Bangladesh’s Power Crisis Drains Tk 30 Billion Monthly Amid Corruption Fallout
Bangladesh’s power sector remains burdened by deep-rooted corruption and excessive capacity charges. Despite recent reforms, the financial strain persists, costing the economy an average of Tk 30 billion each month for the past 30 months. The issue stems from years of mismanagement under the previous government, leaving the new administration with a costly problem to solve.
The crisis traces back to the Awami League’s decade-long rule, during which unsolicited and quick rental power plants were approved under an indemnity law. This legislation shielded those involved from legal consequences, allowing public funds to flow into private hands through capacity charges—payments made even when plants generated no electricity. By the time the interim government took over on August 8, 2024, power overcapacity had soared to around 50%, double the acceptable 25% threshold.
On November 28, 2024, the interim administration repealed the controversial Quick Enhancement of Electricity and Energy Supply Act, a key tool used to bypass scrutiny. Yet, the financial damage lingers. Capacity charges continue to drain resources, with monthly subsidies averaging Tk 30 billion. The system, designed to favour private operators, has left the sector and the broader economy struggling.
The upcoming government, set to form after the February 12 general elections, will face immediate pressure to dismantle this corrupt framework. Without decisive action, the cycle of overcapacity and misallocated funds risks persisting, further weakening public finances.
The repeal of the indemnity law marks a first step, but the power sector’s troubles run deep. Overcapacity and capacity charges still divert billions each month, draining state funds. The next administration’s ability to reform the system will determine whether the sector can recover—or if the financial bleeding continues.
