As the South Asian nation navigates slowing growth, foreign exchange pressures and a politically charged post-election landscape, its power sector tells a complex story of ambitious expansion, structural overcapacity, import dependence and the delicate economics of energy security.
In the early 2010s, chronic load-shedding was a defining constraint on Bangladesh’s growth story. A decade later, the country’s power map looks dramatically different. Installed electricity generation capacity has risen to about 25,700 megawatts (MW), up from roughly 9,600 MW in 2013, according to the Bangladesh Power Development Board (BPDB). Access to electricity has expanded to more than 99 per cent of the population, as per government data and the World Bank.
Yet, scale has introduced a new complexity. While nameplate capacity has nearly tripled, peak demand has remained well below total available supply. BPDB data show recent peak demand hovering around 15,000 to 16,000 MW, implying substantial reserve margins. The issue is no longer scarcity, but optimisation.
This structural overhang has coincided with macroeconomic strain. Following the global commodity price surge of 2022, Bangladesh’s fuel import bill rose sharply. According to the Bangladesh Bank, foreign exchange reserves fell from over $46 billion in 2021 to significantly lower levels in subsequent years, prompting tighter import management and engagement with multilateral lenders. Currency depreciation and elevated global liquified natural gas (LNG) and coal prices amplified power sector costs, increasing subsidy requirements.
The result is a sector that is larger, more reliable and regionally interconnected, but fiscally more exposed.
Expansion Outpacing Utilisation
BPDB statistics confirm that installed capacity crossed 25,000 MW in recent years, compared to under 10,000 MW a decade ago. However, actual generation has lagged behind installed capability due to fuel supply constraints, moderated demand growth and system planning assumptions that proved optimistic.
BPDB’s annual financial statements show recurring losses in recent years, with government budget support bridging the gap between bulk supply costs and regulated retail tariffs. According to Bangladesh’s Ministry of Finance budget documents, energy subsidies have been periodically revised upward in response to rising fuel prices.
The debate over overcapacity has intensified as policymakers balance fiscal consolidation commitments under programmes supported by the International Monetary Fund (IMF) with the political imperative of affordable electricity.
Demand Growth Continues
Electricity demand in Bangladesh has grown steadily at approximately 6 to 7 per cent annually in recent years, based on BPDB and planning commission data. This expansion reflects sustained industrialisation, urbanisation and export growth. The ready-made garment sector, which accounts for more than 80 per cent of Bangladesh’s merchandise exports according to the Export Promotion Bureau, remains energy intensive. Cement, steel and agro-processing industries have also expanded alongside urban infrastructure growth.
However, the pace of demand growth has moderated compared to earlier projections embedded in master planning exercises. The IMF, in its country reports on Bangladesh, has highlighted slower external demand, tighter global financial conditions and the need for fiscal discipline. In practical terms, electricity demand is growing, but not at a rate that fully absorbs installed capacity.
This creates a balancing act. Policymakers must preserve reliability and avoid a return to load-shedding while managing excess capacity costs and ensuring tariff sustainability.
Import Dependence Deepens
Cross-border electricity trade has become a structural component of Bangladesh’s supply mix. According to BPDB and Indian power ministry disclosures, Bangladesh imports up to 2,560 MW of electricity from India through multiple interconnections. These imports account for a quarter of electricity demand.
The largest single dedicated source within this arrangement is the 1,600 MW coal-fired Godda plant in Jharkhand, developed by Adani Power Limited (APL). The plant was commissioned with a dedicated transmission link to Bangladesh under an exclusive long-term power purchase agreement (PPA).
For Bangladesh, this arrangement provides firm baseload capacity without domestic fuel procurement risk. For India, it reflects deepening regional grid integration. For APL, a subsidiary of the Adani Group, it represents the first large-scale cross-border power supply project. The plant meets ~25% of northern region’s power demand.
Importantly, Indian supply is diversified. In addition to the Godda project, Bangladesh draws power through interconnections with India’s grid via Indian state-backed entities such as NTPC Limited, TSECL (Tripura State Electricity Corporation Ltd), and Power Trading Corporation, reflecting layered interdependence rather than reliance on a single asset. Bangladesh has also been importing 40 MW hydro-power from Nepal. These diversified sources collectively enhance reliability by spreading supply risk and ensuring that no single corridor bears the entire burden during peak stress.
The Role Of APL
APL operates more than 18,000 MW of thermal generation capacity across India, according to its public disclosures. It is more than doubling its capacity to 42,000 MW by 2032, in what it describes as India’s largest private sector capax programme in the thermal power segment.
