As winter sets in, Bangladesh is grappling with a significant power overcapacity, with more than 75 per cent of its installed power generation capacity going unused during several hours each morning since the beginning of December. With the chill of winter expected to deepen, electricity demand is projected to decline even further, worsening the ongoing issue that has already cost the nation over Taka 1 lakh crore in the past 15 years.
Currently, Bangladesh’s installed power generation capacity stands at 27,740 MW, while the minimum power demand recorded was just 6,771 MW early Wednesday morning. In stark contrast, the maximum supply reached 16,477 MW on 30th April, illuminating the persistent disconnect between power generation capabilities and actual demand. This disparity raises significant concerns about the country’s economic growth, particularly for the ready-made garment (RMG) sector, which is a crucial driver of Bangladesh’s economy.
Despite significant investments of US $ 33 billion made by the previous Awami League government to boost power generation more than five-fold, the RMG sector has struggled with energy shortages for over two years, hindering its ability to operate at full capacity.
Recent discussions by the Dhaka Chamber of Commerce and Industry highlighted a worrying 30 per cent decline in industrial production due to energy shortages. The RMG sector, which relies heavily on consistent electricity supply for production, has been particularly affected. Many garment factories have turned to captive power sources due to frequent power cuts, further straining gas supplies for power plants connected to the national grid.
Currently, Bangladesh’s captive power capacity is at 2,800 MW. Energy expert Mohammad Tamim pointed out that power consumption by industries has stagnated over the past five years. In 2023, data from the Power Development Board indicated that only 27.63% of the total electricity produced—79,270 units—was sold to the industrial sector, a significant decline from 37.1 per cent in 2019. This trend poses a grave risk to the RMG industry, which constitutes a substantial portion of the country’s exports.
The decline in electricity sales to industries has been a long-term trend, with industrial consumption dropping from 45.72 per cent in 1994 to its current levels.
According to the US-based Institute for Energy Economics and Financial Analysis, shifting half of the industrial captive power demand to the national grid could save Bangladesh Taka 34.14 billion annually. Despite achieving 100 per cent electrification in 2022, energy experts are skeptical about the national grid’s ability to meet household and industrial demand, particularly with ongoing power cuts even during the winter months.
While recent data shows a 5 per cent increase in power demand during the second week of December compared to last winter, experts believe this growth should be higher, possibly around 7 per cent or more. Power generation capacity usage has fallen to 24 per cent last year, down from 28 per cent the previous year, raising alarms about the potential for job losses in the RMG sector if economic conditions do not improve, especially in the wake of political upheaval following the student-led uprising that ousted Sheikh Hasina’s government on August 5.
