Bangladesh’s electricity consumers witnessed two interesting developments on Wednesday, May 20.
On one hand, the country’s power sector achieved a historic milestone by recording an all-time high output of 17,200 megawatts (MW) -- breaking the previous record of 16,794 MW set on July 23 last year.
This peak performance reflects the sector's technical capacity to meet current demand.
On the other hand, a public hearing held on the same day sent a resounding message to authorities: Consumers are in no position to absorb further power tariff hikes.
This generation record comes amid an intense public debate over whether it is rational for the government to shift its power subsidy burden onto a population already struggling with immense economic challenges.
During a public hearing organized by the Bangladesh Energy Regulatory Commission (BERC) to gauge public sentiment on the tariff proposal, politicians, business leaders, and consumer rights activists strongly opposed the Bangladesh Power Development Board’s (BPDB) proposal to increase prices, warning of severe consequences for citizens and industries alike.
No one disputes that just as households and industries can ill-afford higher electricity prices, the government can also ill-afford a heavy subsidy burden.
However, the most pertinent question is whether the government should simply pass the buck to the public to ease fiscal pressure, or instead re-examine how years of policy failures created this catch-22 situation.
The consequences of raising tariffs to cut subsidies are far-reaching. Lower and lower-middle-income families -- already battered by high inflation, a stagnant job market, and recent hikes in diesel and petrol prices -- are walking an economic tightrope. Forcing them to pay more for electricity will push many over the edge.
Furthermore, higher power prices will elevate production costs for businesses. These costs will inevitably be passed down to consumers, who are also bracing for higher tax burdens following the upcoming June budget.
For too long, successive administrations have failed to implement policies that foster a balanced and sustainable energy mix.
Consequently, the cost of power generation has skyrocketed.
This issue is compounded by expensive purchasing agreements with private producers, including cross-border suppliers.
While neighbouring Pakistan managed a massive structural transition -- successfully diversifying its energy mix away from expensive imported fossil fuels toward nuclear, coal, hydropower, and a decentralized solar energy boom -- Bangladesh’s power bureaucracy remained largely content with costly, unsustainable fossil fuels.
Despite years of rhetoric promising a gradual shift to clean and green energy, actual performance has been dismal.
Data from Power Grid Bangladesh highlights this stark reality. A massive chunk of daily power is generated from coal: 6,081 MW domestically, alongside 1,448 MW imported from Adani Power in India.
Gas accounts for over 5,000 MW, while furnace oil contributes nearly 3,500 MW.
On May 20 -- the day of the record-breaking generation -- only 107 MW came from hydropower and a mere 3 MW from wind energy.
Are consumers expected to pay for the short-sightedness and inefficiencies of power sector planning?
Heavy reliance on expensive imported fossil fuels, massive capacity charge payments to idle private power plants, and sharp currency depreciation are the true drivers behind escalating costs.
The Institute for Energy Economics and Financial Analysis (IEEFA), an independent think tank that focuses on research and analysis related to energy markets, trends, and policies, recently urged Bangladesh to transition urgently from volatile imported fossil fuels to renewable energy.
IEEFA notes that between FY2020-21 and FY2024-25, Bangladesh's primary import reliance grew to 62.5%, causing generation costs to soar by 83% due to expensive liquefied natural gas (LNG), coal, and capacity payments.
Renewable energy serves as a natural hedge against global supply disruptions and price spikes. Yet, it currently contributes just 2.3% to Bangladesh's power generation, compared to a global average of over 33%.
While currency depreciation and high fuel prices play a role, IEEFA points out that the costly peaking plants, capacity payments due to high reserve margins, and fuel shortages create a persistent fiscal burden.
Passing this financial weight onto consumers will only deepen economic hardship and cripple industrial competitiveness. To ease the subsidy burden prudently, the government must phase out underutilized, expensive oil- and coal-fired plants burdened by steep capacity payments. It must also expedite a transition toward renewable, clean, and nuclear energy.
Hiking tariffs may be the easiest response, but it is certainly not the right one.
Reaz Ahmad is Editor, Dhaka Tribune
