The latest electricity tariff hike and the growing burden it places on consumers and businesses re?ect deeper structural problems in the energy sector, including rising dependence on imported fuel, currency depreciation, excess generation capacity, and mounting subsidy requirements. While regulators argue that higher tariffs are necessary to reduce ?nancial de?cits, critics contend that consumers are paying for years of poor planning and inef?ciency.
the article explores the causes, consequences, and policy choices shaping Bangladesh’s increasingly expensive power sector.For millions of Bangladeshis, electricity is no longer merely a public utility – it has become a growing source of ?nancial pressure. The latest increase in electricity tariffs, announced in June after a gap of more than two years, comes at a time when households and businesses are already grappling with persistent in?ation, rising fuel costs, and broader economic uncertainty. While regulators argue that the adjustment is necessary to reduce mounting de?cits in the power sector, critics contend that consumers are once again being asked to shoulder the costs of policy failures, inef?ciencies, and an increasingly import-dependent energy system.
the debate surrounding the tariff hike re?ects a deeper challenge confronting Bangladesh’s energy sector.
once largely self-suf?cient in natural gas, the country now relies heavily on imported fuel, making electricity generation costs vulnerable to global market volatility and exchange-rate ?uctuations.
as the government seeks to balance affordability, energy security, and ?scal sustainability, the latest price increase has renewed questions about who should bear the burden of a power sector struggling with rising costs. Rising Fuel Prices and Electricity Tariff Adjustments The price of cooking fuel is now adjusted every month in line with international market conditions, and fuel oil prices are also revised monthly. Recently, fuel prices were increased because of rising tensions in the Middle East following military actions involving the United States and Israel against Iran.
although the Bangladesh Power Development Board (BPDB) and the Power Division had been advocating for electricity tariff adjustments, electricity prices were ?nally increased on June 3, after a gap of 28 months, at the wholesale, retail, and transmission levels. Consumer Concerns over the Price Increase Consumer rights organizations, including the Consumers Association of Bangladesh (CAB), along with various business associations, have criticized the price increase.
they argue that the increase is unjusti?ed given the country’s current economic situation, persistently high in?ation, and the failure to provide reliable, quality energy and electricity services. Critics have accused the regulator of disregarding consumer interests and shifting the burden of inef?ciencies in the power sector onto consumers. However, the Bangladesh Energy Regulatory Commission (BERC) has rejected these allegations.
according to the commission, the decision was made with consumer interests in mind and would address only a portion of the sector’s ?nancial de?cit through higher tariffs.
at the same time, BERC instructed institutions in the power sector to reduce electricity generation costs by tackling inef?ciencies, excess generation capacity, and operational irregularities. Commission Order on Electricity Tariff Increases On June 3, 2026 BERC issued an order increasing electricity tariffs at the wholesale, retail, and transmission levels.
the following day, on June 4, a revised order was issued to keep tariffs unchanged for two categories of consumers.
according to the commission’s order, the average retail electricity tariff was increased from Tk 9.11 per unit to Tk 10.40 per unit, representing an increase of Tk 1.29 per unit, or 14.16 percent. The wholesale tariff was increasedfrom Tk 7.00 per unit to Tk 8.39 per unit, an increase of Tk 1.39 per unit, or 19.86 percent. Similarly, the transmission tariff was increased from Tk 0.31 per unit to Tk 0.39 per unit, representing an increase of Tk 0.08 per unit, or 25.81 percent. Protection for Low-Consumption Consumers At the retail level, tariffs remain unchanged for lifeline consumers, de?ned as households using up to 50 units of electricity per month, as well as for consumers using between 0 and 75 units per month.
the updated residential retail tariff structure is below: Separate tariff structures have been approved for medium- and high-voltage consumers. Medium-Voltage Industrial and Commercial Consumers For medium-voltage (11 kV) consumers with connected loads ranging from 50 kW to 5 MW, the ?at tariff has been increased from Tk 10.55 to Tk 12.50 per unit.
the off-peak tariff has risen from Tk 9.50 to Tk 11.25, while the peak-hour tariff has increased from Tk 13.29 to Tk 15.62 per unit.
