People are in for a rough ride ahead as the government decreased the overall allocation in the power and energy sector, compared with the last fiscal year, in the proposed national budget for the financial year 2024鈥�25.
Finance minister Abul Hassan Mahmood Ali on Thursday proposed to allocate Tk 30,317 crore for the power and energy sector in the new financial year, down from Tk 34,819 crore proposed in FY2023鈥�24.
Energy experts said that the budget reflected the government鈥檚 commitment to follow the International Monetary Fund鈥檚 prescription to reduce subsidy in the sector, though it meant throwing people into even deeper crisis amidst staggering inflation.
The power price is set to frequently increase over the new financial year, energy experts warned.
鈥楾he government effectively passed its subsidy burden onto people鈥檚 shoulder to win IMF鈥檚 mind,鈥� said Hasan Mehedi, an energy sector researcher and also the member secretary of the Bangladesh Working Group on Ecology and Development, a platform of green activists.
Last year, the government paid about Tk 44,000 crore in subsidy in the power and energy sector, which is set to rise even more in the new financial year.
The power sector subsidy corresponds to capacity charge, a controversial payment the government is bound to pay private power producers regardless of their generating any power.
The power and energy state minister in September last year revealed that more than Tk 1 lakh crore was paid to 82 independent and 32 rental power producers since 2009.
The burden of capacity payment is set to soar in the new financial year as big coal-based power plants with capacity charge entitlement joined the power fleet in the last year.
Last year, the government talked about getting rid of capacity charge while the budget was placed in the parliament.
Power prices already saw an increase in February and four times since last year with the power division proposing to keep the price increasing through 2024.
The government plans to keep building new power plants鈥�27 of them are under construction with a total generation capacity of 9,144MW, with further plans to build more to reach a total generation capacity of 40,000MW by 2030 and 60,000MW by 2041.
Bangladesh鈥檚 current installed power generation capacity is over 30,000MW, about half of which remains unused.
鈥楤eing unable to have power or unable to afford it, either way it means economic downfall,鈥� said energy expert M Tamim.
Any power generation projects other than the ones already in progress should be scrapped, he said.
鈥榃hatever the IMF advises, the government must keep paying subsidy in the sector to keep energy price affordable,鈥� he said.
Of the proposed allocation in the new financial year, approximately Tk 29,000 crore was allocated for power division, while around Tk 1,000 crore for the energy and mineral resources division.
Tamim urged the energy division allocation to increase many more times, which might be 15 times, to carry on a robust gas exploration project offshore.
鈥楾his investment promises to bring huge return,鈥� he said.
But the government does not have a plan for gas exploration and rather will commission the task to foreign companies by December this year through the ongoing international tender.
The finance minister proposed for a special allocation of Tk 100 crore in the renewable energy sector.
Renewable energy experts estimated that with the proposed allocation only a plant producing 10MW of solar power could be built.
They said that only 2.31 per cent allocation for the power sector in the development budget was dedicated for developing renewable energy.
The 8th five-year plan targets to achieve 10 per cent renewable energy in the energy mix by 2025. The current contribution of the renewable energy is about 3 per cent.
The government in the proposed budget also recommended imposing 5 per cent duty on the import of plant, equipment, and erection materials. Earlier, these imports used to be duty free.
But solar power plant builders were paying 27鈥�56 per cent import duty from before, which energy experts pointed out as discriminatory financial regime and said that the government failed to end the discrimination.聽
The government is currently receiving $4.7 billion from the IMF to escape from a staggering dollar crisis.
