Undoing power sector damage

The full scale of mismanagement, waste and arbitrary decisions that characterised Bangladesh's power sector under the authoritarian Awami League regime is increasingly becoming more apparent. One deal after another, struck by the state-run Bangladesh Power Development Board (BPDB), stands out for poor judgment and disregard for national interest. The 718MW JERA Meghnaghat plant stands as a prime example of these problematic deals. Despite the project's completion, it remains idle due to an acute gas shortage and transmission bottlenecks, yet the government is liable to pay millions in capacity charges. This arrangement, signed under a long-term power purchase agreement (PPA), is indicative of the imprudence that has defined energy planning in recent years where contracts were awarded without due diligence, tariffs were inflated and foreign interests were accommodated at the expense of public funds.

The JERA Meghnaghat plant is merely the tip of the iceberg in the power sector's crisis. Across the industry, the country is burdened with expensive electricity from unsolicited projects awarded under the now-defunct Speedy Supply of Power and Energy (Special Provision) Act 2010. These contracts often bypassed feasibility studies and were exempt from public scrutiny. This has led to an oversupply of generation capacity -- largely dependent on natural gas -- even though Petrobangla cannot provide even half of the required supply to keep existing plants running. Idle plants continue to collect capacity payments, bleeding the BPDB's finances dry without delivering electricity to the grid. At Meghnaghat alone, three large LNG-based plants sit underutilized due to gas shortages and delays in substation construction. Meanwhile, the government is forced to pay these idle power plant owners through capacity charges, wasting significant taxpayer funds just to meet the costly contractual obligations.

Blame for this unsustainable mess rests squarely on the ousted Awami League government, which spent years pursuing power generation targets without securing fuel supply or transmission capacity. In many instances, contracts were awarded not on the basis of national demand forecasts or technical merit, but to serve political convenience, funnel money to individuals politically connected with Awami League, and cultivate foreign partnerships for short-term gain. This wilful neglect of prudent planning and financial discipline has saddled the nation with high-cost energy, undermined investor confidence and pushed public utilities like BPDB closer to insolvency. Experts have repeatedly cautioned against inflated demand projections and warned of the dangers of overcapacity, but such concerns were brushed aside. Instead of a stable, affordable energy system, the country has been left with one that is expensive, inefficient and shaped more by private interests than public need.

There is, however, a measure of hope that the current interim administration may begin to correct course. The initiative to renegotiate tariffs that started with the JERA plant is a step in the right direction. The incumbent adviser to the Ministry of Power, Energy and Mineral Resources Muhammad Fouzul Kabir Khan deserves a degree of appreciation for initiating this difficult and politically charged process. While his efforts cannot erase the consequences of a decade of misgovernance, they mark a crucial first step towards repairing the extensive damage inflicted upon the sector. To truly rectify the situation, the government must review all existing PPAs to assess fairness and economic viability one by one and phase out the unsustainable practice of capacity payments. Above all, long-term energy planning must be rooted in a reliable fuel supply chain and investment in transmission infrastructure. Bangladesh's energy future must not remain hostage to past mistakes. With a clear strategy and political will, the country can still build a power sector that truly serves its people.