Power distribution, petroleum import going private

Power distribution and petroleum import are set to be privatised under sweeping reforms in Bangladesh's hard-up energy sector as the new government aims to cut subsidies and bring efficiency in the vital field.
Officials say the revamping plan comes as the sector has suffered from years of weak planning and growing dependence on imported fuels.
Power, Energy and Mineral Resources Minister Iqbal Hasan Mahmood disclosed the plans while addressing a policy conclave titled 'Energy Security & Transformation of Bangladesh' organised by Bonik Barta at the Pan Pacific Sonargaon in Dhaka on Wednesday.
The minister said the government received the prime minister's approval in principle to move ahead privatising electricity-distribution companies.
"I want to privatise all our distribution companies," he said. "The government can generate electricity and sell it in bulk, but retail distribution should be handled by the private sector."
He invited local entrepreneurs to submit proposals, saying that private operators would improve accountability, strengthen bill collection and reduce government's financial burden. Referring to India, he said electricity distribution in cities like Kolkata, Mumbai and Delhi was successfully managed by private companies, adding that Bangladeshi firms should also be capable of performing the same role.
Mahmood also said the government was considering allowing private companies to import petroleum products to encourage competition and reduce the state's role in fuel import.
The minister has described Bangladesh's energy sector as one that has been left without an effective long-term strategy over the past 17 years. While power-generation capacity had expanded to around 28,000 megawatts, he said, domestic fuel supplies had failed to keep pace.
"Not a single gas well has been drilled in the country over the past 17 years," he told the meet, adding that Bangladesh had become increasingly dependent on fuel imports.
He mentioned that three gas-fired power plants in the Khulna region remained idle because gas supply had not been secured, while construction of a pipeline from Bhola was continuing.
Referring to the recent disruption to one of the country's two floating LNG-import terminals, Mahmood said gas pressure had fallen across several regions, disrupting household supplies and compressed natural gas stations and triggering protests.
He stresses that Bangladesh must simultaneously increase domestic gas exploration and strengthen LNG-import infrastructure to ensure long-term energy security.
The minister said the government was trying to create greater opportunities for private investment across the energy sector.
He also announced plans to install 10,000 megawatts of solar power during the current government's tenure through utility-scale projects and cluster-based rooftop solar systems operated by private investors under net-metering arrangements.
Building owners installing rooftop solar facility would receive municipal tax rebates, while those unwilling to adopt solar power could face additional taxes.
Land has already been identified for large-scale solar projects, with tenders expected in August or September, he added.
State Minister for Planning Md Zonayed Abdur Rahim Saki attended the conclave as special guest.
Bangladesh Energy Regulatory Commission Chairman Jalal Ahmed warned that Bangladesh's domestic energy resources were steadily depleting.
He said domestic gas production had fallen from around 2,600-2,700 million cubic feet per day in 2016-17 to about 1,700 million cubic feet per day, while uncertainty remained over the country's remaining reserves.
Jalal Ahmed notes that Myanmar recently discovered an estimated 100 trillion cubic feet of offshore gas and India about 29 trillion cubic feet off Andhra Pradesh, whereas Bangladesh had not conducted offshore exploration in the Bay of Bengal for 17 years.
"Even if surveys began immediately," he said, "it would still take at least five years before any commercial discoveries could be confirmed."
During a panel discussion, East Coast Group Chairman Azam J. Chowdhury criticised a lack of transparency in policymaking, particularly changes to tax incentives for the solar sector.
He said investors required a predictable regulatory framework and argued that once businesses committed substantial capital, the government had a moral responsibility to ensure energy connections. Frequent supply disruptions, he added, were affecting industrial production and the wider supply chain.
World Bank Country Director for Bangladesh and Bhutan Jean Pesme described energy as a key driver of private investment, economic growth, employment, competitiveness and fiscal sustainability.
While acknowledging Bangladesh's achievements in expanding electricity access, he said the sector remained vulnerable because of its dependence on imported fuels and the persistent gap between supply costs and consumer tariffs.
According to Pesme, imports now account for around 30 per cent of Bangladesh's gas demand, 95 per cent of fuel-oil demand and 90 per cent of coal demand, exposing the economy to global price volatility and supply disruptions.
He added that declining domestic gas production and expensive power-generation contracts were placing increasing pressure on public finances.
Simeen Rahman, Chief Executive Officer of Transcom Group and Vice-President of the Metropolitan Chamber of Commerce and Industry, said industries required not only adequate electricity but also reliable and high-quality power supplies.
She said voltage fluctuations, outages and unreliable electricity disrupted production, increased operating costs and weakened competitiveness. Rising energy prices also pushed up the costs of running generators, transporting raw materials and distributing finished products, while many companies were unable to pass those additional costs on to consumers because of intense international competition.
Trust Bank Managing Director Ahsan Zaman Chowdhury said commercial banks became heavily exposed to industrial projects affected by gas shortages.
He said Trust Bank alone had between Tk 70 billion and Tk 80 billion invested in projects whose operations had been delayed because of inadequate gas supplies.

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