The High Court yesterday declared unconstitutional two sections of the long-debated electricity sector “compensation law”, which shielded government decisions from legal challenges and gave the energy minister sole power to ‘approve all kinds of projects for the sector.

The ruling by Justice Farah Mahbub and Justice Debasish Roy Chowdhury followed a writ petition filed by Supreme Court lawyers Shahdeen Malik and Md Tayeb-Ul-Islam Showrov on August 28, citing public interest.

The petition claims that any act aimed at compensating a process involving huge sums of public money and heavy state investments is nothing but an act adopted with bad intentions and bad motivations.

Using this law — which was approved by parliament in 2010 initially for five years but has been amended several times to extend its validity until 2026 — the Awami League government has awarded power and energy projects without floating call for tenders.

In doing so, Bangladesh’s power generation capacity has soared to 27,000 megawatts (MW), even though demand is around 17,000 MW. And due to a fuel shortage, the government has failed to produce more than 15,600 MW of electricity.

Subsequently, the state had to pay capacity fees amounting to Taka 130,000 crore to idle power plants over the last 15 years, according to data from the Bangladesh Power Development Board. Of this, around Tk 32,000 crore was disbursed in the 2023-24 financial year alone, a major jump from the Tk 5,600 crore distributed in the 2017-18 financial year.

Not only in the electricity sector, major decisions in the energy sector, such as entering into agreements to import high-priced liquefied natural gas (LNG) from international spot markets and awarding Multi-billion dollar gas infrastructure to selected companies was also taken under the 2010 law.

This was made possible by two sections of the Rapid Improvement in Electricity and Energy Supply (Special Provisions) Act which the HC yesterday declared incantational.

Section 9 provides that no question in respect of any action done or deemed to have been done, or any order or direction given under this Act, shall be raised in any court.

Furthermore, Article 6 (2) states that any planning or proposals related to purchasing or investment decisions must be approved by the Minister of Energy and sent to the cabinet committee for approval after communication and negotiation with a or several institutions.

However, in its verdict yesterday on a writ petition, the HC condoned actions already done in good faith under these two sections of the Act to avoid legal complexities.

“However, the government will have the right to review the activities of the parties involved in the agreement under certain conditions. If a criminal offense is committed, this interim condonation will not be applicable,” the HC bench said.

The court directed the authorities concerned in the government to immediately take necessary steps to make all power plants established under the government and its corporations fully operational in the interest of national and economic development and for the greater benefit of the people.

After the caretaker government took charge, it announced that it would not use the law to make decisions regarding the electricity sector.