Accounting got 10% of the country’s power demand, the Godda plant is therefore material, but not determinative of overall sector economics. Bangladesh’s energy costs remain primarily influenced by domestic gas availability, global LNG prices, coal imports and regulated tariff policies.
Framing APL’s role accurately requires acknowledging both its scale and its context. It is a significant cross-border supplier, but one component of a broader and evolving energy ecosystem shaped by national policy and international markets.
Fossil Fuel Dominance And Imports Exposure
Bangladesh’s power generation mix remains heavily fossil fuel-based. According to BPDB data, natural gas historically accounted for more than 50 per cent of generation. However, declining domestic gas production has increased reliance on imported LNG and coal.
Government trade statistics indicate that coal imports have exceeded 15 to 17 million metric tonnes (MMT) annually in recent years as new coal-fired plants, including Payra and Rampal, have come online. LNG imports have also risen since the commissioning of floating storage and regasification units in 2018 and 2019.
This shift has tied electricity costs more closely to global commodity cycles. During the 2022 energy crisis, spot LNG prices surged to record highs, forcing Bangladesh to curtail purchases temporarily and triggering renewed load-shedding. The episode highlighted the vulnerability of fuel-importing economies to global shocks.
The ADB has emphasised in regional outlook reports that energy pricing reform and subsidy rationalisation are essential for long-term fiscal stability in such contexts.
Foreign Exchange Constraints And Payment Cycles
Foreign exchange shortages have periodically delayed payments to fuel suppliers and independent power producers. Bangladesh Bank data show that the current account deficit widened sharply in 2022 before narrowing as import compression measures took effect.
These liquidity pressures have affected multiple counterparties across the energy value chain. BPDB’s reported financial losses underscore the structural mismatch between generation costs and regulated tariffs. APL and Bangladesh have a long running history of payment dues where at one time it rose to almost a billion dollars, which now has moderated to still high levels of about half that figure.
The IMF-supported programme for Bangladesh has included commitments to improve revenue mobilisation, rationalise subsidies and strengthen state-owned enterprise finances. In the power sector, this translates into gradual tariff adjustments and improved financial discipline.
Political Economy And Post-Poll Recalibration
Bangladesh’s electoral cycle has sharpened scrutiny of long-term infrastructure contracts, including energy agreements. Civil society groups and opposition voices have raised concerns about pricing transparency and capacity payments. The government, in turn, has emphasised the dramatic reduction in outages compared to the pre-2010 period and the near-universal electrification achieved over the past decade.
Energy policy therefore sits at the intersection of economic management and political accountability. Reliable power underpins export competitiveness and social stability, yet subsidy burdens and foreign exchange outflows attract debate during periods of macroeconomic stress.
Regional Interdependence As Strategy
India-Bangladesh power trade began in 2013 with a 500 MW interconnection and has expanded steadily since. Transfer capacity has increased through multiple corridors, reflecting a broader South Asian vision of grid connectivity.
Cross-border trade offers operational flexibility. It enables Bangladesh to supplement domestic supply during peak periods and to manage fuel risk diversification. For India, it enhances utilisation of generation assets and strengthens regional integration.
The Godda project illustrates the maturation of this cooperation, moving beyond grid spillover to dedicated export capacity. It signals a shift towards structured, long-term bilateral energy partnerships.
The Way Forward
Bangladesh’s power sector today embodies both ambition and recalibration. Installed capacity of around 25,700 MW reflects a decade of infrastructure acceleration. Imports of up to 2,560 MW from India underscore pragmatic regional integration. Demand growth of 6 to 7 per cent annually indicates continued industrial momentum, though below earlier forecasts.
At the same time, coal imports exceeding 15 MMT annually, rising LNG dependence, and foreign exchange pressures illustrate structural exposure to global markets. Amidst this backdrop, fiscal sustainability and tariff reform remain central policy challenges.
Within this landscape, the 1,600 MW Godda supply from APL is significant but contextual. It contributes to energy security within a diversified system that includes domestic gas, coal, LNG and multiple cross-border flows. The Adani Group, through APL, participates in Bangladesh’s energy architecture as one stakeholder among several in a complex regional network.
Bangladesh’s power paradox, surplus capacity alongside fiscal strain and import dependence amid domestic expansion, mirrors the experience of many emerging economies. The test ahead lies in aligning infrastructure scale with economic resilience, strengthening sector governance and leveraging regional cooperation to balance affordability, security and sustainability.