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Bangladesh power review: Overcapacity, capacity payments, subsidies and tariffs are set to rise even faster

May 01, 2020
Simon Nicholas and Sara Jane Ahmed
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Key Findings

Bangladesh's power system is headed for financial disaster due to overcapacity in coal and LNG power.

Investments in renewable energy and grid are needed to meet lower-than-expected demand slowed further by COVID-19.

Bangladesh Power Review: Overcapacity, Capacity Payments, Subsidies and Tariffs Are Set to Rise Even Faster

Executive Summary

Bangladesh’s current plan to increase power capacity, based on a switch to expensive imported coal and LNG, is putting the country on course for deeper financial stress in the power system, similar to the strains already emerging in other countries. The Covid-19 pandemic will make this situation even worse.

Comparing IEEFA’s power demand forecast for Bangladesh to the planned capacity additions envisaged in the Revisited Power System Master Plan 2016 (PSMP) shows that the nation is on course to build far more capacity than it will need.

Press release: IEEFA: For price-sensitive LNG buyers in Asia, now is not the time to build new LNG import terminals

Please view full report PDF for references and sources.

Simon Nicholas

Simon Nicholas is IEEFA’s Lead Energy Finance Analyst for Bangladesh, Pakistan and the global steel sector as well as Asian seaborne thermal and coking coal markets.

Simon’s focus is on the energy transition, the long-term outlooks for coal and steel as well as the need for emerging nations to establish financially sustainable power systems to support their development.

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Sara Jane Ahmed

Sara Ahmed is founder of the Financial Futures Center and an advisor to the Vulnerable 20 Group of Finance Ministers (V20) of the Climate Vulnerable Forum (CVF). The Financial Futures Center supports developing countries catalyze an economic transformation to launch a decade of progress with five years of fast-tracked action aimed at ultimately achieving climate prosperity by 2030.

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