25yr roadmap seeks massive investment in gas-power sector to secure long-term security
Officials say the plan seeks to gradually move the country away from its heavy reliance on imported fuels, which currently account for more than 70% of primary energy consumption.
The interim government has approved a transformative 25-year roadmap aimed at overhauling Bangladesh's crisis-ridden energy and power sector by drastically reducing import reliance, increasing domestic gas exploration, and pivoting towards sustainable green energy.
In a meeting on 7 January, chaired by Chief Adviser Muhammad Yunus, the Energy and Power Sector Master Plan 2025 seeks massive investment to secure long-term energy sovereignty as the nation grapples with depleting gas reserves and a crippling subsidy burden.
Officials say the plan seeks to gradually move the country away from its heavy reliance on imported fuels, which currently account for more than 70% of primary energy consumption.
Power, Energy and Mineral Resources Adviser Fouzul Kabir Khan told The Business Standard that a draft of the master plan had been presented to the chief adviser, who consented to its formulation.
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"We have already prepared the draft and will place it for public scrutiny, allowing stakeholders to share their views," he said.
"After incorporating feedback from stakeholders, we will finalise and approve the master plan so that the next elected government has a clear framework to operate from," the adviser added.
According to the plan, successful implementation could bring primary energy imports below 50% by 2050, while increasing the share of domestic gas to at least 60%. At present, gas reserves are depleting even as demand continues to rise, forcing the country to depend increasingly on imported liquefied natural gas (LNG), coal and oil.
Fourfold rise in power demand
The plan projects a fourfold rise in electricity demand by mid-century. Annual power generation, now close to 100 terawatt-hours, is expected to reach around 400 terawatt-hours by 2050, with peak demand rising to nearly 59 gigawatts. Under a high-growth economic scenario, electricity demand could exceed 70 gigawatts by that time.
To meet this demand, the government intends to place renewable energy at the centre of future power generation. The plan targets a renewable share of 30–50% by 2050, a dramatic increase from the current level of less than 2%. Solar and wind power will play a dominant role, alongside electricity generated from waste.
Focusing on renewables
Large-scale solar projects are expected to be launched by 2026, while wind power development will be accelerated after 2033. The plan also envisages major upgrades to the national grid, including the introduction of a 765 kV transmission backbone, smart grids and automated system operations.
Reducing subsidies
A key pillar of the plan is the gradual withdrawal of blanket subsidies. Policymakers acknowledge that the existing subsidy-driven model is fiscally unsustainable. The roadmap aims to reduce energy subsidies to below 1% of GDP by 2050 through tariff rationalisation, targeted subsidies for vulnerable groups and competitive bidding in power procurement.
Current challenges
The draft document offers a candid assessment of the sector's current challenges. It notes that despite acute financial stress, excessive power generation capacity has been created based on unrealistic demand forecasts, leading to heavy capacity charge payments. The increased use of liquid fuels has raised generation costs and widened the subsidy burden.
System losses remain another concern. Technical and non-technical losses currently stand at 6.38%, while governance weaknesses continue to undermine efficiency. The plan also highlights missed opportunities in domestic coal utilisation, despite its relatively low cost.
The plan points out Bangladesh's strong success rate in gas exploration: on average, one commercial gas discovery is made for every 1.3 wells drilled, compared with a global average of one in ten. Yet only around 100 new wells have been drilled so far, indicating significant untapped potential.
On the other hand, system losses in Bangladesh are significantly high, and initiatives to reduce them remain inadequate. Currently, technical and non-technical factors contribute to a 6.38% system loss. Furthermore, power plants with surplus capacity have been established based on unrealistic demand projections, leading to massive capacity charge payments. The energy master plan highlights a distinct lack of good governance within this sector.
This draft plan also outlines projections for the country's future macroeconomy. It suggests that economic growth may reach 4.46% in 2026, with expectations for this growth to increase in the future.
Implementation roadmap
The plan states that 150 onshore wells will be drilled between 2026 and 2030. Tenders for offshore and deep-sea drilling are set to be invited within this year. Furthermore, 2D and 3D seismic surveys will be conducted; the government aims to complete 7,755 lakh kilometres of 2D seismic surveys and 5,674 square kilometres of 3D seismic surveys during this period.
According to the plan, 3D seismic surveys in the Chattogram and Sylhet regions are scheduled to commence this year. The strategy also includes LNG imports, the modernisation of Eastern Refinery, and the installation of a Single Point Mooring. An assessment for coal extraction from the Barapukuria mine will be carried out. Additionally, the gas transmission network will be expanded, costs will be controlled, discipline will be brought to subsidies, and gas wastage will be reduced.
The government anticipates that new gas extraction from offshore sources will be possible between 2030 and 2040. The Matarbari LNG terminal will also become operational during this period. Furthermore, fuel oil refining capacity will be increased, and it will be possible to develop the Dighipara and Jamalganj coal mines.
Between 2040 and 2050, the large-scale use of renewable energy will commence. Additionally, this period will mark the introduction of hydrogen fuel usage.
The plan states that if Bangladesh achieves high-level GDP growth, the demand for electricity in 2050 will reach 70,030MW. According to the Bangladesh Bureau of Statistics projections, GDP growth would result in a demand for 59,351MW by 2050, while a lower-end GDP growth rate would lead to a demand for 54,420MW during the same period.
According to the draft, gas currently accounts for 45% of Bangladesh's total electricity generation. The remainder of the mix comprises coal at 21%, fuel oil at 17%, solar power at 9%, and the remaining 8% is imported.
The government expects the share of gas in the production process to decrease to 29% by 2050. Conversely, solar power generation is projected to rise to 36%, while 11% of electricity will be sourced from wind power. Nuclear power is expected to contribute 5%, coal 15%, and fuel oil 1%, with only 3% of electricity being imported.
Investment requirement
The draft master plan notes that implementing these strategies will require substantial investment in the country's power and energy sectors. It specifies that an investment of $70 to $85 billion will be necessary for the energy sector.
Specifically, $25 to $30 billion will be required for the installation of LNG terminals and pipelines, while $10 to $12 billion is needed for onshore and offshore gas exploration. The establishment of refineries and storage facilities will require $15 to $20 billion, and an additional $2 to $3 billion in investment will be needed for hydrogen and geothermal energy.
The plan states that government investment will be required for exploration and pipeline installation work. For the establishment of refineries, LNG terminals, and single-point moorings, investment could be secured through government-to-government agreements. Furthermore, investment for the construction of LPG terminals may be obtained through Public-Private Partnership models.
The plan also highlights that, to achieve investment capacity, the government must transition towards reducing subsidies and implementing a demand-based pricing mechanism.
The plan indicates that the power sector will require an even higher level of investment. It states that a total investment of $107.25 billion may be necessary by 2050.
Of this amount, the plan specifies that $85.15 billion will be needed for power generation, $11.45 billion for transmission, and $10.65 billion for distribution. It is further mentioned that these funds could be sourced from the government's own reserves, G2G agreements, PPP, and FDI.
Tariff forecast
The plan states that the prices of gas and electricity will increase incrementally in the future. It even mentions a plan to raise gas and electricity prices within the current year. Furthermore, it notes that prices for gas and electricity have not been increased over the past 17 months.
According to the plan, the average price of electricity in 2050 will be Tk13.66 per kilowatt-hour, whereas the current average price is Tk7.34 per kilowatt-hour. Similarly, by 2050, the average price of gas will be Tk65 per cubic foot, which currently stands at Tk22.93.
Environmental and climate aspects
The plan estimates that by 2050, it will be possible to reduce carbon emissions in the power sector by approximately 64 million tonnes annually. Furthermore, the potential revenue from carbon credits is projected to exceed $20 billion.
The plan also notes that the power sector currently requires an annual subsidy of Tk270 crore. However, the IMF has set a condition to eliminate these subsidies entirely by 2030.
Massive subsidies
The draft plan states that the current crisis has been caused by limited gas exploration in the past, unrealistic forecasts of electricity demand, and the rapid establishment of liquid fuel-dependent power plants. Although there is surplus power generation capacity, the pressure of fuel imports and capacity charges is forcing the government to provide massive subsidies.
In the 2023-24 fiscal year, subsidies in the power and energy sector rose to over Tk40,000 crore, which has been identified as a major strain on the economy.
What experts say
The Centre for Policy Dialogue provided its reaction to the draft Energy and Power Master Plan 2025 during a press conference held on 15 January.
During the event, CPD Research Director Khondaker Golam Moazzem stated that the draft master plan does not adequately reflect the role of renewable energy. He noted that under the guise of "resource optimisation," priority has been given to the use of domestic coal. Furthermore, he alleged that other carbon-emitting fuels have been bundled under the label of solar power.
He further remarked that the draft master plan has prioritised massive investment in LNG infrastructure. In the previous master plan, the cost for LNG infrastructure was estimated at $3.9 billion, but in this draft, it has surged to $27 billion.
Moazzem emphasised that such a plan or policy document is not merely an economic one; it is a "political-economic" document. This is because the government often has to make compromises or concessions in various areas. However, he noted that governments typically do not back down from larger objectives.
Based on this document, the CPD believes that there has been pressure from vested interest groups.
