Bangladesh's Power Division has urgently requested Tk1,744 crore ($143 million) in emergency subsidies to avoid sovereign default on a Chinese-financed coal plant loan due March 27, exposing the debt trap dynamics of China's Belt and Road infrastructure push across South Asia.
The crisis centers on the 1,320-megawatt Patuakhali coal-fired power plant near Payra Port, a $2.539 billion facility built as a 50:50 joint venture between Bangladesh's Rural Power Company Limited and China's NORINCO International Cooperation. The project was financed through China's Export-Import Bank with Bangladesh's government providing a sovereign guarantee covering half the loan.
Now the bill has come due, and Dhaka doesn't have the money.
According to documents obtained by The Business Standard, the Finance Division has yet to release the subsidy because the Cabinet Committee on Government Purchase hasn't approved the plant's electricity tariff — a bureaucratic bottleneck that threatens to trigger Bangladesh's first sovereign default on Chinese infrastructure debt.
A billion people aren't a statistic — they're a billion stories. For Bangladesh's 170 million citizens, this isn't an abstract financial problem. A sovereign default would spike borrowing costs across the economy, making everything from roads to schools more expensive to build and forcing the government to choose between debt payments and development spending.
The Patuakhali plant represents a textbook example of Belt and Road Initiative dynamics that have ensnared countries from Sri Lanka to Pakistan. China finances massive infrastructure projects with loans requiring sovereign guarantees, then expects repayment regardless of whether the projects generate revenue. When host governments can't pay, they face default — or surrender strategic assets as collateral.
Both units of the Patuakhali plant began generating electricity in early 2025, but the facility remains in operational limbo. Without an approved tariff, the Bangladesh Power Development Board hasn't paid for the electricity produced, leaving approximately in bills outstanding to the Chinese partner.
