The government of Bangladesh is facing a significant challenge with the mounting arrears in the power and energy sector, which have risen to nearly $5 billion as of last December. A substantial portion of these arrears pertain to the power sector, creating financial strain and difficulties in foreign currency management.
The Bangladesh Power Development Board (BPDB), as the single buyer agency, is responsible for fixing prices in dollar terms for power purchase agreements. Additionally, the costs associated with imported LNG for power plants and gas purchased from foreign extraction companies also contribute to the arrears, as these payments must be made in dollars. The devaluation of the local currency against the dollar further exacerbates the situation, leading to an increase in the arrears.
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