How our electric grid fosters inequality

 At 2pm on a sweltering April day in a small workshop in rural Mymensingh, a welding machine goes silent. It was not because there was no electricity connection, but because the power had vanished again. At that exact moment, in a corporate high-rise in Dhaka, an air conditioner hums uninterrupted.

This split-screen reality exposes a structural reality: what Bangladesh has built is not a single power system serving a single economy, but a divided one.

On one side sits the state economy: an electricity regime engineered around megawatts contracted, capacity payments guaranteed, and fiscal stability preserved. It reliably powers government narratives, corporate enclaves, and politically insulated industry. Here, energy risk is underwritten by sovereign guarantees and absorbed by the public purse.

On the other side sits the bottom-of-the-pyramid economy, spanning agriculture, agri-processing, cottage industries, and small manufacturing. Here, electricity is not a convenience but a precondition for survival. The grid reaches farms, mills, cold storages, and workshops alike, but reliability does not. Risk here is not insured; it is absorbed by farmers through failed irrigation cycles, by poultry owners through heat losses, by millers through spoiled grain, and ultimately by consumers through food inflation.

For the millions of enterprises in this second economy, the celebrated "100 percent electrification" milestone is a vanity metric. Official data shows access exceeding 99 percent, yet productivity remains hostage to reliability. During the heatwaves of 2024, while urban centres faced manageable load shedding, rural feeder lines sustaining the productive base faced outages lasting six to seven hours a day. Small manufacturers were forced to burn diesel at over Tk 106 per litre just to meet deadlines—a massive cost increase over grid tariffs.

This instability bleeds directly into agriculture. Unreliable power forces farmers into gruelling nocturnal irrigation cycles and exposes poultry operations to catastrophic heat losses; industry bodies reported poultry sector losses running into Tk 16,000 crore over a single month. Cold storage operators are pushed onto diesel simply to prevent crops from rotting.

This state-designed monopoly logic feeds food inflation by pushing energy volatility from the grid into food prices. When energy risk is forced onto producers, it results in higher food prices, lower wages, and lost jobs. At the end of this value chain sit households: those that cannot absorb the shock go without a meal or two.

As a cottage industry's load approaches and crosses roughly the 50-kilowatt threshold, utility rules typically require a shift to high-tension supply, often necessitating the installation of a private 11 kV/0.4 kV substation, an investment that can cost Tk 15 to 25 lakh. Connection is permitted, but scaling is disincentivised.

Only once this trap is visible does the architecture behind it come into focus. For more than a decade, under the indemnity of the Speedy Supply of Power and Energy (Special Provision) Act, procurement rules prioritised speed over scrutiny, allowing capacity to be contracted without competitive discipline.

The fiscal consequences are now clear. In the revised FY 2024-25 budget, Tk 62,000 crore was allocated to power-sector subsidies. Recent analysis suggests that in FY 2023-2024, nearly 81 percent of this allocation, to the tune of Tk 32,000 crore, was absorbed by capacity charges. These are payments to plants regardless of whether electricity is actually produced.

This stark division is not a technical inevitability; it is a fiscal choice. The path forward requires treating the bottom-of-the-pyramid economy not as a charity case, but as the engine of growth. The updated Renewable Energy Policy 2025 explicitly recognises peer-to-peer electricity trading. If operationalised, a cluster of rice mills in Bogura or a weaving village in Sirajganj could generate, store, and trade solar power through a swarm-grid model. Decentralisation here is not ideological; it is about yield stability and food system resilience.

A quieter reform lies in finance. Every month, millions of farmers and rural entrepreneurs pay electricity bills. By integrating smart-meter usage with digital credit scoring, a farmer's steady irrigation history or a processor's consistent cold storage demand can become bankable proof of productivity. Finance can then follow performance, not paperwork—transforming energy from a recurring expense into financial infrastructure.

As long as the power sector protects the state economy while extracting from agriculture and small business, food inflation and broad-based unemployment will remain structural features of the economy. This is not a future risk; it is the present cost of a system that keeps capital comfortable and production expendable.

As such, the lights will stay on in the high-rises. The darkness has already been outsourced to the fields and workshops below.

Saba El Kabir is a development practitioner and founder of Cultivera Limited. He can be reached at saba@cultivera.net.

Views expressed in this article are the author's own. 

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