The government of Bangladesh has been granting sovereign guarantees for loans taken by various organizations in the power and energy sector, leading to a significant fiscal burden. Over the past 14 years, more than 100 power plants have been established, with the government providing guarantees for loans associated with these projects. The current amount of sovereign guarantees in the power sector alone is approximately Tk 51,496.32 crore, which accounts for over 52% of the government’s total sovereign guarantee.
Additionally, the government is responsible for full guarantees on fuel oil imports by the Bangladesh Petroleum Corporation, amounting to Tk 4,928 crore. The combined sovereign guarantee amount for the power and energy sector currently stands at Tk 56,424.39 crore. This situation puts strain on the government’s fiscal capacity, especially considering the financial losses incurred by state-owned power generation companies. Economists suggest that unnecessary construction of power plants should be halted to alleviate the financial pressure on the government. Revising the related policies regarding sovereign guarantees is also being considered to mitigate future financial risks.
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