market price of US$10.5/MMBtu, which remained above this level for over seven months in 2024.
The interim government has continued previous administrations’ efforts to crack down on illegal gas connections, but these efforts must persist until tangible results are achieved. Addressing gas leakages requires investment in infrastructure and improved monitoring mechanisms. Reviewing existing distribution improvement projects and securing funds for new initiatives will be essential. These projects are not only economically beneficial but also enhance safety by reducing the risk of gas-related accidents. Furthermore, mitigating methane emissions—28 times more potent than CO2 over a 100-year lifecycle—will contribute to environmental sustainability.
- A constrained annual budget has hindered Bangladesh’s energy sector development over the past decade, leading to an overreliance on imported fossil fuels. With rising LNG import costs impacting the economy, the country must maximize local gas production and prioritize renewable energy adoption. Energy efficiency and conservation should also be emphasized to curb wastage and reduce fossil fuel dependence. However, achieving these goals will require increased budgetary support. As the interim government prepares to announce the next budget in June 2025, it should shift focus from power sector subsidies to energy sector investments, fostering long-term energy security and economic resilience.
- Bangladesh’s renewable energy policy expired in 2021, and the Sustainable and Renewable Energy Development Authority (SREDA) is working on a new framework to clarify the country’s renewable energy goals. While Bangladesh has yet to witness significant success in this domain, the interim government can finalize the updated policy with a realistic and achievable target for 2030. Additionally, it can develop guidelines for reverse auctions, drawing insights from international best practices. Allocating public land near substations for renewable projects will further expedite implementation once the elected government assumes office.
Battery energy storage systems (BESS) will play a crucial role in Bangladesh’s power sector. The interim government can draft regulations to facilitate their integration. Additionally, reducing dependence on costly oil-fired power plants is necessary, as their inflationary effects continue to drive up electricity generation costs. The latest power sector report indicates that private oil-fired plants generated electricity at approximately Tk 25/kWh (US$0.21/kWh) in FY2023-24, whereas utility-scale renewable energy projects averaged Tk 16.4/kWh (US$0.13/kWh).
Given its limited tenure, the interim government may not have the capacity for large-scale reforms in the energy and power sectors. However, it can take critical steps to promote sustainability and establish a foundation for the next administration to build upon.
