Bangladesh’s ability to stabilise electricity tariffs in 2026 remains uncertain as mounting arrears in the power sector coincide with IMF pressure to implement a three-year roadmap to withdraw subsidies and clear outstanding dues.
According to official data, the Bangladesh Power Development Board (BPDB) currently owes Tk37,070 crore ($3.4 billion) to public and private entities.
Independent Power Producers (IPPs) account for the largest share at Tk21,303 crore, while gas bills payable to state-owned Petrobangla stand at Tk11,025 crore.Imports cleared, IPP dues climb
BPDB has continued the electricity import framework established under the previous Awami League government, sourcing power from India and India’s Adani Group. Officials said all outstanding import bills to India were settled by 11th December, 2025, totaling $2.237 billion.
Arrears linked to Adani Power, including late payment surcharges, fell from Tk5,950 crore before August 2024 to Tk885 crore, though Adani disputes the figures, claiming BPDB still owes more than USD 300 million due to coal pricing disagreements.
Under bilateral and commercial agreements, Bangladesh imports 1,000 MW from India (Bheramara), 160 MW privately from Tripura, and 40 MW from Nepal via Indian lines.
While import arrears have declined, dues to domestic IPPs have risen from Tk18,293 crore in August 2024 to Tk21,303 crore currently. Many local producers remain under financial pressure due to delayed payments and growing bank liabilities.
Election timeline adds pressure
A recent meeting chaired by Power and Energy Adviser Faozul Kabir Khan highlighted the urgency of clearing arrears before national elections in February.
Officials warned that the next government could face severe challenges during the dry season (March-April) when electricity demand typically rises from 10,000-11,000 MW in winter to 16,000-17,000 MW.
Part of the challenge stems from unpaid subsidies from the Ministry of Finance. BPDB is owed Tk4,000 crore in subsidies to offset losses from electricity purchased from two large IPPs.
Subsidy gap widens despite payments
Gas bills payable to Petrobangla have fallen to Tk11,025 crore from Tk17,227 crore, while dues to government-owned plants dropped to Tk3,671 crore from Tk5,675 crore. Unpaid wheeling charges to the Power Grid Company of Bangladesh (PGCB) decreased to Tk186 crore from Tk478 crore.
Between August 2024 and December 2025, BPDB paid Tk135,095 crore toward electricity and related bills.
Reduced gas supply forced greater reliance on coal- and oil-fired plants, adding Tk4,372 crore in costs. Rising furnace oil prices, currency depreciation, and higher import costs further strained finances.
Electricity demand in Bangladesh grows roughly 7% annually, but subsidies have not kept pace. Last fiscal year, BPDB received Tk38,000 crore in subsidies but incurred losses totaling Tk55,000 crore.
Over fiscal years 2022-23, 2023-24, and 2024-25, BPDB recorded losses of Tk36,828 crore beyond subsidies.
The average cost of generation and purchase is Tk11.83 per unit, rising to Tk12.35 per unit at distribution, while retail tariffs leave BPDB losing Tk5.72 per unit.
Experts see tariff hike as inevitable
BPDB said it saved Tk898 crore over the past 18 months by reducing furnace oil import surcharges and securing lump-sum discounts from Adani.
Energy expert Prof. Ijaz Hossain of BUET said subsidy pressures are increasing. “The IMF is pressuring the government to adjust costs by raising electricity tariffs. Some tariff increase now seems unavoidable,” he said.
Hossain suggested moderate hikes could cover half of the subsidy gap, while efficiency gains, gradual phase-out of oil-based plants, and expansion of renewables could address the rest.
“If oil-based plants are phased out over five years and renewables fully utilised, Bangladesh could save $500 million-$1 billion annually. The sector could become sustainable within three to five years, though consumers will face short-term pain,” he added.