Power sector in Bangladesh

Bangladesh is prioritising development of power capacity to boost GDP growth. The revised power generation policy of Bangladesh provides a number of incentives for foreign investment in the power sector to solve the demand-supply gap.

Market overview

The Bangladesh economy has grown by 5-6% per year since 1996 despite political instability, poor infrastructure, corruption, insufficient power supplies and slow implementation of economic reforms. It has been estimated that power outage in Bangladesh results a loss of annual industrial output of $1 billion. Power is one of the major reasons for slow GDP growth and the Government of Bangladesh (GOB) has recognised the power as a priority sector. GOB has decided to build more power projects through private sector and public private partnership.

As of December 2012, 56% (4794 MW) of the power is generated by the public sector (Bangladesh Power Development Board (BPDB), Ashuganj Power Station Company Ltd (APSC) & Electricity Generation Company of Bangladesh (EGCB) whereas 44% (3731MW) is being generated by the private sector. Most of them are gas based (77.89%), and then HSD (11.11%), and then gradually HFO (5.46%), Hydro (3.75%) and Furnace Oil (1.79%) based.

For years, the matter of balancing the supply against the demand for electricity has remained largely an unresolved matter. The country faces a significant challenge in revamping its network responsible for the supply of electricity. In generating and distributing electricity, the failure to adequately manage the load leads to extensive load shedding which results in severe disruption in the industrial production and other economic activities. As of December 2012 about 3083 MW of power has been added to the grid (ref: power Cell) but the demand and supply gap remains same because of the increased demand of power due to rapid urbanisation and industrialisation.

To overcome these problems GOB has initiated a Power and Energy Sector Development Roadmap (2010-2021) which targeted to produce 8,500 MW by 2013, 11,500 MW by 2015 and 20,000 MW by 2021.

The Future Generation plan

To realize Vision 2021 which is to provide access to quality electricity to all people at an affordable price, the government of Bangladesh (GOB) has adopted Power System Master Plan (PSMP) 2010 as the basis for future projects to be undertaken in this sector. As per PSMP 2010, electricity generation would reach to 39,000 MW by 2030 with an additional generation of 36,000 MW. Following table shows the total generation plan by the year 2030:

Fuel Type

Capacity (MW)

Domestic Coal


Imported Coal


Natural Gas/ LNG


Cross-Border Power


Liquid Fuel


Renewable Energy






Source: Bangladesh Power Cell


Problems in the Bangladesh’s electric power sector include corruption in administration, high system losses, and delays in completion of new plants, low plant efficiencies, fuel shortage, erratic power supply, electricity theft, blackouts, and shortages of funds for power plant maintenance.

Possible Remedies to overcome the challenges:

Primary Fuel supply

  • Enhanced Gas Exploration, Production

  • Domestic Coal Development

  • Coal import (long term contract) and deep sea port for coal handling

  • LNG import

  • Safe Nuclear Technology

Project Financing

  • Ensuring financing for public and private sector projects

  • Availability of foreign currency

Transportation of Fuel and equipment

  • Infrastructure development; railway and R&H

  • Dredging of river routes

  • Capacity Building of BPC, Railway, R&H and BIWTA etc

HR Development

  • Development of skilled manpower

  • Adopt and operate new technology.

Key opportunities

The government has given highest priority to the development of the power sector which has been reflected in the allocation of annual development programme (ADP). The total allocation in the power sector is around Tk.79 billion (around £665 million) for the fiscal year 2012-13. Business opportunities are available in power generation, distribution and in transmission.

In spite of financial constraints and fuel supply shortages, the government designed a strategy to overcome the crisis and at the same time meet the ever increasing demands for power. It launched short, medium and long term programs to increase power supply based on introduction of fuel mix (gas, coal ,liquid fuel, nuclear energy and renewable), demand side management, energy efficiency and conservation. After assessing the latent demands, the government has revised upward its targets for increasing power generation. It now plans to generate 9,600 MW by 2013 and around 15,000 MW by 2016.

Generation Expansion Plan

Immediate: 6 -12 Months

  • Rental Plants (liquid fuel)

Short term: 18 – 24 Months

  • Peaking Plants (liquid fuel)

Medium term: 3 – 5 years

  • Combined Cycle Plants (Gas or dual fuel)

  • Peaking Plant (Gas or dual fuel)

  • Coal fired steam plants

Long term: beyond 5 years

  • LNG based Combined Cycle Plants

  • Domestic/Imported Coal Power Plant

  • Gas/Oil based Peaking Plant

  • Nuclear Power Plant

  • Renewable Energy

Between 2010 to 2016 the Bangladesh Government has plans to generate 14,773 MW of power. Among these, 6204 MW which is 42% of the total target will be from public sector. 8569 MW which is 58% of the total target will be from the private sector. Around 30 tenders are under process which will bring an additional 4000 MW. These tenders are expected to be floated soon. Bangladesh Govt is also considering few small projects which are under pre tendering process now. These projects will be from 100 – 225 MW based on HFO, gas and coal. Govt is planning to add total 1075 MW from these projects.

