The government has unveiled a plan to reduce the overall cost of power generation by 10 percent, as outlined in the proposed national budget. This initiative aims to ensure an adequate and affordable energy supply nationwide, thereby enhancing citizens’ quality of life and supporting economic growth.
During his budget speech on Monday, Finance Adviser Dr. Salehuddin Ahmed proposed an allocation of Tk. 22,520 crore for the power and energy sectors. This allocation is intended to bolster energy security, modernize the distribution system, and facilitate the generation of 3,400 MW of electricity from clean sources by 2028. Dr. Ahmed also announced a decision to generate 30 percent of the country’s total electricity from renewable sources by 2040.
The proposed budget allocates Tk. 20,342 crore to the Power Division and Tk. 2,178 crore to the Energy Division for Fiscal Year 2025-26 (FY26).
The Finance Adviser noted that the government currently provides subsidies to the power sector equivalent to approximately 1.0 percent of the country’s Gross Domestic Product (GDP), which he described as “very high.” To gradually reduce this burden, the government plans to decrease the overall cost of power generation by 10 percent. If successfully implemented, this measure is estimated to save over Tk. 11,000 crore in electricity subsidies.
In a related move, the interim government has established a dedicated committee to review and renegotiate tariff structures of existing power purchase agreements and to provide recommendations. “We are reviewing the power purchase agreements. We have taken initiative to carry out energy audits to reduce the cost of power generation. In principle, we have decided not to increase the price of electricity for the time being in the context of the prevailing high inflation,” Dr. Ahmed stated.
Furthermore, the government has set a plan to supply 648 million cubic feet of gas from domestic sources within the current year and to extract an additional 1500 million cubic feet of gas from local wells by 2028. Emphasis has been placed on enhancing the capacity of the state-run gas exploration company, BAPEX, with necessary funds allocated for its activities.
As part of modernizing the power distribution system, efforts are underway to place distribution lines and substations underground in metropolitan areas, aiming to improve the stability and efficiency of the power network.
In a significant step towards sub-regional cooperation, an agreement was signed with Nepal on October 3, 2024, to import 40 MW of hydropower at an affordable price to meet electricity demand during the summer months. The government also anticipates that the 2,400 MW Rooppur Nuclear Power Plant will begin supplying electricity to the national grid by December of this year.
Moreover, an Integrated Power Sector Master Plan has been prepared, setting a target to generate 3,400 MW of electricity from clean sources by 2028. “To ensure energy security in the country, the government has taken initiatives to increase oil and gas exploration and production through its own effort,” the adviser highlighted.
He detailed BAPEX’s plans for geological, 2-D seismic, and 3-D seismic surveys between FY2025-26 and FY2027-28, covering 270 km, 700 km, and 700 square km, respectively. In the medium term, BAPEX intends to drill 69 new wells and complete workover operations on 31 wells using its own rigs. Concurrently, efforts are being made to develop cost-effective and sustainable infrastructure to aid in controlling energy prices.
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