Energy Sector Reforms in Bangladesh: Pricing and Subsidization
The current energy crisis started well before Russia’s invasion of Ukraine. The pent-up demand surged as the world emerged from the COVID-19 pandemic - China ran short of coal and the coal prices shot up. The global market for liquefied natural gas (LNG) then also tightened, with prices skyrocketing. The oil prices just followed the trend and rose as well.
This crisis is also taking a toll on the energy market as well as the overall economy of Bangladesh. The gas-dependent power plants are in trouble in securing enough fuels to run the plants, coal-based power plants, which are environmentally unfriendly, are getting popular again, prices of power have been revised upward, electricity has been rationing to ensure supply to the industrial and agricultural sectors. Issues of energy security are now dominating over cleaner energy.
Against this backdrop, it is important to take a fresh look at the energy market of Bangladesh and its prices.
Objectives of the study
The primary objective of the study is to take stock of the energy pricing methods in developing countries and how Bangladesh fares with global good practices in this respect. This necessitates a sound understanding of the economics behind the pricing methods including subsidies. Hence, the study aims to conceptualize the theories behind the pricing methods and tailor them to the context of Bangladesh. In the end, we will also suggest a few pricing options suitable for Bangladesh which are likely to enhance the welfare of the citizens and reduce the pressure on the treasury.
Scope of the study
1. A review of the energy sector in Bangladesh
2. Energy pricing: A conceptual framework
3. Energy pricing methods in developing countries
4. A critical review of the energy pricing in Bangladesh
5. Policy recommendations
The study will rely on secondary data, desk review, and KIIs.
Dr. Kazi Iqbal, Senior Research Fellow, BIDS (Team leader)
Dr. Enamul Haque, Professor, East West University
Tahreen Tahrima Boishakhi, Research Fellow, BIDS