BPDB wants Tk22,547cr losses as subsidy

Bangladesh Power Development Board (BPDB) incurred losses of Tk 22,547 crore during June-November 2022 and is now urging the Finance Division to release the amount as subsidy soon, saying power production in the coming days will be hampered otherwise.

It asked for the money in a letter to the Finance Division on January 31.

However, government officials said there is a complication in providing subsidies due to a condition set by the International Monetary Fund (IMF) as part of its $4.7 billion loan programme for Bangladesh.

“The government has not yet decided whether it will keep electricity subsidies in the next budget or not. Because of this, there is a complication in releasing the money,” a senior official of the Finance Division told The Business Post.

However, the official added that the government does not want to completely remove subsidies from the budget as per the advice of the IMF. “If electricity subsidy is not given, the price will have to be increased in the third phase.”

According to the BPDB letter, the cost of electricity production has gone up in recent times due to the decrease in gas supply to the power sector and the increase in the prices of oil, coal, and dollar in the international market.

According to sources, due to the withdrawal of import duty and tax exemption benefits, the cost of importing furnace oil has increased by about 28.56 per cent since June 2020.

Meanwhile, the government’s electricity subsidy fund reached almost the bottom in the first five months of the current fiscal year. At present, the fund has only Tk 2,000 crore.

Since November last year, the government has released Tk 15,000 crore in subsidy, which is 88 per cent of the total allocation for the power sector.

In the last fiscal year, Tk 11,963 crore was allocated for subsidies in the sector. Subsidies were provided till December 2021.

In the current fiscal year, the government has allocated Tk 82,745 crore for subsidies for electricity, liquefied natural gas (LNG), cash assistance, food, and export incentives.

But according to Finance Division sources, the government may have to pay an additional Tk 40,000 crore in subsidy in the current financial year despite the increase in the prices of petrol, octane, diesel, kerosene, gas, and electricity in the last few months.

The government hiked electricity prices by 20 per cent in November last year and another 5 per cent at the retail level in January.

In one of the conditions of the loan programme for Bangladesh, the IMF has asked the government to reduce subsidy in the power sector and adjust electricity prices with the international market.