agricultural Irrigation For low-voltage agricultural irrigation consumers, the tariff has been raised from Tk 5.25 to Tk 6.04 per unit. For medium-voltage irrigation consumers (11 kV), the ?at rate has increased from Tk 6.42 to Tk 7.38 per unit, the off-peak tariff from Tk 5.77 to Tk 6.64, and the peak tariff from Tk 8.06 to Tk 9.23 per unit.
electric Vehicle and Battery Charging Tariffs For low-voltage electric vehicle and battery charging stations, the ?at tariff has been increased from Tk 9.59 to Tk 11.36 per unit.
the off-peak rate has risen from Tk 8.63 to Tk 10.22, the super off-peak rate from Tk 7.71 to Tk 9.09, and the peak-hour tariff from Tk 12.14 to Tk 14.20 per unit. For medium-voltage (11 kV) battery charging facilities, the ?at tariff has been raised from Tk 9.62 to Tk 11.31 per unit, while the off-peak, super off-peak, and peak-hour rates have been set at Tk 10.18, Tk 9.05, and Tk 14.14 per unit, respectively.
institutional and Other Consumers The tariff for educational institutions, religious establishments, charitable organizations, and hospitals under the low-voltage category has been increased from Tk 7.55 to Tk 9.05 per unit. Proposals for Higher Electricity Tariffs Earlier, BPDB proposed increasing the wholesale electricity tariff by between Tk 1.20 per unit (17 percent) and Tk 1.50 per unit (21 percent).
in its proposal, BPDB stated that the projected cost of electricity generation for ?scal year 2026- 27 would be approximately Tk 143,108 crore.
the average generation cost was estimated at around Tk 12.91 per unit.
the utility projected losses of around Tk 56,000 crore if the wholesale tariff remained unchanged. Power Grid Bangladesh PLC, the country’s sole electricity transmission company, also proposed increasing its wheeling charge from 30-31 paisa per unit to 48-49 paisa per unit.
at the same time, all electricity distribution companies submitted applications seeking increases in retail tariffs. BERC held public hearings on May 20 and 21 to discuss the proposed electricity price increases. Previous Electricity Price Adjustments The most recent electricity price increase before this took place on February 29, 2024, through an executive order, which raised retail electricity prices by 8.5 percent.
at the same time, the wholesale tariff was increased by 5 percent, from Tk 6.70 per unit to Tk 7.04 per unit.
an analysis of BPDB data shows that the cost of electricity generation was Tk 2.50 per unit in 2009.
today, that ?gure has risen to Tk 12.91 per unit.
if international fuel prices continue to rise and the Bangladeshi taka depreciates further against the US dollar, electricity generation costs may exceed Tk 13 per unit during ?scal year 2026-27.
in 2009, the wholesale selling price of electricity was Tk 2.37 per unit. Following the latest increase on June 3, it has risen to Tk 8.39 per unit.
at the consumer level, the average retail selling price was Tk 3.73 per unit in 2009; it has now increased to Tk 10.40 per unit. Middle East Con?ict, Rising Energy Prices, and Higher Subsidy Requirements After the beginning of the budget session, Finance and Planning Minister Amir Khasru Mahmud Chowdhury informed Parliament that the government would need to provide an additional Tk 46,600 crore in subsidies during ?scal year 2025-26 because of rising international prices for fuel and fertilizer.
of this amount, Tk 19,821 crore would be allocated to the electricity sector, Tk 11,170 crore to the natural gas (LNG) sector, and Tk 10,258 crore to fuel oil. Meanwhile, in the proposed budget for ?scal year 2026-27, 9.5 percent of the total Tk 938,000 crore budget has been allocated for subsidies and incentives. A signi?cant portion of this allocation will be directed toward electricity, LNG, and fuel oil.
according to BERC sources, BPDB proposed increasing wholesale electricity tariffs due to a ?nancial de?cit of Tk 56,000 crore. Based on BERC’s approved tariff increase, BPDB’s annual revenue is expected to rise by Tk 12,000-13,000 crore. However, the organization will still face a de?cit of Tk 41,000-44,000 crore, meaning the government will need to continue providing subsidies to address the shortfall. Reactions to the Electricity Price Increase The increase in energy prices has intensi?ed in?ationary pressures across the country. Following the latest rise in electricity tariffs, the cost of living for ordinary households is expected to become even more dif?cult to manage, according to economist Fahmida Khatun.
