ADB fossil funding escalates energy, economic risks of Bangladesh

Environmental Activists have claimed on Sunday that that the Asian Development Bank's (ADB) decades-long focus on fossil fuel financing is exacerbating Bangladesh's energy, economic, and environmental vulnerabilities.

"After 2000, the ADB shifted toward direct financing of gas-fired power plants and combined-cycle efficiency upgrades-primarily through OCR loans. High-profile tenders were also initiated for the huge power plants including Sirajganj and Meghnaghat 450 MW gas plants," Sarmin Akter Bristy, Fossil Fuel Campaigner and Coordinator at the NGO Forum on ADB told a seminar at the Bangladesh Energy Conference 2025 adding that from 1977 to 1993, ADB's assistance focused on gas planning, system upgrades, energy-efficiency measures, and the Power System Master Plan.

In total, ADB financed $1.232 billion for power plant construction, $1.12 billion for gas pipelines, $703.6 million for gas sector development, $660 million for planning, $600 million for the Power System Master Plan and $1.393 billion for other gas-related projects, she told.

She presented keynote papers titled "MDBs in the Energy Sector of Bangladesh"

Forum's Executive Director, Rayyan Hassan cautioned that ADB's "one-sided, fossil-heavy investment model" heightens Bangladesh's exposure to fuel shortages, mounting debt, and intensified climate risks.

On the same day, another session titled "Problems and Potentials of RE Application in Bangladesh" highlighted that despite the sector's significant potential, policy-related barriers continue to limit renewable energy expansion.

"Industrial solar installations have received far more attention than rooftop systems. Yet, nearly 90% of home-based rooftop solar setups remain non-functional-installed mostly for compliance rather than actual generation.

If these systems operated properly, a substantial amount of electricity could be added to the national grid," Anwar Hossain, Executive Director of Earth, said.

"Four public-sector plants received $817 million, while $415 million went to private-sector ventures led by GEE, Pendeker, Summit, JERA-Reliance, and NWPGCL. Direct financing included $75 million for Bibiyana II (341 MW), $200 million for Rupsha 800 MW, and $500 million for the Reliance Meghnaghat 715 MW plant," he said.

Civil society groups warned that ADB's continued reliance on gas-based power is locking Bangladesh into an expensive and unstable energy model, while renewable energy remains critically underfunded, even as global consensus increasingly favors clean and resilient systems.

Mostofa Al Mahmud, President of the Bangladesh Solar and Renewable Energy Association (BSREA), added "A meaningful transition to renewable energy requires strong financial incentives due to the high upfront cost of solar. Invisible barriers persist. For instance, a meeting was held months ago to reduce tariffs on solar panels and equipment, but no action followed, indicating forces actively resisting progress."

Sheikh Ruhul Amin, Energy Finance Researcher, noted "If Bangladesh aims to achieve 20-30% renewable energy in its power mix, policymakers must revisit current targets. Major funders, including the ADB and other multilateral banks, have expressed concern that these goals are not bankable. Unaligned targets pose significant financial risks. Renewable energy ambitions must be realistic and financially viable."

According to the NGO Forum's report, ADB has committed $92.1 billion across 570 energy projects in South Asia, supporting 13,797 MW of generation. Of this, Bangladesh received $17.34 billion for 106 projects, including $5.995 billion across 36 gas-focused projects supporting 3,659 MW of capacity.

ADB's gas-related portfolio in Bangladesh is overwhelmingly loan-based 60 per cent $3.603 billion) from the Technical Assistance Special Fund (TASF), 36 per cent from high-interest Ordinary Capital Resources (OCR), and just 4 per cent ($2.59 million) from the Asian Development Fund.

The seminar said the idle power plants are rising debts, highlights major economic losses from ADB-financed plants that cannot operate due to gas shortages and missing pipeline infrastructure.

"The Rupsha 800 MW and Reliance 715 MW plants-both fully constructed-remain idle. Despite not generating electricity, Bangladesh must pay hefty capacity charges under OCR loan agreements, deepening the nation's financial stress," the report said.

"These projects represent the costliest form of energy insecurity-plants ready to run but starved of fuel," Bristy said.

The paper also analyses the Power Purchase Agreements (PPA) and Environmental Impact Assessment (EIA) documents, that shows that carbon emissions from ADB-backed plants as follows Reliance 714 MW 42.03 million tons CO?, Rupsha 800 MW 44.93 million tons CO?, Bibiyana II 341 MW 19.3 million tons CO?, Meghnaghat 450 MW Phase 2 25.27 million tons CO?, Ashuganj-Meghnaghat 43.18 million tons CO?, combined, these facilities will emit 174.71 million tons of CO? over their operational lifetimes while occupying more than 160 acres along the Meghna, Meghnaghat, and Bhairab rivers-ecosystems already under severe stress.

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