Solving the power sector’s overcapacity problem

One of the less talked-about downsides of the pandemic-induced lull has been the increasing financial stress on the Bangladesh Power Development Board (BPDB). According to a study last year by the Ohio-based Institute for Energy Economics and Financial Analysis, Bangladesh is set to have the capacity to "generate 58 percent more power than the nation needs by 2030"— a forecast which crucially takes into account the economic impact of Covid-19. But experts had been warning about the growing overcapacity in the power sector long before the pandemic started.

According to another study from last year (this one done by the Centre for Policy Dialogue) the amount of overcapacity on June 16 of FY18, FY19 and FY20 was 9,437 MW, 8,806 MW, and 10,216 MW—meaning that the rates of overcapacity was 59 percent, 46 percent and 49.8 percent respectively. Thus, the reserve capacity in all the cases were much higher than the 25 percent target set in the Power Sector Master Plan and significantly higher than the 10 percent reserve capacity maintained in many developing countries.