Allowing merchant power plants to sell electricity directly to large industrial and commercial consumers could reduce the revenue of Bangladesh’s power distribution companies and weaken the existing cross-subsidy system, a government committee has warned.
The concern comes after the government allowed private renewable power plants under the Policy for Establishing Commercial Power Generation/Power Plants Based on Renewable Energy with Private Participation, 2025 to sell electricity directly to large consumers using the national grid and relevant distribution networks. The arrangement is known as open access.
The Bangladesh Power Development Board (BPDB) committee formed to prepare the proposed Open Access Tariff (OAT) has recommended a cross-subsidy surcharge (CSS) to address possible revenue risks for distribution companies. The BPDB has sent the proposal to the Bangladesh Energy Regulatory Commission (BERC) for consideration.
Under open access, a large consumer can buy electricity directly from a merchant power plant instead of purchasing it through the existing distribution system. The power producer, however, will have to pay charges for using transmission and distribution networks.
BPDB formed a nine-member committee headed by Chief Engineer (Private Generation) at BPDB Md Abdul Haque to determine the OAT, break-even point, billing and settlement process.
Revenue risks for distributors
The committee’s main concern is the possible loss of revenue for distribution companies. Under the existing cross-subsidy system, residential, irrigation and charitable consumers receive electricity at relatively lower tariffs, while commercial and industrial consumers pay higher tariffs that support the structure.
The committee said large consumers shifting to merchant power plants could reduce distribution companies’ high-tariff sales while leaving them responsible for network maintenance and backup supply. It also identified billing and grid management challenges, as existing systems cannot separately track electricity supplied by merchant plants and the national grid, while renewable power output can fluctuate.
CSS proposed to maintain balance
To address these risks, the committee proposed a cross-subsidy surcharge (CSS) under the OAT. The surcharge would be paid by large consumers buying electricity directly from merchant power plants to partly offset the impact on the existing cross-subsidy system. The committee recommended applying it initially and reviewing it later as market-based electricity trading expands.
Charges depend on network use
The proposed OAT will vary based on voltage levels and network use. The committee identified 13 possible network-use arrangements and proposed transmission wheeling charges of Tk0.4657 per kWh at 230kV, Tk0.4901 at 132kV and Tk0.7891 at 33kV. It also proposed an Energy Accounting and Management Charge (EMAC) of Tk0.05 per kWh for electricity generated by merchant power plants.
BPDB proposes central settlement
The committee proposed a centralised payment settlement system to reduce billing problems and disputes. Under the proposal, BPDB would determine and settle payments payable to different utilities in open access transactions, considering BERC-approved tariffs, system losses, operation charges and the cross-subsidy surcharge where applicable.
The proposed OAT is not final, as BERC has the authority to determine tariffs for transmission and distribution of electricity generated by merchant power plants. BPDB Secretary Md Rashedul Haque Pradhan sent the proposal to the BERC chairman on 1 April 2026 for consideration and approval.
