Last Updated on February 26, 2026 4:20 pm by BIZNAMA NEWS
Zakir Hossain from Dhaka
The Bangladesh government has initiated a sweeping review of power purchase agreements (PPAs) signed during the tenure of former Prime Minister Sheikh Hasina, saying several contracts may have undermined national interest and contributed to mounting fiscal stress.
Power, Energy and Mineral Resources Minister Iqbal Hasan Mahmud Tuku on Tuesday said the government would seek to renegotiate what he described as “one-sided” deals executed under the previous regime.
“Electricity and sovereignty are the same thing. We gave this sovereignty to some people (power producers). We need to establish our sovereignty over the deals,” Tuku told reporters at the Secretariat.
The move follows a report by the National Review Committee (NRC) on power contracts, which flagged alleged cronyism and lack of competitive bidding in a number of long-term agreements. The committee warned that without reform, Bangladesh risks prolonged fiscal strain due to rigid contractual obligations, particularly capacity payments to private power producers.
Legal risks acknowledged: The minister conceded that unilateral cancellation of contracts could trigger legal disputes, including international arbitration proceedings at forums such as the Singapore International Arbitration Centre.
“We need to review all the anti-national deals in the power sector to find a solution. We will sit with them and discuss,” he said, indicating preference for negotiated settlements.
Industry stakeholders responded cautiously. The Bangladesh Independent Power Producers’ Association (BIPPA) said it welcomed discussions. BIPPA president David Hasanat said certain tariff disparities were difficult to justify.
“Why should a power plant with similar specifications receive a higher tariff while another gets less? These discrepancies must be addressed,” he said. Energy expert M Tamim also backed dialogue, noting that most projects are already mature and operational.
Mounting capacity payments: Sector analysts have long argued that generation costs, particularly for oil- and gas-fired plants, remain high due to substantial fixed capacity payments, even when plants operate below full capacity. As reserve margins increased over the years, capacity payments rose accordingly, intensifying fiscal pressure.
The NRC report observed that long-term PPAs signed under the Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act remain binding and continue to shape pricing and fiscal outcomes. It cautioned that aggressive unilateral action could lead to investor uncertainty and short-term disruptions, while inaction would guarantee continued fiscal drain.
Immediate focus: Ramadan and summer supply: Tuku said ensuring stable electricity supply during Ramadan, the upcoming summer and the irrigation season is the government’s top priority. “At the moment, the entire sector is facing difficulties. Financial crisis, irregularities and corruption have created massive challenges,” he said, adding that his ministry was burdened with heavy debt inherited from the previous administration. Looking ahead, the minister signalled a shift towards renewable energy. “Our future push in the power sector will be green. We will prioritise renewable energy,” he said.
