Bangladesh considers private role in retail electricity distribution

Bangladesh is considering a private-sector role in retail electricity distribution as it seeks to address financial pressure in the power sector.

Power, Energy and Mineral Resources Minister Iqbal Hasan Mahmud said generation and wholesale supply would remain under government control, while private companies could be assigned delivery to consumers and distribution management.

Mahmud said the prime minister had agreed to the proposal in principle.

He said the government would weigh costs and benefits and advance the process gradually.

The minister said consumers bear a cost both through public subsidies and through higher electricity prices, and described the proposed review as an effort to address that burden.

The government has indicated that subsidies for the electricity sector could total Tk41,000 crore in the current fiscal year.

The 2026-27 budget allocated Tk14,996 crore to electricity among 15 priority sectors.

The sector also faces Tk67,000 crore in outstanding bills, while the government buys power at a higher price than the price at which it sells it to six distribution companies, with subsidies covering the gap.

Professor M Shamsul Alam, energy adviser to the Consumers Association of Bangladesh, said private distribution without first repairing regulatory arrangements could raise consumer costs rather than resolve structural problems.

Alam argued that the Bangladesh Energy Regulatory Commission’s authority and capacity should be strengthened before any such shift.

He said existing contracts should be revised and policy weaknesses addressed before distribution functions are transferred.

Energy specialists cited in the evidence said effective regulation could reduce administrative delays, political interference, system losses and collection arrears, but warned that a weak regulator could leave consumers exposed to unjustified price increases.

They also raised concerns that profit incentives could limit investment in remote, mountainous or sparsely populated areas and create uncertainty for workers at six state-controlled distribution entities.