Bangladesh Energy - Overview

Demand for electricity in Bangladesh is projected to reach 40,000 megawatts (MW) by 2030.  The Government of Bangladesh has plans to increase power generation beyond expected demand to help propel growth in the export-oriented economy and meet the needs of a growing middle class by raising $70 billion in total investments in the sector over the next 15 years.  Electricity generation capacity has increased significantly over the last decade, despite poor transmission and distribution infrastructure, inadequate thermal efficiency in a large number of aged power plants, and a mismatch between the types of energy needed by existing plants and the fuel mix available.  Private power production units make up about half of total installed capacity.

Electrical generation capacity has increased from about 5 gigawatts in 2009 to around 21 gigawatts in 2019, and access to energy has expanded to nearly 95 percent of the population.  Still, the reliability and quality of electricity remain major issues.  Improving the supply and reliability of electricity and energy in general, while maintaining affordability, is essential to supporting the continued growth of industry and commerce in Bangladesh.

The fuel mix of Bangladesh's power plants is heavily based on natural gas.  The Government of Bangladesh plans to reduce dependence on domestic natural gas and increase the use of imported liquified natural gas (LNG).  As of July 2020 the Ministry of Power, Energy, and Mineral Resources Plans was reportedly reconsidering plans to shift Bangladesh's fuel mix towards coal – including by generating as much as 50 percent of total electricity using coal-based power plants by 2030.  The government is also considering importing electricity from neighboring countries and expanding the use of renewable resources, including solar and wind power.

U.S. companies play an outsized role in the power and energy industry in Bangladesh.  U.S. companies supply over 55 percent of Bangladesh's domestic natural gas production and are among the largest investors in power projects.  U.S.-origin power turbines currently provide 80 percent of Bangladesh's installed gas-fired power generation capacity.

There are also opportunities for offshore gas exploration.  Currently, 26 offshore blocks exist in the Bay of Bengal, including 11 shallow blocks and 15 deep sea blocks.  Petrobangla, the state-owned oil, gas exploration, and production company, agreed in March 2020 to award U.S.-Norway joint venture TGS-NOPEC and Schlumberger a contract to conduct a 2D non-exclusive, multi-client seismic survey in the 26 blocks over two years.  According to press reports, the Government of Bangladesh (GoB) had planned to invite international  bidding on 21 offshore gas blocks in March 2020, but the announcement was postponed due to the outbreak of COVID-19.  The GoB also amended the terms of the Model Production Sharing Contract (PSC) in 2019 to attract greater international bidding interest, including reintroducing a provision to allow offshore drilling companies to export any gas Petrobangla refuses to buy. 

In March 2017, without a public tender, the government and state-run Petrobangla signed a production sharing contract with POSCO Daewoo Corporation of South Korea for oil and gas exploration in deep sea block 12.  The Bangladesh government processed Daewoo's proposal under the "Prompt Power and Energy Supply (Special) Act-2010," under which there was no open competitive bidding process.  This was the first time a PSC was signed under the special act.