The story of Bangladesh’s power sector is, in many ways, a story of missed opportunities. This sector has been struggling with a deep structural crisis for many years. The causes of this crisis go far beyond fluctuations in global energy prices or pressure on foreign exchange reserves. At its core lie years of policy missteps, inefficient management, opaque contracts, corruption, and a lack of accountability. Yet, instead of addressing these fundamental problems, successive governments have repeatedly relied on raising electricity tariffs as a means of managing the crisis. The latest electricity price hike announced by the Bangladesh Energy Regulatory Commission (BERC) is another example of this familiar approach.
Years of policy errors, wasteful spending, opaque deals, and poor oversight have left the sector trapped in a cycle of financial distress. While global energy prices and foreign exchange shortages have added to the pressure, they are not the root cause of the problem. Yet, instead of pursuing the reforms needed to address these structural weaknesses, governments have repeatedly turned to electricity tariff hikes. BERC’s latest increase is merely the newest chapter in that familiar story.
Under the new decision, wholesale electricity tariffs have been increased by nearly 20 percent, while retail tariffs for consumers have risen by about 17 percent. Transmission charges have also been raised by nearly 24 percent. As a result, electricity costs will increase not only for household consumers but also for agriculture, industry, educational institutions, hospitals, and small businesses. The direct and indirect consequences of these increases will be felt across the entire economy.
Most concerning is the fact that even lifeline consumers have not been spared from the latest tariff hike. The lifeline tariff was originally introduced to ensure affordable electricity for low-income households. However, their electricity rates have now been increased by nearly 15 percent. In 2010, consumers using the first 50 units of electricity paid Tk 2.50 per unit. Today, that rate has risen to Tk 5.32 per unit. In other words, the electricity burden on low-income households has more than doubled over the past sixteen years. The question is obvious: if even this minimum social protection mechanism cannot shield vulnerable citizens from rising costs, who will safeguard their interests?
To understand the roots of the current crisis, one must examine the policy decisions of the past decade and a half. During the tenure of the Awami League government, numerous power plants were established under the banner of rapidly expanding electricity generation. Many of these projects proved expensive and economically inefficient in the long term. Excess generation capacity far beyond actual demand forced the government to pay enormous amounts in capacity charges. In other words, plant owners were compensated even when electricity was not being produced. This arrangement placed a substantial financial burden on both the state treasury and the Bangladesh Power Development Board.
At the same time, insufficient attention was given to domestic gas exploration and production, while dependence on imported liquefied natural gas (LNG) steadily increased. This resulted in significant outflows of foreign currency. Whenever global energy prices rose, the impact was transmitted directly into the domestic economy. Meanwhile, meaningful efforts to develop indigenous energy resources and promote alternative energy sources remained limited.
Following the fall of the Awami League government, the interim administration pledged reforms in the power and energy sectors. It promised to review power purchase agreements, reduce capacity payments, retire inefficient plants, curb corruption and waste, and strengthen accountability. However, little visible progress was made. Consequently, the structural weaknesses that continue to drive losses in the sector remain largely unchanged.
Experts have repeatedly argued that raising electricity tariffs is not a sustainable solution. While higher prices may temporarily boost revenue, they do not resolve the underlying problems. Instead, they increase industrial production costs, raise irrigation expenses for farmers, place additional pressure on small entrepreneurs, and further increase the cost of living for ordinary citizens. At a time when inflationary pressures are already affecting households and businesses, another round of electricity price hikes risks worsening the situation.
What is particularly troubling is that during the public hearings, business leaders, consumer rights groups, and energy experts strongly urged reforms aimed at reducing costs rather than increasing tariffs. Yet those appeals were effectively ignored. While the tariff increases were implemented swiftly, there remains no clear roadmap for tackling inefficiency, reducing system losses, or addressing corruption within the sector.
The reality is that ordinary consumers are not responsible for the power sector’s financial troubles. Therefore, they should not be expected to bear the entire burden of solving them. A sustainable solution lies in transparency, accountability, and structural reform. Reducing the burden of capacity payments, controlling unnecessary expenditures, strengthening domestic energy exploration, and establishing good governance in the power sector are essential steps toward long-term stability. If the new government genuinely intends to deliver meaningful change, it must abandon the easy path of price increases and embrace the more difficult—but necessary—path of reform.