This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 12/10/2018

Overview
Demand for electricity in Bangladesh is projected to reach 34,000 megawatts (MW) by 2030 and the Government of Bangladesh has plans to increase power generation beyond expected demand to help propel growth in the export-oriented economy and to meet the demands of a growing middle class.  Total investment in the sector over the next 15 years is estimated at $70 billion.  While installed generation capacity including captive power (as of June 30, 2018) has increased to 18,753 MW, shortfalls exist due to poor distribution infrastructure and a mismatch between the types of energy plants and fuel mix available.  Private power production units are approaching half of total installed capacity.

Only two-thirds of Bangladesh’s population is currently connected to the electricity grid.  This indicates an untapped potential market of up to 60 million people connecting to the national grid in coming years as Bangladesh continues its growth trajectory.
The fuel mix of Bangladesh’s power plants is heavily based on natural gas.  The Government of Bangladesh plans to reduce dependence on natural gas and move towards coal with plans to generate 50 percent of total electricity using coal-based power plants by 2030. Other solutions include importing electricity from neighboring countries, importing liquefied natural gas (LNG), and expanding use of renewable resources, including solar and wind.

U.S. companies play a strong role in the power and energy industry in Bangladesh.  U.S. companies produce over 55 percent of Bangladesh’s domestic natural gas supply 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, 18 offshore blocks exist in the Bay of Bengal, most of which remain available for allocation and exploration.  Oil and gas firms can pursue exploration and production ventures through production sharing agreements with the state-owned oil and gas company, Petrobangla.  In March 2017, without 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 Government of Bangladesh had previously indicated that the terms of production sharing contracts would be improved to attract greater international interest.  According to press reports, Bangladesh’s new model production sharing contract (PSC) allows Daewoo to sell natural gas and other petroleum resources to a third party in the country or outside at negotiated prices if Petrobangla refuses to buy the gas.  The Bangladesh government processed the proposal of Daewoo under the “Prompt Power and Energy Supply (Special) Act-2010,” under which there was no open competitive bidding process in awarding the contract.  This was the first time a PSC was signed under the special act.

Leading Sub-Sectors
Liquefied Natural Gas (LNG) Imports: Bangladesh is turning to liquefied natural gas imports to help meet burgeoning fuel demands.  As a result, the country is in the process of setting up its first floating storage and regasification units and is beginning discussions on LNG supply contracts.  In addition, Bangladesh is planning several LNG-based power plants.
Solar Power: Bangladesh has successfully managed to implement a large-scale Solar Home System (SHS) project with over 4.12 million SHSs installed nationwide.  Prime Minister Sheikh Hasina has publicly supported the expansion of renewable energy in Bangladesh, targeting 20,000 MW by 2021.

Opportunities
Bangladesh may have sizable reserves of untapped gas in its 18 offshore blocks in the Bay of Bengal.  Exploration has been stymied by the government's failure to offer attractive fiscal terms during the bidding process.  The deep-water area of Bangladesh is virtually unexplored and the Government of Bangladesh plans to acquire 2D seismic survey data for the Bay of Bengal that will be made available to potential offshore exploration companies.  Geologists have indicated that prospects are good for locating gas, but commercially viable reserves have yet to be confirmed.

In addition to offshore deep-water exploration, possibilities exist for reinvigorating aging brown fields, further developing onshore gas fields, overhauling roads, waterways and infrastructure to facilitate fuel transport, and building pipeline infrastructure to carry imported LNG and drilled natural gas to distribution hubs.

Incentives provided to foreign investors in the energy sector include:

  • Tax exemption on royalties, technical know-how and technical assistance fees, and facilities for their repatriation;
  • Tax exemption on interest paid on foreign loans;
  • Tax exemption on capital gains from transfer of shares by the investing company;
  • Avoidance of double taxation for foreign investors on the basis of bilateral agreements;
  • Exemption from income tax payments for up to three years for the expatriate personnel employed in approved industries;
  • Approved remittance of up to 50 percent of salary for foreigners employed in Bangladesh as well as facilities for repatriation of their savings and retirement benefits at the time of their return;
  • No restrictions on issuance of work permits for project-related foreign nationals and employees;

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Bangladesh Energy Trade Development and Promotion