Sovereign guarantees limit power deal review: Energy minister

The government cannot unilaterally cancel or withdraw sovereign guarantees backing power purchase agreements with Adani and other domestic and foreign power producers, as doing so could damage Bangladesh’s credit rating and undermine international confidence, Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood Tuku has said.

The government is negotiating with power producers to reduce electricity prices while weighing the risk of disrupting supplies amid an existing power shortage, he said while speaking at the fifth Bangladesh Economic Summit 2026, organised by Bonik Barta at Pan Pacific Sonargaon in Dhaka today (14 November).

The minister said sovereign guarantees were bankable instruments that power companies had used to secure loans from financial institutions. Their cancellation could therefore have wider financial consequences.

“Once a sovereign guarantee is issued to a country or company, negotiations are possible, but it cannot simply be withdrawn. That would affect our country’s credit rating, and people would lose confidence,” he said.

The government has held discussions with Adani and other Indian power suppliers, with teams from Bangladesh and India exchanging visits as part of the negotiations. Talks are also underway with domestic coal- and gas-fired power producers to reduce electricity prices.

However, global fuel price volatility has complicated the negotiations, with power producers seeking higher prices citing increased fuel and shipping costs, particularly coal freight charges following the recent conflict.

Tuku acknowledged that the government had limited room for aggressive measures, as any disruption to electricity supplies could worsen the country’s existing power shortage.

Phulbari open-pit mining under consideration

The minister also advocated open-pit coal mining at Phulbari in Dinajpur, arguing that modern technology could minimise environmental damage and the loss of agricultural land while allowing Bangladesh to utilise its domestic resources.

“I think the time has come to explore that coal mine through open-pit mining,” he said, arguing that the economic benefits of coal-based electricity generation could outweigh potential losses in agricultural production.

Prime Minister Tarique Rahman has directed officials to finalise a roadmap for coal extraction within the next three months, he said. Discussions on the bidding process have already begun, and the government will invite bids once the framework is finalised.

The government is also planning to establish a coal-fired power plant near the Phulbari mine so that extracted coal can be used directly for electricity generation, reducing transportation and generation costs.

Tuku said Bangladesh had already spent around Tk50,000 crore on liquefied natural gas (LNG) subsidies, putting additional pressure on public finances and limiting resources for development programmes.

Gas exploration, offshore bidding to reduce import dependence

Beyond renegotiating existing power contracts, the government is pursuing a broader strategy to reduce reliance on imported LNG through domestic exploration and alternative energy sources.

The minister said drilling of new gas wells had begun after years of inadequate exploration, while two additional drilling rigs were being procured to accelerate the process.

Initial exploration results had been encouraging, he said, adding that commercial development would follow if sufficient reserves were established.

For offshore exploration, the government has floated an international tender to attract foreign companies with deep-sea exploration capabilities. The bidding process is scheduled to close in March, after which successful bidders could be awarded exploration contracts.

Rooftop solar to offer financial incentives

The minister also highlighted the government’s plans to expand renewable energy through rooftop solar installations.

Under the initiative, distribution companies will purchase surplus electricity supplied to the grid at Tk10.50 per unit.

He said households could earn money by selling excess electricity generated through rooftop solar systems, creating an additional incentive for adoption while reducing pressure on conventional power sources.