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Dhaka: Finance and Planning Minister Amir Khosru Mahmud Chowdhury has expressed optimism that Bangladesh’s economy, including the energy sector, will stabilise by the second year of the government’s tenure, with stronger growth expected in the following years.
“By the end of the second year, everything should be stabilised, including the energy sector. The third year should be about to take off, and the fourth and fifth years will be the take-off period,” he said.
The minister made the remarks at a high-level luncheon meeting titled “Sustainable Power and Energy: Driving Investment in Bangladesh”, organised by the Foreign Investors’ Chamber of Commerce and Industry (FICCI) at a hotel in Dhaka on Sunday.
Khosru said the government was undertaking major reforms in the tax system despite deep-rooted structural problems in tax administration.
“We all know that, but gradually you’ll see the improvement. There are some contradictions in tax policies that we are looking into. We had a meeting the day before yesterday with the chairman and the private sector as well. So, this will go on, but give us a little time,” he said.
Acknowledging the challenges facing the economy, the minister said the government had been confronted with a major energy crisis within a week of taking office following the outbreak of war in the Middle East, while also having to deal with inherited financial liabilities and structural weaknesses.
“We have not done a great job, but we have not done too badly considering the crisis,” he said, adding that the energy crisis had already imposed an additional financial burden of around US$7 billion.
He said energy and power had become central to economic activity amid geopolitical tensions and intensifying global competition. Bangladesh must reduce the cost of doing business, improve the investment climate and make domestic industries more competitive, he added.
Khosru acknowledged that Bangladesh had long been an overregulated economy, making deregulation a major government priority. He said his budget speech had devoted four and a half pages to deregulation, although entrenched problems in tax collection, the financial sector and macroeconomic management continued to complicate the reform process.
On domestic gas exploration, he said the government was preparing to expand onshore and offshore activities through production-sharing contracts (PSCs) and the state-owned Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX).
“BAPEX is going to drill 150 wells,” he said, adding that the government had approved the purchase of equipment for the company through the relevant purchase committee.
He expressed hope that the exploration initiatives would move forward soon, helping Bangladesh develop its domestic energy resources and reduce dependence on imported fuels.
On renewable energy, the minister said the government had introduced a six-month policy window to accelerate investment and was offering tax incentives for solar projects, including imported supporting structures.
The government aims to add around 10 gigawatts of solar power capacity over the next two to three years, a target he described as achievable. Rooftop solar installations by households and industries were already increasing, he added.
The government was also allowing households to sell surplus electricity to the grid at rates intended to encourage solar investment. Increased renewable power generation would help reduce gas demand and ease pressure on gas-fired power plants, he said.
Regarding coal-based power generation, Khosru said the government was considering ways to utilise domestic coal resources while addressing political and environmental concerns.
To address the immediate gas shortage, the government was working on developing three to four floating storage and regasification units (FSRUs), with private investors from countries including South Korea and China showing interest.
However, he cautioned that FSRU projects could take around 18 months to complete, limiting their ability to provide an immediate solution to the crisis. The government was also discussing shore-based liquefied natural gas (LNG) terminals and oil storage facilities to strengthen long-term energy security.
He said potential sites had been identified at Matarbari and near Khulna, where a navigational draft of around 20 metres would allow large vessels to enter and help reduce transportation costs.
The minister said the government expected to complete its broader energy security plan within two to two and a half years, covering LNG facilities, shore-based terminals and oil storage infrastructure.
On financing, Khosru said the government was receiving encouraging responses from multilateral development partners, bilateral sources and international capital markets.
Referring to the Prime Minister’s meeting with senior Wall Street representatives, he expressed hope that foreign investment would support Bangladesh’s energy sector, capital market and banking system.
He said the government was exploring the establishment of an equity fund in Hong Kong dedicated to Bangladesh and advancing the public-private partnership (PPP) model. It had also begun the process of disinvesting from around 10 to 12 state-owned enterprises, including jute and sugar mills, to attract investment and make productive use of existing industrial infrastructure and land.
Turning to the financial sector, Khosru said weaknesses in the banking system and alleged large-scale capital flight had created serious challenges for economic recovery. He cited an estimated US$235 billion taken out of the country and stressed that financial-sector stability and a stronger capital market were essential to mobilising investment.
He also outlined major tax administration reforms, including the division of the National Board of Revenue (NBR) into separate policy-making and enforcement bodies. The move is intended to address conflicts of interest, improve efficiency and reduce corruption.
The minister urged the private sector to prepare for a challenging transition, expressing confidence that gradual reforms would improve the investment climate and strengthen economic stability.
Earlier, FICCI President Rupali Haque Chowdhury called for stronger domestic gas exploration, diversified LNG supplies, modernised energy infrastructure, improved energy efficiency and faster investment in renewable energy.
FICCI said global energy disruptions had exposed Bangladesh’s vulnerability to imported fuels, raising industrial costs, disrupting production and creating uncertainty for businesses.
Delivering the keynote address, Shafiqul Alam, lead analyst for Bangladesh Energy at the Institute for Energy Economics and Financial Analysis (IEEFA), warned that domestic gas reserves could be depleted by 2036 without new discoveries.
He stressed the need to expand exploration, reduce gas losses, promote rooftop solar and improve industrial energy efficiency.
Participants in the panel discussion also emphasised the importance of predictable regulations, investment-friendly policies, green financing and stronger public-private collaboration to ensure reliable and affordable energy supplies and sustain industrial competitiveness.
The discussion was moderated by Mahbub ur Rahman, chief executive officer of HSBC Bangladesh and a former FICCI board director.
The panellists included Shu Xiong, president and managing director of Chevron Bangladesh; Professor Dr Mohammad Tamim, vice-chancellor of Independent University, Bangladesh; Dr Nazneen Ahmed, executive director of the Centre for Policy Dialogue (CPD); and Fazlul Hoque, administrator of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).
