Energy sector neglected again

The allocations for the energy and mineral resources sector in the national budget have been declining for three fiscal years, with experts saying this is seriously hampering domestic oil and natural gas exploration and production.

In the proposed budget for the fiscal year 2022-23, the allocations for the power and energy sectors have been reduced by Tk 1,419 crore to Tk 26,065 crore.

Of the amount, the Power Division alone received Tk 24,196 crore while the Energy and Mineral Resources Division got Tk 1,870 crore. The joint allocation for the two divisions is 10 per cent of the total budget.

In an immediate reaction to the new budget, energy expert Professor Shamsul Alam told The Business Post this was just a conventional budget.

“The government is generating electricity from fossil fuels and building infrastructure. On the other hand, allocations for domestic gas exploration and extraction are not increasing despite the continuous gas shortage,” he said.

There was no allocation to meet the power generation target from renewable sources, he added. In the current financial year, allocations for the Energy and Mineral Resources Division were Tk 2,086 crore. In the revised budget, it came down to Tk 1,845 crore. In the outgoing fiscal year, allocations of Tk 27,484 crore in the power and energy sectors were proposed while it was Tk 26,758 crore in FY21.

From July to April of FY22, the overall annual development programme (ADP) implementation rate was 61.99 per cent in the power and energy sectors.

The prices of fuel products in the world market are rising due to the Russia-Ukraine war. In this situation, Bangladesh Petroleum Corporation and Petrobangla are facing huge pressure on the imports of fuel and liquefied natural gas (LNG).

The Energy and Mineral Resources Division said Petrobangla alone needs Tk 35,000 crore in the upcoming financial year to import LNG. Even after using its own funds, the state-run organisation will have a deficit of Tk 11,000 crore.

However, the government has announced a subsidy of Tk 6,000 crore for LNG imports. In his budget speech, the finance minister said subsidies for electricity, fuel, food, agriculture, and fertiliser would increase to Tk 85,000 crore in FY23, from Tk 65,000 crore in FY22, in the face of rising fuel prices in the world market.