The Bangladesh government is facing escalating capacity-charge payments to private power producers, a challenge that intensified under the previous Sheikh Hasina administration. These payments surged from Tk 25.17 billion in December 2023 to Tk 46.47 billion by June 2024, straining public finances amid declining foreign reserves and mounting debt.
The government had been purchasing expensive electricity from private plants while leaving cheaper public plants idle, driving up liabilities. In response, officials are reviewing contracts with independent power producers (IPPs) and rental plants, considering terminating or not renewing agreements with costly providers. By June 2024, the government’s total liabilities to private power producers reached Tk 360.74 billion, with Tk 783.70 billion paid in capacity charges between FY 2019 and FY 2023. Economists recommend revising or scrapping these deals to ease economic pressures. For FY2025, the government has allocated Tk 400 billion in power subsidies, with a significant portion earmarked for capacity-charge payments.
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