Energy Sector in Bangladesh: An agenda for reforms

The report examines the energy sector in Bangladesh, highlighting a sharp increase in energy subsidies from US$128 million in FY2010 to US$1.91 billion in FY2012. It identifies a critical supply-demand gap in electricity and the high cost of relying on liquid fuel-based rental power plants. The document outlines the government's Power System Master Plan (PSMP) 2010, which aims for fuel diversification including coal, nuclear, and renewables. It argues for a transition toward cost-reflective pricing and targeted cash transfers to replace broad subsidies, aligned with an IMF Extended Credit Facility arrangement to restore fiscal sustainability.

• Energy subsidies in Bangladesh grew significantly between FY2010 and FY2012, rising from approximately US$128 million to US$1.91 billion, driven by increased energy consumption and higher import prices.
• The electricity generation mix has become more dependent on expensive liquid fuels due to the use of rental and quick-rental power plants to address crises, with liquid fuel's share increasing from 5% in FY2010 to 18% in FY2011-12.
• The Bangladesh Power Development Board (BPDB) consistently incurs losses because electricity is sold at prices below the break-even point, necessitating annual government budgetary transfers.
• The government's Power System Master Plan (PSMP) 2010 targets a diversified fuel composition by 2030, aiming for 50% coal (30% domestic, 20% imported), 25% natural gas (including LNG), 20% nuclear/renewables/cross-border trade, and 5% liquid fuel.
• To address fiscal pressures and macroeconomic instability, Bangladesh entered a three-year IMF Extended Credit Facility (ECF) in April 2012, committing to reduce subsidy costs through fuel and electricity price adjustments.
• The report recommends prioritizing demand-side management (DSM) as the most cost-effective way to reduce the electricity gap, alongside optimizing existing capacity and accelerating the implementation of long-term PSMP phases.

APA

Mujeri, M. K., Chowdhury, T. T., & Shahana, S. (2014). Energy Sector in Bangladesh: An agenda for reforms. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/energy_sector_bangladesh.pdf

Chicago

Mujeri, Mustafa K., Tahreen Tahrima Chowdhury, and Siban Shahana. Energy Sector in Bangladesh: An agenda for reforms. International Institute for Sustainable Development, 2014. https://www.iisd.org/system/files/publications/energy_sector_bangladesh.pdf.

Wikipedia

{{cite report |last1=Mujeri |first1=Mustafa K. |last2=Chowdhury |first2=Tahreen Tahrima |last3=Shahana |first3=Siban |title=Energy Sector in Bangladesh: An agenda for reforms |publisher=International Institute for Sustainable Development |date=March 2014 |url=https://www.iisd.org/system/files/publications/energy_sector_bangladesh.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mujeri2014energy, author = {Mujeri, Mustafa K. and Chowdhury, Tahreen Tahrima and Shahana, Siban}, title = {{Energy Sector in Bangladesh: An agenda for reforms}}, institution = {International Institute for Sustainable Development}, year = {2014}, month = mar, url = {https://www.iisd.org/system/files/publications/energy_sector_bangladesh.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }