Power and energy sector leads ADP spending, but structural risks loom large: Planning Commission report
The critical challenge for the sector now is converting rapid implementation into long-term resilience, ensuring that infrastructure growth aligns with economic realities, fiscal constraints, and the global energy transition
Bangladesh's power and energy sector has emerged as a major performer in government expenditure, far outpacing most other ministries in implementing its development budget for the fiscal year (FY) 2024–25, , according to the first-ever "State of the Economy" report released by the General Economics Division (GED) of the Planning Commission.
The report highlights that despite prevalent fiscal pressures and broader economic instability, the Power Division and the Energy and Mineral Resources Division demonstrated remarkably high efficiency in executing development projects.
Data compiled by the Implementation Monitoring and Evaluation Division (IMED) shows that the Power Division achieved an impressive 98.10% utilisation of its Annual Development Programme (ADP) allocation, with the Energy Division closely following at 98.00%.
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This performance significantly outpaced the national ADP utilisation rate of 67.85%.
Moreover, self-financed projects within the Power Division also saw unusually strong execution, even exceeding 100% utilisation, a trend mirrored by several related agencies. Relevant ministry officials credit this surge to the momentum gained in FY25 for ongoing transmission upgrades, renewable energy expansion, and long-pending grid modernisation efforts.
Deep-rooted structural challenges
Despite standing out for efficient spending, the report issues a stark warning: deep-rooted structural challenges continue to threaten the long-term sustainability of the sector.
"These include rising subsidy burdens, fuel import dependency, delays in feasibility studies, and limited diversification of energy sources," the GED report cautioned.
Overcapacity, particularly in oil- and coal-based plants, continues to inflate fixed payments, while global price volatility puts cumulative pressure on Bangladesh's already strained foreign exchange reserves.
The report recommends the phasing out of universal energy subsidies, proposing a shift towards targeted support exclusively for low-income households. It also calls for stronger feasibility assessments, accelerated adoption of renewable technologies, and wider use of public-private partnerships (PPP) to alleviate fiscal strain.
Energy reliability and affordability will be crucial for industrial competitiveness and export-led growth as Bangladesh prepares for LDC graduation in 2026.
From rapid to long-term
Experts emphasise that while high ADP utilisation reflects administrative efficiency, it must be paired with policy reforms that address systemic inefficiencies.
As the report notes, "Strong spending does not guarantee strong outcomes".
The critical challenge for the sector now is converting rapid implementation into long-term resilience, ensuring that infrastructure growth aligns with economic realities, fiscal constraints, and the global energy transition.
The positive spending narrative within power and energy divisions contrasts sharply with the broader ADP picture, where over 75% of total annual spending occurred in the second half of the fiscal — a pattern criticised for encouraging rushed procurement and weakened oversight.
Several ministries, especially in health and social sectors, recorded dismal utilisation rates as low as 15–22%, reflecting persistent capacity gaps across the governmental organs.
