Bangladesh is preparing to increase electricity tariffs as early as May or early June, in a move aimed at easing mounting fiscal pressure driven by rising energy import costs.
The state-owned Bangladesh Power Development Board (BPDB) is set to submit a proposal to the Bangladesh Energy Regulatory Commission (BERC) today, seeking approval for adjustments to both bulk and retail electricity prices.
Officials say the proposed changes would affect around 37% of the country’s 49.7 million electricity consumers, with higher-usage households and businesses likely to bear the brunt.
By contrast, approximately 63% of users—classified as “lifeline consumers” due to their low electricity usage—are expected to be shielded from the increases.
Under the proposal, bulk electricity tariffs could rise by between Tk 1.20 and 1.50 per kilowatt hour. If approved, the adjustment could generate an additional Tk 100 billion to Tk 150 billion (bn) in revenue annually, helping to reduce the government’s subsidy burden.
Subsidy pressures mount
The move comes as Bangladesh grapples with a widening gap between the cost of electricity generation and the price paid by consumers. BPDB estimates it will require around Tk 620bn in the current fiscal year, rising to Tk 630bn next year if tariffs remain unchanged.
The government has already allocated Tk 360bn taka in subsidies for the power sector, but officials say a further Tk 150bn may be needed due to surging global fuel prices, another official said.
Much of the pressure stems from higher import costs for liquefied natural gas (LNG), coal and oil, which are used extensively in electricity generation. Officials say recent geopolitical tensions, including the Iran–Israel conflict, have exacerbated these costs.
Some idle baseload plants in public and private sectors, including JERA Meghnaghat, the RPCL–NORENCO coal-fired plant, 1200MW Matarbari Power Plant and the 800MW Rupsha plant, have also added to the subsidy burden.
Focus on higher consumption
Policymakers are considering a tiered pricing structure that would place greater emphasis on higher electricity consumption. Households using more than 400 units per month—accounting for roughly 63% of total electricity use—are expected to face the steepest increases.
Plans under discussion include raising tariffs by around Tk 1.38 per unit for high-consumption users, and by approximately Tk 0.70 for those consuming between 76 and 400 units.
Officials argue that such a structure would help balance fiscal consolidation with social protection, ensuring that lower-income households remain insulated from price shocks.
Policy shift despite earlier pledge
The proposed increase marks a shift from earlier commitments by the government, led by the Bangladesh Nationalist Party (BNP), which had pledged to keep energy prices stable during its initial months in office.
However, officials say external economic pressures have forced a reassessment. A high-level committee chaired by the finance minister has been tasked with reviewing the tariff structure and recommending adjustments.
According to BPDB estimates, the cost of generating electricity now exceeds retail prices by around 5.5 taka per unit, creating a substantial financial shortfall.
Move towards cost-reflective pricing
The planned reforms reflect a broader shift towards “cost-reflective” energy pricing, aligning domestic tariffs more closely with international market conditions. Analysts note that similar measures are being adopted across developing economies facing volatile global energy markets.
While the proposed increases could significantly reduce subsidy requirements and ease pressure on public finances, they also risk adding to cost-of-living challenges for consumers and businesses.
“We have received a proposal from the Ministry of Power and Energy and have asked that it be resubmitted through the Bangladesh Power Development Board (BPDB). We expect to receive it on Monday,” BERC chairman Jalal Ahmed told Just Energy News.
According to him, a final decision will be taken following a regulatory review by the Bangladesh Energy Regulatory Commission (BERC).