Power board's loss may soar 196% to Tk18,000cr in FY25: CPD
“The board will face substantial losses despite increased electricity prices and government subsidies,” CPD Research Director says
The Bangladesh Power Development Board's losses are projected to soar by 196% year-on-year to Tk18,000 crore in the fiscal 2024-25 due to the government's "flawed" policies, said the Centre for Policy Dialogue (CPD) today.
"The board will face substantial losses despite increased electricity prices and government subsidies," CPD Research Director Khondaker Golam Moazzem said during a presentation on the budget allocation for the power sector held at the BRAC Centre Inn in the capital's Mohakhali.
He said the power generation capacity is 46.4% more than the demand, with the country now having a capacity of 30,738MW, but only 14,000MW being used. This excess capacity leads to significant government spending on capacity charges without generating any electricity. He questioned why production capacity is being increased when it is not being utilised.
"Currently, electricity generation falls short of demand due to distribution and transmission limitations. This results in load shedding despite surplus electricity, while also paying a large amount as capacity charge for power plants," he said, explaining the rising electricity bills as well as PDB's projected loss.
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Moazzem said the government's plan to produce 60,000MW by 2041 is ambitious and argued that a maximum of 35,000MW, with a 25% reserve margin, would be sufficient.
He said the current power generation capacity will not be needed even by 2030. In six years, demand may reach 19,400MW, and with a 25% reserve margin, 23,252MW will be required. Despite the increased capacity, load shedding continues, averaging 1,100MW in summer, affecting Mymensingh, Khulna, and Sylhet the most.
The budget lacks clarity on the power sector, leaving everyone uncertain about the government's plans for this sector, he added.
Advocating for greater reliance on renewable energy, the CPD research director called for a reduction in the use of fossil fuel-based power plants, labelling them "environmentally harmful and expensive".
He criticised the government's increasing import of costly fossil fuels and emphasised focusing on domestic gas exploration.
He also urged the government to develop a smart grid system and improve transmission and distribution lines to ensure an uninterrupted power supply.
Moazzem also criticised the operations of the Bangladesh Petroleum Corporation (BPC), noting inconsistencies in their financial reports.
"The BPC shows losses at the beginning of the year but claims profits by the end. The method they use to determine oil prices needs scrutiny," he said.
Speaking at the event, lawmaker AK Azad said prices have been hiked with a commitment to supplying uninterrupted electricity and gas, but load shedding has not decreased.
"As a result of load shedding and an increase in the price of fuel, many industrial plants have been shut down," he added.
AK Azad, also chairman of Ha-Meem Group, one of the largest Bangladeshi conglomerates in the textile and garments sector, said as per Bangladesh Bank data the import of factory machinery, raw materials and other products has decreased by 46.68% compared to last year.
He emphasised, "Overall, the government's revenue has decreased. The National Board of Revenue did not meet its revenue target in the outgoing fiscal year, and it will likely be challenging to meet the Tk4.8 lakh crore target in the upcoming fiscal year."
Azad mentioned that the NBR chairman himself admitted this, adding, "If this trend continues, there is significant doubt that the government will be able to allocate Tk30,000 crore as budgeted for the power sector."
He underscored the necessity of uninterrupted electricity for employment creation and the country's development, emphasising the importance of ensuring transparency and accountability at every level of government.
Professor M Shamsul Alam, energy adviser to the Consumers Association of Bangladesh, accused the BPC of corruption, alleging that it manipulates fuel oil prices under the guise of automatic adjustment.
He criticised the BPC for usurping the Bangladesh Energy Regulatory Commission's role in setting fuel prices, despite legal provisions.
Alam highlighted legal challenges against this practice, noting that despite evidence of corruption, no action has been taken.
He also criticised the government for purchasing power without competition under special legislation and increasing electricity fuel prices through executive orders, bypassing public hearings and regulatory oversight.
"Officials' salaries, allowances, foreign travel expenses, bribes, and commissions are all being paid with public money. Yet, people are not allowed to speak or be heard," he said. "As a result, nobody cares whether this budget passes or fails. Instead, the larger the budget becomes, the more looting will occur."
Energy expert Professor M Tamim, Rector of Bangladesh Power Management Institute Mohammad Alauddin, and Director General of Power Cell Mohammad Hossain were also present on the occasion.
