The government is preparing to raise bulk and retail electricity tariffs, citing an “unsustainable surge in subsidies” amid the ongoing fuel crunch triggered by the US-Israel war on Iran.
A power division proposal, issued in early April and now awaiting cabinet approval, seeks to increase the bulk tariff by up to Tk 1.20 per unit from the current Tk 7.04.
The plan is in motion at a time when the national power deficit widened to 1,900MW yesterday afternoon, nearly double last week’s shortfall, leaving large parts of the country under prolonged outages in the sweltering heat.
Regions including Khulna, Mymensingh, Rajshahi, and Cumilla have been facing prolonged and unannounced power cuts, making daily life increasingly unbearable, with households, hospitals, and businesses struggling to cope.
In Noakhali, nearly 9.5 lakh consumers across nine upazilas are receiving only a fraction of the required supply.
Power officials say supply in some areas has fallen to less than half of demand due to reduced generation stemming from fuel shortages.
“In 24 hours, we get no more than five to six hours of electricity,” said Poli Akhter, a resident of Chatkhil. “We only get 30 to 40 minutes of power before the next outage.”
Students preparing for exams are struggling to study or sleep during prolonged outages, while hospitals are incurring additional costs to run generators.
In Khulna, demand stood at 1,800MW on Wednesday against supply of 1,500MW, leaving a deficit of 300MW, according to PDB. Residents yesterday reported outages every hour, even at night, with children, the elderly, and the sick suffering the most. In rural Dhaka, consumers of the Bangladesh Rural Electrification Board faced a shortfall of up to 300MW.
On February 26, Energy Minister Iqbal Hassan Mahmood Tuku pledged not to raise electricity prices for two years, aiming instead to ease fiscal pressure by reducing system losses. But the war, which began on February 28, has disrupted fuel supplies and driven up import costs of LNG, coal, and furnace oil, which are key inputs for power generation.
With efforts to maintain coal supply and continue LNG imports at high prices, the fiscal burden has escalated sharply. Current electricity prices do not reflect actual generation costs of the Power Development Board (PDB), resulting in a widening gap covered through government subsidies.
In FY 2024‑25, the actual cost per unit was Tk 12.36 while the wholesale price was Tk 7.04. As a result, the PDB incurred a loss of Tk 10,600 crore, despite Tk 45,000 crore in government subsidies. For FY 2025‑26, the budget had planned to cap subsidies at Tk 37,000 crore, but the fuel crisis made this impossible.
Latest projections show subsidies rising to around Tk 56,000 crore this fiscal year, as import costs of primary fuel surge.
According to multiple officials aware of the proceedings, the power division proposal was sent before the cabinet in early April, which was sent back for further clarification, and officials are working on it now.
Before Pahela Baishakh, a committee led by the finance minister was formed to finalise the power tariff proposal.
The outlines suggest a Tk 0.50 hike in wholesale prices would cut subsidies by Tk 5,000 crore, a Tk 1 hike by Tk 10,000 crore, and a Tk 1.20 hike by Tk 12,500 crore.
Officials say they have proposed keeping retail tariffs unchanged for “lifeline consumers”, those using up to 75 units (kWh), while raising rates for higher‑consuming users by Tk 0.70 to Tk 1.80 per unit.
“This would align with the conditions and recommendations of the International Monetary Fund, which has pressed for reducing subsidy burdens under economic reform measures while safeguarding marginal consumers,” a power division official told The Daily Star on condition of anonymity.
If the proposal is approved by the cabinet, it would be placed before the Bangladesh Energy Regulatory Commission for final nod, following public hearings.
The proposal also references trends in neighbouring countries, including Sri Lanka and Singapore, which have raised electricity tariffs across sectors.
Meanwhile, the PDB data shows it produced 12,324MW of electricity during the day peak hours yesterday against a demand of 14,380MW, which is 1,900MW more.
However, in the evening hours, the gap was reduced to around 500MW, although the demand rose to 15,350MW. Of the 14,800MW production, 5,300MW was from gas, 4,200MW from coal, and 2,500MW from furnace oil. The electricity import from India was around 2,500MW.
Fuel shortages have left a significant portion of installed capacity underutilised. At least 66 of 143 power plants reported fuel shortages yesterday.
Earlier assessments had shown that around 60 percent of gas-based power plants would remain idle due to fuel constraints, a situation that appears to have worsened in recent days.
The PDB’s summer plan expected 5200MW of electricity from gas, 5700MW from coal, and 3500MW from furnace oil.
Besides, three major coal-fired power plants, with a combined 4,800MW of capacity, have been running below half of their capacities due to shortages in coal supply -- SS Power in Chattogram, Matarbari in Cox’s Bazar and RNPL in Patuakhali.
[Our correspondents from the respective districts contributed to this report.]
