A systemic failure by local government bodies to settle accounts with state-owned power distributors has left the energy sector saddled with hundreds of crores of taka in outstanding arrears, threatening broader fiscal stability.
The depth of the liquidity bottleneck was highlighted this week after data from the Northern Electricity Supply Company (Nesco), which operates across 16 northern districts in Rajshahi and Rangpur divisions, showed a total freeze on collections from municipalities and city corporations.
Subsequent cross-examination of corporate ledgers reveals the crisis is structural. Several major city corporations are currently operating under a mountain of arrears inherited from the 1990s and early 2000s, when they were still classified as minor municipalities.
Following pressure from the Power Division, local government organisations have recently begun paying their current utility bills.
However, the clearance of outstanding arrears remains highly uncertain.
By the end of March this year, Nesco faced outstanding arrears of Tk646 crore. While official figures for April are not yet available, March data shows that Nesco collected Tk309 crore against a total billing of Tk332 crore.
Nesco Managing Director Md Mashiur Rahman told TIMES of Bangladesh that outstanding local government bills are a widespread issue. “This is not unique to Nesco; all electricity distribution companies across Bangladesh are facing the same challenge,” he said.
According to Nesco’s data from late March, outstanding electricity bills in 62 municipalities in Rajshahi division stood at Tk126.17 crore, while municipalities in Rangpur division owed Tk21 crore.
Meanwhile, the region’s two city corporations have accumulated massive dues, with Rajshahi City Corporation owing Tk43.92 crore and Rangpur City Corporation owing Tk24.44 crore.
A Nesco official noted that some of the arrears from the Rajshahi City Corporation have been pending for 140 months.
When asked how such massive debts accumulated, the Nesco managing director explained that the Local Government Ministry typically releases funds only at the end of the fiscal year, causing dues to stack up over time.
This explanation aligns with financial patterns across various other municipalities and city corporations in Bangladesh, where a clear trend emerges: the older the city corporation, the higher its outstanding electricity arrears.
Dhaka, which was upgraded to a municipal corporation in 1983 before being divided into two separate entities in 2011, reflects a similar debt pattern.
Dhaka South City Corporation, which inherited the bulk of the historical jurisdiction, carries an outstanding electricity bill of around Tk105 crore, accounting for most of the capital’s legacy arrears. Dhaka South City Corporation Administrator Abdus Salam told TIMES, “This amount is from the past. We need to determine how it was accumulated and will investigate if necessary.”
In contrast, Dhaka North City Corporation, established during the 2011 split, has accumulated significantly less debt, with arrears standing at approximately Tk19 crore.
Md Rabiul Islam, deputy secretary of the Local Government Ministry’s City Corporation-1 branch, declined to comment on the specific figures.
When questioned by TIMES, he said, “The respective corporations are best positioned to answer this. I cannot provide a comment from the ministry level.”
However, Parimal Sarkar, joint secretary of the ministry’s Urban Development Wing, shed some light on the systemic delays.
“There are various institutional complications,” Sarkar explained. “At times, budget allocations are not released on time, and at other times, the municipalities or city corporations fail to submit their paperwork promptly. Nevertheless, we always advise them to clear their dues. This is essentially a transfer of funds from one government entity to another, which ultimately funds national development activities.”
When asked how Rajshahi City Corporation managed to accumulate 140 months of backlogs, Sarkar questioned the distribution agencies’ leniency.
“It is baffling,” he remarked. “The Power Division is owed this money. Why aren’t they pursuing its recovery rather than letting it sit idle?”
The joint secretary added that a formal directive to clear outstanding bills was issued during a coordination meeting a week ago, and the matter will be prioritised again in the upcoming sitting.
Regarding the massive arrears of the Rajshahi City Corporation (RCC), Mahbubul Alam, Superintendent Engineer of Nesco Circle-1, told TIMES, “I understand that bills were neglected virtually from the inception of the corporation. While current monthly bills are now being cleared, the legacy arrears remain locked in place.”
When asked if “from the inception” meant dating back to the 1990s, Alam replied, “I cannot confirm the exact date off the top of my head, but official records show the outstanding bills span 140 months.”
In the private sector, utility companies routinely disconnect service over unpaid bills. Asked if Nesco had ever considered such drastic measures against a major city corporation, Alam explained the logistical dilemma. “We have actually cut the lines at various times,” he noted.
“However, we cannot leave the city streets dark at night without creating severe public security risks. As a result, we’ve found ourselves disconnecting lines during the day, only to reconnect them before nightfall. Even daytime disconnections are problematic because they halt the water pumps, cutting off the public water supply,” he added.
To resolve the impasse, Nesco’s managing director confirmed that a meeting was held last Wednesday with the RCC administrator, who assured Nesco that the corporation would clear the arrears gradually.
