Bangladesh plans sweeping energy reforms from July, focusing on renewable expansion, lower fossil fuel dependence, energy pricing reform and stronger domestic exploration to improve affordability, sustainability and long-term energy security.
Bangladesh is preparing sweeping reforms in its energy sector to reduce wasteful spending, expand renewable energy and lessen dependence on costly fossil fuel infrastructure, senior government officials said on Sunday.
The announcement came at a seminar in Dhaka where Prime Minister’s Adviser on Economy and Planning Rashid Al Mahmud Titumir outlined plans to overhaul a sector long criticised for excess power generation capacity, weak governance and financially burdensome contracts.
Bangladesh, one of the world’s fastest-growing economies and among the countries most vulnerable to climate change, has been under growing pressure to shift away from imported fossil fuels toward cleaner, more affordable and sustainable energy sources.
The seminar, titled “Renewable Energy in the Upcoming Budget: Expectations and Realities,” was jointly organised by Centre for Policy Dialogue and Dhaka Stream at Pan Pacific Sonargaon Dhaka.
Titumir said Bangladesh had created a wide gap between installed electricity generation capacity and actual power demand, resulting in major financial losses and inefficient use of public resources.
He criticised the much-debated “capacity charge” system under which the government pays power producers even when electricity is not generated.
“Some reserve capacity is necessary for future demand, but Bangladesh built far more capacity than needed, much of which remains unused,” he said.
The adviser also alleged that several energy agreements signed in previous years bypassed proper procedures and were later granted legal protection despite concerns over transparency and accountability.
According to him, years of heavy investment in fossil fuel infrastructure slowed the growth of environmentally sustainable and renewable energy systems.
Inflation worries linked to fuel prices
Titumir said volatility in global fuel markets, intensified by tensions in the Middle East, had added pressure on Bangladesh’s economy despite the country having no direct involvement in the conflict.
He said the government remained cautious about adjusting fuel prices because increases in energy costs quickly feed into inflation and affect agriculture, transport and household expenses.
“Even limited adjustments in fuel prices recently contributed to inflationary pressure,” he said, adding that authorities were particularly careful about raising diesel prices because of the impact on food production and farming costs.
Against that backdrop, the government is preparing a broader reform agenda centred on renewable energy expansion and long-term energy security.
Five-point reform agenda from July
Titumir said the government plans to begin implementing a five-point strategy from July 1.
The plan includes restructuring Bangladesh’s energy mix by increasing the share of renewable energy as part of the country’s ambition to become a trillion-dollar economy by 2034.
Authorities also plan to introduce income-sensitive energy pricing policies with separate tariff structures for industries and residential consumers.
To cut import dependence, the government aims to encourage domestic manufacturing of solar photovoltaic panels and other renewable energy equipment.
Titumir said the operational capacity of Bangladesh Petroleum Exploration and Production Company Limited would be expanded to strengthen local energy exploration and reduce reliance on foreign firms.
The government also plans to establish benchmark-based fuel reserve policies similar to food and fertiliser stock management systems to improve long-term energy security.
Sharp criticism of past governance
In unusually strong remarks, Titumir accused a small group of actors of dominating Bangladesh’s energy sector for years, describing it as a “poisonous devils network.”
He said the country had been pushed toward an import-dependent and oligarchic energy structure that raised costs and deepened subsidy burdens.
“As long as we fail to address the structural weaknesses of the energy sector, subsidies will continue,” he warned.
He added that the government now wants to rebuild the sector around lower-cost energy systems to support industrialisation, economic competitiveness and affordable energy access.
The seminar also featured remarks from Golam Iftekhar Mahmud, editor-in-chief of Dhaka Stream, and Khandaker Golam Moazzem, research director at the Centre for Policy Dialogue.
Analysts say the success of Bangladesh’s planned reforms will depend on transparency, regulatory independence and the government’s ability to balance energy affordability with long-term sustainability goals.
