Bangladesh is reassessing controversial power purchase agreements signed under Sheikh Hasina, seeking fairer terms, easing fiscal pressure and signalling a strategic shift toward renewable energy while maintaining investor confidence.
Bangladesh has begun reassessing a series of power purchase agreements signed under former prime minister Sheikh Hasina, with authorities saying several contracts may have compromised national interest and placed heavy financial strain on the energy sector.
Power, Energy and Mineral Resources Minister Iqbal Hasan Mahmud Tuku said the government plans to renegotiate terms with independent power producers to secure fairer conditions while safeguarding electricity supply.
“Electricity and sovereignty are the same thing. We gave this sovereignty to some people, power producers. We need to establish our sovereignty over the deals,” Tuku told reporters at the Secretariat in Dhaka.
Officials involved in the review say some agreements were awarded in ways that raised concerns over transparency and long term financial sustainability. A report by the government’s National Review Committee found indications that certain contracts were influenced by cronyism and were not subject to competitive processes.
Over the past decade Bangladesh sharply increased electricity generation capacity through agreements with private producers to meet rising demand. Many of those deals, however, included costly capacity payments and fixed charges that continue to burden public finances even when plants operate below capacity.
Tuku said the government favours dialogue over confrontation, cautioning that unilateral action could lead to legal disputes in international arbitration venues such as the Singapore International Arbitration Centre.
“We need to review all the anti national deals in the power sector to find a solution. We will sit with them and discuss,” he said, adding that discussions across the table would be wiser than protracted legal battles.
The Bangladesh Independent Power Producers’ Association has signalled willingness to cooperate. Its president David Hasanat acknowledged that some agreements appear inequitable, noting that power plants with similar specifications sometimes receive different tariffs.
Energy experts say resolving disagreements through negotiation could prevent disruptions, particularly as most projects are already mature and operational.
Sector insiders say the average generation cost from oil fired plants remains significantly high, largely due to fixed capacity payments. Gas fired plants running at low plant factors have also produced relatively expensive electricity. The situation has intensified fiscal pressure as reserve margins have increased over the years.
The minister described the power and energy sector as facing deep challenges, citing financial stress, irregularities and past corruption. He also pointed to sovereign guarantees embedded in several agreements that limit the government’s room for swift action.
Policymakers are weighing difficult trade offs. The committee reviewing the contracts warned that aggressive unilateral steps could trigger investor uncertainty and legal disputes. At the same time failure to reform risks continued fiscal drain and lost development opportunities.
For now the government’s immediate focus is to ensure stable electricity supply during Ramadan, the upcoming summer period and the irrigation season when demand typically rises.
Looking ahead Tuku signalled a broader policy shift toward cleaner sources.
“Our future push in the power sector will be green. We will prioritise renewable energy,” he said.
Analysts say the outcome of the planned renegotiations and the transition to renewables could determine whether Bangladesh can stabilise its power sector while maintaining investor confidence in the years ahead.
Sohanur Rahman, executive coordinator of YouthNet Global, said reforms must align with a long term sustainable transition.
“Renegotiating unfair power agreements is important for protecting public interest, but Bangladesh should also use this moment to accelerate investment in renewable energy and ensure transparency in future energy planning,” he said.
