Bangladesh’s cumulative debt to private power producers, accumulated during the previous regime, reached Tk 360.74 billion by the end of the last fiscal year, driven by contentious capacity charges. 

The capacity charges, payments made to Independent Power Producers (IPPs), and rental plant owners for installed overcapacity have become a major financial burden. The charges are paid even if electricity is not generated, worsening the financial strain on the government, which is already struggling with dwindling foreign reserves.

Bangladesh’s foreign exchange reserves have dropped from $48 billion two years ago to under $20 billion recently.

Economists suggest that the government revise or cancel these power-purchase agreements, guaranteeing capacity charges. As of June 2023, the total amount owed to IPPs stood at Tk 409.37 billion, and the government has allocated Tk 400 billion in subsidies for the current fiscal year, most of which will go toward paying these charges.