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BPDB seeks Tk 650b more in subsidy

Published : 27 May 2022 09:30 PM

The government will focus on power transmission and distribution system in the upcoming financial year 2022-23. Emphasis will also be placed on gas exploration activities, Ministry of Power, Energy and Mineral Resources official said.

It is expected that, the government is likely to allocate Tk 30,913 crore for power and energy sector in the new national budget.

The government has already ensured electricity for every house, which is a great success. Now it is a challenge to supply reliable and uninterrupted electricity. Although, there is capacity to generate electricity, load shedding free power is not being provided due to limitation of power transmission and distribution system. Therefore, in the proposed budget, more importance has been given to transmission and distribution.

According to the ministry, Bangladesh Power Development Board (BPDB) has demanded Tk 25,000 crore for power generation. On the other hand, Tk 40,000 crore has been sought to meet the additional cost of LNG imports. 

However, the finance division has not yet informed the ministry of power and energy exactly how much of the subsidy will be provided.

Finance Division officials said the subsidy will be effective if the prices of electricity, gas and fertilizer are not hiked in the next financial year. In the process of raising the price of gas, the subsidy may also be reduced on the decision.

As a result of the Russia-Ukraine war, the prices of various products including oil, gas and fertilizer are increasing in the international market, which is also affecting the country's domestic market. 

As a result, the pressure on subsidies is increasing. Being compelled, the government has also increased the allocation of subsidies in these sectors in the revised budget for the current fiscal year 2021-22.

In the current budget Tk 9,000 crore has been allocated as subsidy in the power sector. However, in the revised budget, the subsidy in the power sector has increased by Tk 3,000 crore to Tk 12,000 crore. In the upcoming budget for the 2022-23 financial year, the subsidy in the power sector may remain at Tk 18,000 crore.

Among the subsidies, the interest subsidy on liquefied natural gas (LNG) import price payment and incentive package could be taka 17,300 crore.

As an alternative, the government has taken steps to increase the import of costly LNG. Gas exploration funds have been spent on LNG imports.

The government has provided a subsidy of Tk 3,000 crore to LNG in the last eight months due to rising LNG prices in the international market.

State Minister for Power, Energy and Mineral Resources Nasrul Hamid has said, “The power system loss has been reduced from 14.33 to 8.48 percent due to strict measures taken by the government along with 100 percent electrification.”

He continued saying, “Now our challenge is to ensure uninterrupted power supply at affordable prices. We are working towards that goal. However, due to the overall global situation, various crises have occurred in the fuel market. On the one hand such price is an issue and at the same time there are various equations in the supply chain of the product. We are working with utmost sincerity to keep the price within the reach of the people.”

In the current financial year (2021-22), it was proposed to allocate Tk 27,484 crore in the power and energy sector. And in the financial year 2020-21, the proposed allocation was 26,758 crore. In the current financial year, the overall ADP implementation rate (July-April) was 61.99 percent.

The government is giving top priority to the development of the power and energy sector. To ensure a balanced power supply, the government has already formulated short, medium and long term plans and taken up various programs to improve the current state of power generation.

The 'Power System Master Plan 2016' has been formulated for the development of the power sector.

Under this plan, the government is working to achieve the target of generating 40,000 MW by 2030 and 60,000 MW by 2041.

As the socio-economic condition of the country improves, the demand for energy is also increasing rapidly. Natural gas is an important energy resource of Bangladesh, which supplies to most of the country's total commercial energy.

Therefore, onshore and offshore seismic survey activities are being conducted on a large scale for domestic gas exploration.