Bangladesh's Tk 1 Lakh Crore Capacity Charge Controversy

Special Correspondent
Published: 22 Jul, 2026
Updated: 26 Jul, 2026
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Fresh debate has emerged over Bangladesh's power sector policies, particularly the Speedy Supply of Power and Energy (Special Provisions) Act, 2010, under which numerous rental and quick-rental power plants were established. According to official data and sector sources, the government spent more than Tk 104,926 crore on capacity charges between FY2009-10 and FY2023-24, covering a period of just 14 years.

Sector insiders argue that the programme, originally introduced to address an acute electricity shortage, continued long after the emergency had passed. As a result, many power plants have continued to receive capacity payments under contractual obligations despite remaining idle. Although Bangladesh's electricity generation capacity is now nearly double the country's peak demand, the government is still required to pay substantial capacity charges.

The report identifies Summit Group as one of the largest beneficiaries of capacity payments. Other companies mentioned include United Group, Bangla CAT, Confidence Group, Banglatrac, Sikder Group, and India's Adani Group, which the report claims also received significant financial benefits through special arrangements.

According to the Power Division, several large gas-fired power plants have been unable to operate at full capacity because of gas shortages. Nevertheless, long-term Power Purchase Agreements (PPAs) require the government to continue paying capacity charges. Some of these contracts will remain in force until 2045 and 2050, extending the financial burden for decades.

Energy experts argue that repeatedly renewing contracts initially signed for three to five years, combined with creating generation capacity far beyond demand, has become a major source of the current crisis. Dr. Khondaker Golam Moazzem, Research Director at the Centre for Policy Dialogue (CPD), said that renewing the contracts under unchanged terms despite substantial excess generation capacity has imposed unnecessary costs on the economy. He added that, after accounting for capacity charges, the effective cost of electricity from some plants becomes exceptionally high.

Meanwhile, Summit Power Limited has rejected allegations of money laundering. In a statement, Chairman Mohammad Latif Khan said the company's power plants had been operated professionally for many years and had fulfilled all obligations under government power purchase agreements. He described the money laundering allegations as completely baseless.

Officials at the Ministry of Power, Energy and Mineral Resources said that although the Special Provisions Act has been repealed, previously signed contracts cannot be cancelled immediately because of legal obligations. Consequently, the government continues to pay capacity charges to many non-operational power plants, creating a significant challenge for fiscal management and power sector reforms. The issue has also intensified calls for a comprehensive review of past contracts, expenditures, and policy decisions.