Finance ministry approves Tk 20.67b subsidy for private power plants
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The Finance Ministry has approved the release of Tk 20.67 billion in subsidies to settle outstanding bills of private power plants for March, aiming to ease financial strain in the power sector and ramp up generation.
The subsidy will be directed to the Bangladesh Power Development Board (BPDB) to pay Independent Power Producers (IPPs) and Rental Power Plants (RPPs), a senior official of Finance Division under the Ministry of Finance told The Financial Express on Thursday.
The subsidy has been allocated from the power subsidy segment of the revised budget for the fiscal year 2025–26.
This payment will cover actual shortfalls of 85 independent power producers (IPPs) and 9 rental power plants (RPPs) for March, 2026.
Previous shortfalls up to February have already been settled, said the official.
The payments will, however, not cover two power plants lacking government procurement approval or electricity imports from India.
Subsidy payments to 160 MW BR Power Gen Sripur and RPCL–Norinco International Power Ltd will be addressed after clarification.
The fund must only be used for designated IPP and RPP bills, with strict adherence to government financial regulations.
Monthly shortfall details must be submitted to the Finance Division in the first week of each month and future audits will reconcile subsidies with actual liabilities.
The Finance Division also emphasized structural reforms to control subsidy management, which include the reduction of capacity charges in power purchase agreements, maintenance of comparative records of plant-based generation and sales.
This subsidy release highlights the government’s effort to stabilize the power sector amid recurring financial shortfalls.
By imposing conditions and emphasizing transparency, the Finance Division seeks to balance immediate relief with long-term sustainability.
Sources said the Middle East conflict has triggered a sharp global energy price spike, with Brent crude surging over 70 per cent to $120 per barrel and Asian LNG spot prices climbing over 150 per cent to around US$25 per million British thermal unit (MMBTu).
The financial strain is cascading onto IPPs, who generate a significant share of the country’s electricity.
Payment arrears from the BPDB now stretch around 300 days.