World Bank Enables Corruption in Bangladesh

Asia-Pacific , Crime & Justice , Development & Aid , Economy & Trade , Energy , Financial Crisis , Headlines , TerraViva United Nations Opinion

SYDNEY, Jun 9 2026 (IPS) - The World Bank considers corruption a major obstacle to eradicating global poverty . The Bank officially has a zero-tolerance policy against fraud and corruption in its projects. Concerned with widespread corruption in Bangladesh, the Bank and the Government agreed on the Governance-oriented Country Assistance Strategy (GCAS) in 2006 and the Bank’s subsequent Country Partnership Strategy (CPS) ostensibly has been more selective on governance and anti-corruption (GAC) issues. Ironically, however, the Bank’s funding enables corruption. The Bank’s recent decision to advance a US$350 million loan allegedly for enhancing energy security is a glaring example.

Anis Chowdhury

Corruption-riddled energy sector

The Interim Government’s White Paper on the state of the economy documented the extent of collusion and corruption in the energy sector. It noted the authoritarian kleptocratic government’s inflated demand forecast, disregarding professional projections. Thus, the installed capacity hugely exceeds actual demand. Against the peak summer demand of approximately 17,000 MW, the installed capacity is nearly 32,000 MW (or 30,000 MW considering aging infrastructure). According to the White paper, this artificially “increased capacity was driven by unscrupulous motivations” to benefit the regime’s cronies who formed a monopoly cartel in the power sector.

A series of dodgy moves facilitated unprecedented misappropriation of public money in the sector. The first was the awarding of contracts to 17 private rental plants through ‘negotiation’ in 2010, circumventing the Public Procurement Rules. The second was the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010, which protected energy contracts from competitive bidding and legal challenges. Such indemnity is a license for corruption, facilitating unchecked project approvals and non-transparent often dollar-denominated Power Purchase Agreements.

These agreements enabled the purchase of electricity from furnace-oil-based plants at prices 40-50% above market rates and from gas-fired plants at prices 45% above market rates, according to the Interim Government’s review committee . Initially established for a four-year period to address an emergency supply situation, the arrangement has been extended multiple times, allowing the cronies to be paid an exorbitant excess capacity charge.

The estimated total excess capacity/rental payment to the private sector from 2010-11 to 2023-24 was approximately US$2.93 billion. In the 2024-25 fiscal year alone the capacity charge was approximately US$3.42 billion , while nearly 63% of installed electricity generation capacity remained idle. According to the review committee, an estimated excess generation capacity of roughly 7,700 to 9,500 MW is causing an additional annual expenditure of US$900 million to US$1.5 billion in capacity payments.

The White Paper estimated that the rental power plants made as high as 35% profit against a standard 15%! The private sector power companies received payments from the government as rent for power plants under the guise of power purchase agreements , where corruption, rather than electricity supply, was the main objective.

Most of the operational private power plants in Bangladesh are owned/controlled by a group of five cronies . They control country’s power sector to loot vast amounts of money. While the kleptocratic regime beat the drum of “self-sufficiency” in electricity, its cronies were pillaging the state coffer.

While the cronies enjoyed excess profits through extraordinary corrupt practices, consumers paid the price. Electricity prices were increased 12 times at the wholesale level and 14 times at the retail level over 15 years during the kleptocratic regime, ostensibly to reduce losses and subsidy requirements. But neither losses nor subsidies declined .

The review committee recommended that contracts containing evidence of corruption should be cancelled immediately. It also recommended renegotiation of high-cost and unequal power purchase agreements to revise and convert them to a “take-and-pay” model following Pakistan’s example.

Instead of taking these recommended measures, the current government has chosen the path of the kleptocratic regime’s looting model . The decision to hike the electricity price will protect the fatty pockets of cronies at the expense of the common people.

The World Bank’s role

The Bank has been a prime advocate of privatisation of Bangladesh’s energy sector, citing widespread corruption and inefficiency of the publicly-owned power sector. It pushed for “unbundling” vertically integrated state monopolies, facilitating Independent Power Producers (IPPs), and mobilising private capital through financial guarantees – a strategy that supposedly should improve…