Tariff revisions at BD state power stations aim to ease pressure

Bangladesh’s interim government has revised electricity tariffs at three major state-owned gas-fired power plants, a move officials say will reduce public spending and ease long-standing financial pressure on the power sector.

The decision, approved by the Advisers Council Committee on Government Purchase at a recent meeting in Dhaka, lowers tariffs at power plants in Haripur, Siddhirganj and Ashuganj. Authorities estimate the combined revisions will generate annual savings of about Tk 119 crore for the Bangladesh Power Development Board (BPDB), the state’s single buyer of electricity.

The Power Division said the measure forms part of a broader effort to rationalise energy costs, curb subsidy burdens and improve fiscal discipline in a sector that has strained public finances for years.

Under the revised framework, the tariff for the 412-megawatt Haripur Combined Cycle Power Plant, operated by the Electricity Generation Company of Bangladesh Limited (EGCB), will fall slightly from Tk 4.7796 to Tk 4.7588 per kilowatt-hour from August 2025. While the cut appears modest, officials estimate it will save BPDB nearly Tk 37 crore a year, given the plant’s annual output of more than 300 crore units.

A similar adjustment was approved for the 335-megawatt Siddhirganj Combined Cycle Power Plant, also run by EGCB. Its tariff will drop from Tk 5.5216 to Tk 5.4204 per unit, a change expected to reduce BPDB’s annual power purchase bill by around Tk 63 crore.

Ashuganj, the country’s largest gas-based generation hub, the 450-megawatt combined cycle plant operated by Ashuganj Power Station Company Limited (APSCL) will see its tariff lowered from Tk 5.7844 to Tk 5.7634 per unit, translating into savings of roughly Tk 19 crore a year.

Though the reductions are incremental, energy economists say the symbolism is significant. Bangladesh’s power sector has long been criticised for high procurement costs, capacity payments and reliance on expensive fuel-based generation, factors that have contributed to mounting subsidies and repeated tariff hikes for consumers.

Because all three plants are owned by the state, any reduction in tariffs effectively shifts money from one public pocket to another, but with important budgetary implications. Lower payments by BPDB reduce the need for government transfers and borrowing, helping to stabilise the sector’s balance sheet.

“Even small tariff adjustments matter when applied over large volumes and long contract periods,” said an energy analyst familiar with the power sector. “Over time, these savings accumulate and help contain subsidy pressures, which is crucial given Bangladesh’s fiscal constraints.”

Officials noted that EGCB and APSCL are government-owned entities, with profits ultimately treated as state revenue. This means efficiency gains at the plant level directly benefit the public exchequer, rather than private shareholders.

The revisions also reflect a broader policy recalibration by the interim administration, which has signalled a willingness to scrutinise power contracts more closely after years of rapid capacity expansion. Analysts say the focus appears to be shifting from building new plants toward extracting better value from existing assets.

Gas-based plants, which are generally cheaper and cleaner than oil-fired alternatives, are increasingly seen as a backbone of the power system as Bangladesh navigates fuel supply constraints and global energy volatility. Ensuring these plants operate at the lowest reasonable cost is central to maintaining grid stability without inflating electricity prices for households and industry.

At the same time, officials stressed that the revised tariffs are designed to preserve the financial viability of the generation companies, avoiding the risk of under-recovery that could deter maintenance or future investment.

The timing is also notable. The tariff cuts come amid renewed debate over proposals to raise retail electricity prices, a move opposed by consumer groups, economists and industry representatives who warn that higher power costs could undermine economic recovery and competitiveness.

By trimming costs at the generation level, the government may be seeking to demonstrate that internal efficiencies can help offset the need for consumer tariff hikes — at least in part.

While the immediate fiscal impact is limited relative to the scale of the power sector, observers say the move sends an important signal. It suggests a growing emphasis on cost rationalisation, transparency and value-for-money procurement — principles that could shape future decisions on energy pricing, subsidies and investment.

As Bangladesh continues to balance rising energy demand with fiscal realities, the tariff revisions at Haripur, Siddhirganj and Ashuganj highlight a cautious but deliberate shift toward tighter financial stewardship in one of the country’s most politically sensitive sectors.