Latest/upcoming Tender news:




Few more projects:

  • Rural Electrification Board (REB) has taken a mega project of Tk 54.13 billion to bring 1.8 million more rural people under electricity coverage by 2015 under a rural electrification expansion project at an estimated cost of Tk 54.13 billion. The new plan requires 765MW more power to connect those targeted people

  • The World Bank (WB) has agreed to lend an additional $ 155 million to set up the proposed Siddhirganj 450 MW combined cycle power plant, instead of the 300 MW peaking power unit. WB agreed to provide soft loan and negotiations for the loan is expected to be completed by January next year. The project is expected to be completed by December 2014

  • The World Bank will further provide $155 million credit for Rural Electrification and renewable energy project. (Source: ERD)

  • GOB has also planned for a wind park at Anawara upazila, Chittagong. The wind Potential of this site is 177 W/m2 at 50 m and the average Wind Speed 6.7 m/s at 50 m height. Estimated Capacity will be 20 MW though the Government has plans for a final 100-200 MW Wind Park at the same Site. GOB is also looking for foreign investors to invest in wind power.

  • GOB has also planned another 10 MW wind power plant at Cox’s Bazar and the Government is looking at setting up more solar PV plants in the northern part of the country in Jamalpur and Rajshahi plus they will undertake a wind mapping study of the coastal region very soon. Few of these upcoming projects will be public sector whereas most of the projects will be undertaken by private sector. Some of these projects will be funded by Asian Development Bank.

  • The government has set a target of generating 500 megawatts (MW) of solar energy – almost ten times the current amount – by 2015, in an attempt to narrow the gap between current supplies of grid electricity. Since November 2010, the government has mandated the installation of roof-top solar panels on all new high-rise buildings, and it currently has other solar power projects under development with a total capacity of 35 MW. Under the plan, 340 MW of new capacity will be generated from systems installed on residential, commercial and industrial buildings, as well irrigation pumps, mini-grid systems and solar parks. Government is also looking for implementing partners for these projects. Details: http://www.powerdivision.gov.bd/user/brec/50/91

  • ADB has declared its vision ‘Asia Energy Solar Initiative (ASEI)’ to develop 3000 MW solar power in Asia and Pacific Region by 2013. ADB is also keen to provide support for renewable energy development in Bangladesh.

Investment Potential in Bangladesh Power Sector

Bangladesh is an investor friendly country. Its incentive package for FDI and for power sector in particular, is one of the most competitive. Its capital account is freely convertible for FDI. The Independent Power Policy of Bangladesh has been able to attract FDI since 1990s

From GOB’s power sector Road Map, following investment potentials can be identified:

  • Coal based power plants (mainly imported coal),

  • Natural gas/LNG based power plants

  • Renewable energy projects

  • Cross-border power projects including Hydro power plants

  • Projects to enhance energy efficiency, energy conservation and DSM

  • Projects for transmission and distribution capacity expansion

  • US$ 40 billion investment will be required for new generation

  • US$ 8 billion would be required for transmission network

Latest export opportunities – Power

Latest export opportunities – Bangladesh

Getting into the market

Public Procurement is one of the key routes into the Bangladesh Power sector market. Bangladesh Power Development Board, Dhaka Electric Supply Authority (DESA), Rural Electrification Board (REB), Power Grid Company of Bangladesh is responsible for transmission and distribution of electricity. Tender and Project news are available in the respective websites.

The Government of Bangladesh in the year 1996 allowed private sector to generate power. To encourage private sector investment in power sector, Private Sector Power Generation Policy of Bangladesh has offered attractive fiscal and non fiscal incentives.

Fiscal incentives for private power companies

  • Exemption from corporate income tax for a period of 15 years.

  • Allowed to import plant and equipment and spare parts up to a maximum of ten percent (10%) of the original value of total plant and equipment within a period of 12 years of commercial operation without payment of customs duties, VAT and any other surcharges as well as import permit fee except for indigenously produced equipment manufactured according to international standards.

  • Repatriation of equity along with dividends allowed freely.

  • Exemption from income tax for foreign lenders to such companies.

  • The foreign investors will be free to enter into joint ventures but this is optional and not mandatory.

Facilities and incentives for foreign investors

  • Tax exemption on royalties, technical know-how and technical assistance fees, and facilities for their repatriation.

  • Tax exemption on interest on foreign loans.

  • Tax exemption on capital gains from transfer of shares by the investing company.

  • Avoidance of double taxation case of foreign investors on the basis of bilateral agreements.

  • Exemption of income tax for up to three years for the expatriate personnel employed under the approved industry.

  • Remittance of up to 50% of salary of the foreigners employed in Bangladesh and facilities for repatriation of their savings and retirement benefits at the time of their return.

  • No restrictions on issuance of work permits to project related foreign nationals and employees.

  • Facilities for repatriation of invested capital, profits and dividends.

GOB has been also putting renewed emphasis on Public Private Partnership (PPP) since 2009. The PPP policy is currently administered under the Prime Minister’s Office (PMO). More about doing business in Bangladesh


Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).

To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.

  • Suraya Jahan, Deputy Director of UK Trade & Investment, UKTI Bangladesh; +88-02-8822705-9; [email protected].

Contact your local international trade team

UKTI Events

UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.

Latest events – Power

Major Events

Power & Lighting Expo

13-15 June 2013

K Square, G.E.C, Chittagong, Bangladesh

12th Power Bangladesh 2013 Int’l Exhibition

(Bangladesh’s Int’l Exhibition on Power Generation & Transmission,

PV Power, Energy & Renewable Energy)

14-16 November 2013

Bangabandhu International Conference Centre Dhaka, Bangladesh


Useful links

More about OMIS and other UKTI services for exporters

Sectors: Energy
Countries: Bangladesh
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