Bangladesh’s draft energy plan risks $45 bln ‘import trap,’ debt crisis, think tank warns

NN Report

Bangladesh’s draft Energy & Power Sector Master Plan 2025 (EPSMP) is set to institutionalise a cycle of compounding debt and economic destruction, according to a prompt examination by the think-and-do tank, Change Initiative. While the plan acknowledges past failures like overstated demand and mounting subsidies, it fails to prioritise energy sovereignty, potentially locking the nation into a permanent “debt trap”.

The $45 Billion Import Burden

The analysis by Change Initiative reveals that the draft EPSMP normalises a long-term reliance on imported fuels. Although the plan aims to reduce import dependence by 20% by 2050, Bangladesh remains energy output dependent for the next quarter-century. This persistent reliance is projected to cause a massive foreign exchange drain of USD 30 to 45 billion between 2026 and 2050. By prioritising LNG terminals and refineries over domestic alternatives, the plan sustains exposure to global price shocks and currency depreciation.

Engineered Overcapacity and Capacity Charges

The position paper flags a severe risk of returning to an overcapacity crisis. Planned generation expansion is set to reach 89.1 GW by 2050, while national demand is projected at only 59 GW for the same period. This massive 30 GW surplus threatens to lock the country into fossil fuel-led and corruption-prone capacity charges, forcing consumers to pay for idle power plants and driving up electricity tariffs.

Delayed Renewable Transition

Despite national climate commitments (NDC 3.0), the EPSMP significantly delays the transition to renewable energy until 2040–2050. This “back-loading” jeopardises early access to concessional climate finance and maintains dependence on expensive fossil fuels. Low-cost options like rooftop and distributed solar systems remain under-prioritised in favour of high-capex LNG infrastructure.

Furthermore, Change Initiative questioned the credibility of the plan’s carbon finance claims. While the EPSMP projects USD 20 billion in credits by 2050, Change Initiative’s study suggests a realistic near-term potential of just USD 150 million by 2030.

Social Cost and Affordability

The draft plan projects significant utility price hikes, with electricity prices rising to 13.66 BDT/kWh and gas to 70 BDT/m3 by 2050. The report warns that current reforms lack rights-based protections for households and small businesses. There are currently no “lifeline tariffs” or automatic support mechanisms to protect vulnerable communities from these price shocks.

“Despite directing $1 investment from LNG to solar projects, ensuring an additional $17 gain, the masterplan is to destroy the country’s economic future,” said M. Zakir Hossain Khan, Chief Executive of Change Initiative. “Without Renewable Energy-based Sovereignty, Just Energy Transition are just Words”.

Proposed Critical Fixes

To prevent a “stranded asset” future, Change Initiative proposes five mandatory revisions before the plan is finalised:

Energy Sovereignty Test: Mandatory foreign exchange stress testing and price-shock scenarios for all new fossil fuel projects.

Renewable Re-sequencing: Moving large-scale solar and wind deployment from Phase III (2040s) to Phase I (current).

Rights-based Affordability: Institutionalising lifeline tariffs and worker transition packages.

Natural Rights Led Governance: Embedding “ecological no-go zones” into energy project approvals.

Transparency Mechanism: A rolling update system to prevent overcapacity and ensure auditable monitoring of emissions and procurement.

Would you like me to create an infographic summary of the projected $45 billion import drain and the 30 GW overcapacity mentioned in this report?