Over the past five years, electricity production costs in Bangladesh have surged significantly, outpacing the growth in production capacity. According to the Bangladesh Power Development Board (BPDB), electricity production increased by only 35%, while production costs jumped by a staggering 154%. By the end of the 2023-24 fiscal year, the country’s electricity production capacity reached 26,262 MW, producing 9,340.22 crore kilowatt-hours (including imports). The cost for this production was BDT 1,02,923.19 crore, making the average production cost BDT 11.02 per unit, the second highest in the country’s history. The previous fiscal year (2022-23) saw an even higher average cost of BDT 11.04 per unit. This increase in costs is attributed to factors such as inflation, rising fuel prices, and inefficiencies within the power sector. Over the years, quick rental power plants, dependency on fuel imports, and policy challenges have contributed to this trend, further straining the country’s energy affordability and accessibility.

In contrast, back in the 2019-20 fiscal year, the average cost of electricity production was just Tk 5.85 per kWh, highlighting a sharp rise in costs over a relatively short period. During that year, electricity generation capacity was 18,966 MW, and the total production was 6,941.15 crore kWh at a cost of Tk 40,584.93 crore. The subsequent years saw production costs escalate rapidly, with a 7.18% increase in 2020-21 and a record 38.60% jump in 2021-22.

An analysis of data since 2008-09, when the current government came to power, shows that the average cost of electricity production has increased significantly over the years. At the time, the average production cost was just Tk 2.53 per kWh, which gradually rose as quick rental power plants were introduced in 2010-11. By 2013-14, the cost had risen to Tk 6.28 per kWh. While costs temporarily decreased between 2015-16 and 2019-20, driven by lower global fuel prices, they have been on a sharp upward trajectory since then.

The sharp increase in production costs has placed a heavy financial burden on the government, which continues to subsidize electricity for consumers. This has raised questions about the sustainability of the current energy policies, including the reliance on expensive quick rental power plants and fuel imports. Additionally, despite higher investments in the power sector, the gap between production capacity and actual supply persists, leading to frequent load shedding and dissatisfaction among consumers.

Experts argue that improving efficiency, diversifying energy sources, and reducing dependency on costly imports are essential to controlling rising production costs and ensuring energy security in Bangladesh. Without these reforms, the affordability of electricity for the population and the financial stability of the power sector may remain under threat.