RE: Phulbari (Dinajpur) Representative5 Apr 2026 10:50
For not adding generation capacity, Bangladesh faced increasing power outages from 2000 onward. The BNP government came up with oil-based rental power plants to tackle the situation that was picked up by the caretaker government, and the first 10 rental power plants were awarded in 2008. Despite initial opposition, the Awami League government had to add more oil-based rental plants from 2010. There was no other alternative to addressing the severe load-shedding, which was hampering economic growth. In the meantime, the power sector problem shifted from a lack of generation capacity, to a shortage of primary energy. In 2007, the gas shortage started with a 300 mmcfd shortfall that could never be mitigated. Today, the gas deficit is estimated at 1,300 mmcfd. Both the Power System Master Plan (PSMP) 2010 and PSMP 2016 accepted this deficit and, instead of emphasising local exploration (although PSMP 2010 relied 30 percent on its future power generation plan from local coal, which was abandoned in the 2016 plan), depended heavily on imported fuel. Although the government did not follow these plans, fuel import dependency kept on increasing, putting the country at an international price and supply fluctuation risk. The legacy problem of generation got much more attention, putting the primary energy issue on the backburner. Every time the issue of high future energy import bill was raised, the growing economic strength was shown as a solution.
The Bapex-only local exploration policy resulted in only one drilling a year in the last 20 years, and despite settling the maritime boundary in 2014, offshore activity was questionable and half-hearted. Petrobangla miserably failed to maintain the production plateau reached during 2016-17. Any hope of local coal development was shut down in 2012. Bangladesh started to move away from energy independence at a much faster rate than was needed in the absence of local exploration and exploitation. For fuel and source diversification, and hence better energy security, the import of LNG and coal was needed and should have been started earlier. Our lack of experience in international energy trading was exposed when we opted for a four-tonne long-term contract for the 7.2-tonne LNG capacity. A large option spot portfolio is never recommended in a perpetual supply deficit situation.
The overcapacity dilemma is a trap created by the government. Out of 25,500MW of electricity generation capacity, 3,500MW is off-grid (solar home and captive), while 4,000MW cannot be operational because of forced/unforced shutdown and fuel shortage. Including derated capacity and plant availability, the true grid capacity is about 16,000MW. Unless the government decommissions the idle 3,000MW capacity it is carrying on paper, the overcapacity question will not go away. The other question of capacity payment is more complex. Every power plant is paid a capacity cost varying between Tk 1.25-2.4/kWh. This is part of the generation cost
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