The government is planning to charge 21 profitable Palli Bidyut Samitys (PBSs) higher bulk electricity purchase rates.
Officials and energy experts warn that, if followed through, it could destabilise the decades-old cross-subsidy system that keeps rural power distribution running across the country.
In the cross-subsidy system, surplus revenues from industrial‑heavy PBSs are distributed to loss‑making residential‑focused rural PBSs.
As part of the ongoing electricity tariff review, the Bangladesh Power Development Board (PDB) in a proposal submitted to the Bangladesh Energy Regulatory Commission (BERC) identified the profit-making PBSs and proposed treating them in the same way as urban power distribution companies.
Officials at the Bangladesh Rural Electrification Board (REB) said the proposal could disrupt the internal financial balancing mechanism as the PBSs that generate surplus revenues support weaker PBSs, allowing all 80 PBSs under REB to run despite mounting losses in rural electricity supply.
“In reality, the profitable PBSs are sustaining the entire rural distribution structure,” an REB official told The Daily Star, requesting anonymity as the matter remains under regulatory review.
According to documents submitted to the BERC, 13 PBSs transferred a combined Tk 3,515 crore to 65 other PBSs in the 2024-25 fiscal year to offset operational losses, stemming largely from lower residential tariffs and a large number of subsidised consumers.
Although the PDB identified 21 profitable PBSs, most of which are located in industrial belts, REB data show that only around 10 to 13 PBSs have consistently been profitable over the last five fiscal years.
REB officials fear that if the government captures a larger share of revenues from profitable PBSs through higher bulk electricity charges, the rural power distribution network could face serious liquidity stress.
Established in 1977, REB now serves around 3.79 crore consumers across the country, accounting for nearly 77 percent of Bangladesh’s total electricity users. In terms of electricity consumption, REB accounts for around 57 percent of the national power supply.
However, the consumer composition differs sharply across PBSs. Residential users account for around 56 percent of REB power consumption, but PBSs in industrial corridors are significantly more profitable than residential-focused PBSs.
Dhaka-1 PBS emerged as the highest-earning PBS in FY25, with earnings of Tk 615 crore, followed by Gazipur-1 with Tk 565 crore and Narayanganj-1 with Tk 522 crore.
The other profitable PBSs identified by PDB are Chattogram-1 and 3, Gazipur-2, Mymensingh-2, Narayanganj-2, Dhaka-2 and -4, Narsingdi-1 and -2, Cumilla-2 and -3, Bagerhat, Patuakhali, Habiganj, Moulvibazar, Manikganj, Munshiganj, and Cox’s Bazar.
Despite internal subsidy transfers, REB continues to face growing financial pressure.
According to REB’s submission to BERC, the organisation incurred a loss of Tk 1,698 crore in FY25. The loss is projected to increase to Tk 2,387 crore in the ongoing FY26 and further to Tk 2,897 crore in FY27.
REB’s average loss stood at Tk 0.34 per kilowatt-hour (kWh) in FY25 and has now increased to Tk 0.44 per unit. For FY27, the gap is projected to widen to Tk 0.50 per kWh, prompting REB to seek a corresponding increase in retail electricity tariffs.
The REB submission reads, “If wholesale electricity and transmission costs increase further, the additional burden would need to be passed on to consumers through retail tariffs.
“90 percent of our customers are residential, of which 49 percent [1.63 crore] are lifeline customers, who pay Tk 4.63 per unit -- far lower than the average retail tariff of Tk 8.95 per kWh.”
PDB officials involved in the tariff review process argued that industrial-heavy PBSs now operate in ways similar to urban electricity distributors and therefore should not continue receiving comparatively favourable bulk electricity pricing.
Energy sector analysts, however, warned that weakening the cross-subsidy structure without broader reform could ultimately increase pressure on government subsidies or rural electricity tariffs.
M Shamsul Alam, energy adviser to the Consumers Association of Bangladesh, told The Daily Star that only a small number of PBSs operating in major industrial zones generate enough surplus to sustain the wider rural distribution system.
“The number of PBSs that actually support the cross-subsidy mechanism is very limited. Outside a few industrial belts like Gazipur and Narayanganj, most PBSs are not profit-making in practical terms.
“If profitable PBSs are forced to bear higher bulk electricity costs, their ability to support weaker PBSs will shrink. In that case, government subsidies may rise further instead of falling.”
He also alleged that the proposal could revive debates over corporatising PBS operations, an issue that sparked resistance within the rural electrification sector in previous years.
BERC is scheduled to begin public hearings on the proposal tomorrow at the Krishibid Institution Auditorium.
