The government has announced plans to privatise electricity distribution and allow private companies to import petroleum products, saying the initiatives are intended to reduce subsidy burdens, improve efficiency and rebuild an energy sector left heavily dependent on imports after years of what it described as poor planning under the Awami League government.
Speaking at a policy conclave titled "Energy Security & Transformation of Bangladesh" organised by Bonik Barta in Dhaka on Wednesday, Power, Energy and Mineral Resources Minister Iqbal Hasan Mahmood said the government had already received the prime minister's approval in principle to move ahead with the privatisation of electricity distribution companies.
"I want to privatise all our distribution companies," the minister said. "The government can generate electricity and sell it in bulk, but retail distribution should be handled by the private sector."
He invited local entrepreneurs to submit proposals, saying the government would examine them before taking further steps.
Mahmood said privatising electricity distribution would improve accountability, increase bill collection and reduce the financial burden on the government.
"The government cannot do retail business. Private operators will ensure greater accountability and better collection," he said.
Drawing comparisons with neighbouring India, he noted that electricity distribution in cities such as Kolkata, Mumbai and Delhi is managed by private companies and questioned why Bangladeshi businesses could not perform the same role.
The minister also said the government was considering opening petroleum imports to private companies instead of keeping the business under state control.
"Why should the government always import petroleum products? Let the private sector do it. There is a market, and competition will reduce the government's burden," he said.
The government currently imports fuel and generates electricity at comparatively high costs but supplies them to consumers at subsidised prices, resulting in a significant fiscal burden.
Mahmood said the reform initiatives were necessary because the country had inherited an energy sector suffering from years of inadequate planning, weak investment in domestic resources and growing dependence on imported fuel.
He said Bangladesh had not drilled a single new gas well in the past 17 years despite expanding power generation capacity to about 28,000 megawatts, leaving the country increasingly exposed to supply disruptions.
"We built 28,000 megawatts of generation capacity, but failed to ensure the gas required to run these plants," he said.
According to the minister, three gas-fired power plants in the Khulna region remain unable to commence operation because gas supplies have not been secured. Construction of a pipeline from Bhola, where gas reserves are available, is continuing.
He said years of insufficient exploration had created an energy system in which even a minor disruption could trigger a nationwide crisis.
Referring to the recent disruption at one of the country's two floating liquefied natural gas import terminals, Mahmood said the incident reduced gas pressure across parts of the country, disrupting supplies to Mymensingh and several other regions. The shortage affected households, forced compressed natural gas filling stations to suspend operations and triggered protests in some areas.
To strengthen long-term energy security, he said Bangladesh must simultaneously increase domestic gas exploration and production while expanding liquefied natural gas import infrastructure so that problems at a single terminal do not disrupt supplies nationwide.
The minister also outlined the government's renewable energy plans, saying Bangladesh aims to install 10,000 megawatts of solar power before the end of the current government's tenure.
Under the plan, cluster-based rooftop solar systems will be installed and operated by private investors under net-metering arrangements. Building owners installing rooftop solar systems will receive municipal tax rebates, while additional taxes may be imposed on those unwilling to adopt solar power.
He said land had already been identified for large-scale solar parks, with tenders expected to be invited in August or September. Chinese investors have already expressed interest in the projects.
Mahmood acknowledged the severe financial challenges facing the sector, revealing that outstanding liabilities in the power sector have reached Tk 670 billion, underscoring the urgency of structural reforms aimed at improving financial sustainability and reducing reliance on imported energy.
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