Bangladesh protests India's Rs 0.01 hike, eyes 127% costlier Chinese power. Here's why

Bangladesh is set to buy electricity generated from waste in Dhaka from a Chinese company at a 127% higher rate than what it pays Indian suppliers on average. The news comes just days after Dhaka objected to India's proposed Rs 0.01-per-unit hike on electricity supply charge.

Bangladesh's electricity strategy is throwing up a striking contradiction. Just days after Dhaka raised objections to India's proposed Rs 0.01 per-unit charge for settling cross-border electricity transactions, which Delhi later halved to Rs 0.005, the Tarique Rahman-led government is preparing to pay a Chinese company Taka (Tk) 25 per unit for electricity generated from waste.

The Chinese project is small, with a planned capacity of just 42 Mega Watt (MW), and is primarily aimed at tackling Dhaka's mounting garbage problem. But the contrast comes at a politically sensitive moment even as Bangladesh is battling severe power shortages, gas supply disruptions and prolonged blackouts, while protests over electricity outages have erupted on the streets.

Against that backdrop, the proposed Chinese tariff is about 127% higher than the roughly Tk 11 per unit Bangladesh paid for electricity from Indian suppliers in Financial Year 2025-26.

One Taka is valued at 0.77 Indian Rupees and the comparison, however, needs context. The project in Dhaka's Aminbazar is not a replacement for India's much larger electricity supplies to Bangladesh.

Rather, Dhaka is seeking to turn an environmental liability, which is its growing mountains of urban waste, into electricity and other useful products. Yet the Tk 25 tariff has put a fresh spotlight on the cost of Bangladesh's power strategy at a time when every additional unit of electricity and every additional cost is under scrutiny.

INDIA'S RS 0.01 CHARGE VS CHINA'S TK 25 FOR BANGLADESH POWER

The contrast became particularly striking after Bangladesh objected to India's proposed Settlement Nodal Agency (SNA) charge for cross-border electricity transactions.

On August 24, India proposed an SNA charge of Rs 0.005 per unit on electricity supplied to Bangladesh. The charge followed a decision by India's Central Electricity Regulatory Commission (CERC) to introduce SNA charges for cross-border power trade.

The initial proposal had been Rs 0.01 per unit, but the charge was subsequently reduced by half after the Bangladesh Power Development Board raised the issue.

The SNA charge is not the price of electricity itself. It is meant to cover services connected with the movement and settlement of cross-border power, including scheduling, metering, energy accounting and grid operations. Officials have indicated that the additional cost would be relatively small.

That makes Dhaka's willingness to pay Tk 25 per unit for the Aminbazar waste-to-energy project stand out even more.

The two charges are, of course, not directly comparable. India's SNA fee is an additional transaction and grid-related charge, whereas Tk 25 is the proposed tariff for electricity generated by a waste-to-energy plant.

WHY BANGLADESH IS BETTING ON COSTLY POWER EQUATION

According to Bangladesh's The Daily Star, the average price of imported electricity more than doubled between FY21 and FY25, rising from Tk 5.82 per unit to Tk 11.72 per unit.

Against that backdrop, the proposed Aminbazar tariff of Tk 25 per unit is more than twice the FY25 average price of imported electricity.

But the Aminbazar project is not comparable in scale to Bangladesh's electricity imports from India.

In FY25, electricity imported from India accounted for approximately 15.8% of Bangladesh's total electricity purchase cost. Dhaka paid around Tk 19,225 crore for electricity imported from India that year, out of a total power purchase cost of about Tk 1,21,420 crore, according to The Daily Star.

The Chinese project, by contrast, would generate only 42MW. Its primary purpose is waste management, with electricity generation being one of its benefits.

WHY IS BANGLADESH PAYING TK 25 FOR CHINESE ELECTRICITY?

The proposed deal involves electricity generated from waste at the Aminbazar landfill in Dhaka, which is managed by Dhaka North City Corporation.

Dhaka-based New Age newspaper reported on August 27 that the Bangladesh government will purchase electricity generated from waste at the landfill from a Chinese company at Tk 25 per unit.

State Minister for Local Government, Rural Development and Cooperatives, Mir Shahe Alam, said the project would have a generation capacity of 42MW and is expected to begin generation within 18 months.

Electricity generated at Aminbazar could be supplied to Bangladesh's national grid by August or September 2028, according to the minister.

The government will not have to make a direct investment in the project, Shahe Alam said.

The economics of the project are therefore not based solely on electricity generation. The Chinese investor will process waste at the landfill, generate power and produce organic fertiliser in the process. The investor will also pay Dhaka North City Corporation monthly rent for using the landfill.

Shahe Alam acknowledged that the electricity price might appear high but argued that the project would provide wider environmental benefits.

"Garbage and waste are a major burden for our nation and Dhaka city," he said, according to the New Age report, pointing to environmental benefits and carbon credits as ways through which the cost could be recovered.

In effect, Dhaka is buying more than electricity. The project is being presented as a combined waste-management, environmental and energy-generation initiative.

BANGLADESH IS FACING A POWER CRISIS NOW

The timing is what makes the Tk 25 per unit initiative particularly noteworthy. Bangladesh has been struggling with severe electricity shortages as disruptions in gas and LNG supplies have squeezed power generation. The crisis has also spilt onto the streets, with residents protesting prolonged outages and shortages in electricity supply.

The immediate crisis has been linked to disruptions on the LNG side. The consequences were felt directly by Bangladesh's power plants. The country's power sector requires more than 1 billion cubic feet of gas per day, while available supplies have fallen to around 700 million cubic feet per day.

The resulting shortage severely affected electricity generation and triggered widespread load-shedding. In some areas, residents reportedly faced nine to 10 hours of power outages, turning electricity availability into a growing public grievance.

The government announced measures to conserve power as it attempted to balance the shrinking supply with demand. But with imported electricity supplies also reduced, the crisis has increasingly become visible outside government offices.

INDIA REMAINS A MAJOR POWER SUPPLIER TO BANGLADESH

Despite the emerging Chinese role in waste-to-energy, India remains a major source of imported electricity for Bangladesh. Dhaka currently has arrangements to import up to 2,656MW of electricity from India through multiple agreements.

The scale difference is significant. While the Chinese Aminbazar project would add 42MW, Bangladesh's existing arrangements with India cover up to 2,656MW.

Therefore, the Chinese project cannot realistically be viewed as an alternative to India's electricity supply. Its importance lies primarily in what it does with Dhaka's waste.

CHINA'S WASTE-TO-POWER PUSH COULD GROW MORE

The Aminbazar project might also be the beginning of a broader Chinese role in Bangladesh's waste-to-energy sector. State Minister Shahe Alam said an initiative had been taken to generate electricity from waste accumulated at the landfill operated by Dhaka South City Corporation.

The Bangladesh government has taken the initiative to approach Chinese company PowerChina for the project. If pursued, that would give Chinese companies a larger role in converting Bangladesh's waste into energy.

For now, however, the Aminbazar project remains a relatively small addition to Bangladesh's electricity generation capacity.

As Bangladesh battles a power crisis severe enough to trigger street protests, Dhaka is simultaneously trying to secure immediate energy supplies from India, objecting to even a Rs 0.01-per-unit cross-border settlement charge, and preparing to pay Tk 25 per unit for a Chinese waste-to-energy project.

The numbers remain striking. At a time when Bangladesh's electricity costs are rising and its citizens are protesting outages, the proposed Tk 25 tariff will inevitably invite scrutiny, even if the project is ultimately justified not by the price of electricity alone, but by the value of turning one of Dhaka's biggest environmental burdens into power.

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