Power, gas crisis may take at least 2 years to resolve: Khosru

Bangladesh's ongoing gas and electricity crisis cannot be resolved within six months or even a year and will require at least two years, Finance and Planning Minister Amir Khosru Mahmud Chowdhury said today (16 August).

"Nothing on electricity and gas can be solved within six months. No solution is possible within a year either. It will take at least two years," he said at a luncheon organised by the American Chamber of Commerce in Bangladesh (AmCham) at the InterContinental Dhaka.

The luncheon, titled "Building Investors' Confidence: From Policy Reform to Effective Implementation," brought together government officials, policymakers, business leaders and investors to discuss Bangladesh's investment climate and the implementation of reforms.

Acknowledging that the crisis was inherited from the past, Khosru said the government was working to address it without wasting time.

"Without gas and electricity, the economy cannot move forward," he said.

Plans for floating LNG terminals and onshore gas storage facilities are being finalised, with details expected to be announced within the next few days, he said.

On electricity, Khosru said transmission had emerged as a major problem despite substantial power generation. The government is also finalising an energy mix combining renewable energy and gas-based power, while examining the use of coal.

"We are moving forward with an integrated energy mix," he said, adding that a major change in the power and gas sectors could be expected in due course.

Tax policy to be separated from execution

The government plans to separate tax policy formulation from its execution as part of the restructuring of the National Board of Revenue (NBR), with an expert group taking charge of policy formulation instead of bureaucrats.

"The policy-making body will be an expert group. Not bureaucrats," Khosru said.

He said the previous system kept policy formulation and execution under the same group, often without adequately considering the impact of tax measures on taxpayers, revenue collection and consumption.

The government is also moving towards full automation of the tax system, with tax returns, refunds and other services eventually handled online on a real-time basis.

Govt seeks alternative financing for industry

Khosru said Bangladesh's financial architecture also needs to move beyond its heavy dependence on bank borrowing.

Commercial banks rely largely on short-term deposits while providing long-term financing to industries, he said, adding that high borrowing costs are difficult for businesses to sustain.

The government is therefore looking to expand alternative financing through the capital market, international financial institutions and blended-finance products.

He said several foreign fund managers and major global investment banks, including JPMorgan and Goldman Sachs, are showing interest in Bangladesh's capital market.

The country needs more listed companies and a deeper capital market to reduce industries' dependence on bank financing, he added.

Bank resolution a major challenge

Khosru also described the distressed banking sector as a major challenge, saying several banks face serious capital shortages and high non-performing loans.

The government cannot bear the entire cost of recapitalizing troubled banks because of its own fiscal constraints, he said.

"We have to have a mix of government support, rescue support and other quick resolution processes," he said, adding that the government is seeking capital from foreign fund managers and other sources.

On the broader investment climate, Khosru said the government was working to ensure greater policy predictability and consistency. He said the latest budget provides policy direction for five years rather than limiting measures to a single fiscal year.

AmCham President Syed Mohammad Kamal said Bangladesh has strong potential to attract increased US investment, particularly in emerging and technology-driven sectors, but consistent implementation of reforms will be crucial to converting that potential into actual investment.

HSBC CEO Md Mahbub ur Rahman stressed the importance of capital security and a predictable, transparent business environment for strengthening investor confidence.