the Consumers Association of Bangladesh (CAB) also criticized the decision.
its President, AHM Sho?quzzaman, said that much of the de?cit could have been reduced through improved management and by eliminating corruption and irregularities, rather than increasing electricity prices. He argued that the commission’s decision was unacceptable despite these concerns being raised during the public hearings. Professor M.
tamim believes that higher energy and electricity prices will undoubtedly have negative impacts on both ordinary consumers and industries. He stated that electricity generation costs have reached their current level because power plants were built without ensuring fuel supplies, excessive generating capacity was installed beyond actual demand, unnecessary capacity payments were made, and the taka depreciated against the US dollar.
therefore, he argued that consumers should not bear the entire burden.
instead, efforts should be made to reduce generation costs while maintaining government support where necessary. Various chambers of commerce, including the Bangladesh Garment Manufacturers and Exporters Association, the Bangladesh Textile Mills Association, and the Bangladesh Knitwear Manufacturers and Exporters Association, have also described the electricity price increase as unreasonable and called for a reduction in tariffs.
they warned that otherwise Bangladesh’s export-oriented industries would lose international competitiveness while domestic prices would rise further.
economist Masrur Riaz stated that higher energy and electricity prices would undoubtedly fuel in?ation. However, he noted that the government cannot inde?nitely address de?cits through subsidies.
therefore, Bangladesh should prioritize extracting and utilizing its own natural resources, particularly gas and coal, to reduce electricity production costs. Professor Ijaz Hossain observed that an electricity generation cost of 10 US cents per unit is acceptable by global standards. However, due to the depreciation of the Bangladeshi taka against the US dollar, this cost has become excessively high for Bangladesh.
therefore, he argued that the entire burden should not be transferred to consumers. Sha?qul Alam said that electricity generation costs have risen signi?cantly because power plants were established without proper planning and because fuel supplies were not adequately secured.
the sharp increase in dependence on imported energy and electricity has further increased production costs.
although measures should be taken to reduce costs, he cautioned that doing so would not be easy. Former BERC member Mizanur Rahman believes that there is still an opportunity to reduce electricity generation costs by adopting the appropriate fuel mix. He noted that the lowest-cost electricity is generated using domestically produced natural gas, but supply shortages remain a major obstacle.
although electricitygenerated from imported LNG is cheaper than furnace oil-based generation, it is still more expensive than coal. Therefore, he emphasized the need to ensure adequate ?nancing for continued coal imports so that Bangladesh’s coal?red power plants can operate at an 80 percent plant load factor. Conclusion The latest electricity tariff increase is not simply a pricing decision; it is a re?ection of deeper structural weaknesses within Bangladesh’s energy sector. Despite having more than 33,000 MW of installed generation capacity, the country’s highest recorded output remains only around 17,200 MW, highlighting the extent of excess capacity that consumers are helping to ?nance through electricity bills.
industry experts estimate that around 60 percent of generation costs are linked to fuel and operations, while the remaining 40 percent consists of ?xed costs embedded in power purchase agreements.
in its tariff proposal to BERC, BPDB argued that nearly Tk 5.0 of the average per-unit generation cost is attributable to capacity payments. Yet many analysts contend that the larger problem is not the existence of capacity charges themselves, but years of investment decisions that created more generating capacity than the system actually required. Bangladesh’s growing dependence on imported energy – now accounting for roughly 65 percent of overall energy and electricity supply – combined with a more than 40 percent depreciation of the taka against the US dollar over the past ?ve years, has sharply increased electricity production costs.
at the same time, allegations of inef?ciency, weak planning, corruption, and governance failures have compounded the sector’s ?nancial dif?culties.
as a result, future tariff increases alone cannot provide a sustainable solution. Bangladesh will need a broader strategy that combines greater development of domestic gas and coal resources, more prudent investment planning, reduced reliance on costly imported fuels, and stronger oversight of sector institutions. Without such reforms, consumers are likely to face recurring price hikes while the underlying causes of rising electricity costs remain unresolved.
the challenge for policymakers is therefore not merely to balance the books of the power sector, but to restore affordability, ef?ciency, and public con?dence in a system that has become increasingly expensive to sustain.