When approached for comment regarding the debt, Rajshahi City Corporation CEO Rezaul Karim said, “This is a historical issue from a long time ago.” Pressed further for details, Karim demurred, adding, “It cannot be explained so easily. I need to review the background properly before giving a statement, and I’m currently in a meeting.”
When asked about the outstanding debt, Mahfuz Un Nabi Chowdhury Don, the Administrator of Rangpur City Corporation, said, “I have been made aware of the issue, but the relevant officials have not yet briefed me on the exact details. There are currently 18 departments under this corporation. Once I receive a comprehensive report from them, I will be able to provide detailed information.”
Further south, the Chittagong City Corporation owes approximately Tk25 crore. Mahmud Safkat Amin, the corporation’s Supervising Engineer, acknowledged the debt but noted that a seasonal pattern usually clears it. “Traditionally, a significant portion of this backlog is settled every June before the close of the fiscal year,” he explained.
In Sylhet, the city corporation’s outstanding utility debt stands at Tk13 crore. Joydeb Biswas, an executive engineer for the corporation’s electricity department, told TIMES that the financial strain is relatively recent. “We had no outstanding dues prior to 2024,” Biswas said. “Following that period, revenue collection dipped, though it is now recovering.”
Sylhet City Corporation Administrator Abdul Qayyum Chowdhury added, “I have already cleared Tk8 crore since taking charge, and the remaining balance will be paid.”
Meanwhile, Barisal City Corporation faces a much steeper backlog of Tk64 crore. Compounding the issue, the corporation has yet to clear debts inherited from its previous tenure as a municipality before its upgrading in 2002.
In Khulna, city officials declined to comment on the exact size of their outstanding electricity bills, with various departments redirecting inquiries to one another.
However, past media reports indicate a severe debt cycle: in early 2023, then-Mayor Talukder Abdul Khalek issued a check for Tk6.85 crore at a time when the corporation’s total accumulated arrears stood at Tk26.90 crore.
Rounding out the regional corporations, Narayanganj carries an outstanding balance close to Tk29 crore.
In Cumilla, established in 2012, arrears hover around Tk3 crore. Mohammad Yusuf, an assistant engineer for Cumilla’s electricity and water department, described the systemic nature of the gridlock, “These utility debts have been dragging on since the old municipal days. Every month we pay what we can, but a balance always rolls over into arrears. It’s a continuous cycle.”
Outstanding electricity bills in Jamalpur Municipality currently total Tk2.72 crore. Municipal Executive Officer Md Hafizur Rahman explained the situation: “This debt accumulated between 2000 and 2019. We are now systematically clearing the backlog by paying an extra amount on top of our current monthly utility bills.”
Meanwhile, Kishoreganj Municipality’s utility debt reached Tk4.13 crore by the end of February.
Although the Power Division formally requested payment from the municipality’s administrator in March, no concrete action has been taken despite repeated reminders. This continued delay has prompted higher authorities to express “extreme dissatisfaction” over the unresolved arrears.
Entities beyond local govts also owe Nesco
The issue of unpaid utility bills extends far beyond local government bodies; various other public, private, and religious institutions across Bangladesh carry massive arrears. Among the most significant debts are those tied to the camps of stranded Pakistanis (Biharis).
In the northern region alone, spanning Nilphamari’s Saidpur, Rangpur, Dinajpur, Bogura, and Rajshahi, outstanding electricity bills in these camps have accumulated to Tk73 crore.
Religious institutions across the Rajshahi and Rangpur divisions have also shown a persistent tendency to accumulate arrears, with unpaid bills for mosques and other places of worship reaching approximately Tk28 crore.
A significant portion of this debt belongs to the newly established “model mosques” built under the previous Awami League administration. Payment has stalled because of an ongoing dispute between local mosque committees and the government over who holds financial responsibility for the utilities.
Additionally, various government housing quarters in the north owe Tk9.5 crore. Industrial arrears are also substantial, with the defunct North Bengal Paper Mill in Paksi owing roughly Tk5 crore, and the Sirajganj Spinning Mill carrying a backlog of around Tk4 crore. Furthermore, outstanding electricity bills for agricultural irrigation pumps have surpassed Tk41 crore.
Perhaps the most difficult debt to recover involves “untraceable” consumers.
A total of 7,742 customers have completely vanished or closed their accounts without settling their final dues, leaving behind a combined debt close to Tk70 crore. A senior Nesco official admitted that the utility provider views the prospects of recovering these specific funds as highly unlikely.
Mofazzal Hossain from Barishal, Ali Abrar from Khulna, Rakibul Hasan Rokel from Kishoreganj and Saimum Sabbir Shovon from Jamalpur also contributed to this report.
