The interim government’s proposed national budget for the fiscal year 2025–26 has shifted focus from the power sector to the energy sector, reflecting a strategic pivot in response to longstanding fuel shortages that have rendered several power plants idle.
In the budget presented yesterday, Finance Adviser Dr. Salehuddin Ahmed announced a significant increase in allocation for the energy and mineral resources sector, while allocations for the power sector have been reduced.
“In light of the current high inflation, the government has decided, in principle, not to increase electricity prices for now,” Dr. Ahmed said in his speech. He also announced that 648 million cubic feet of gas will be supplied from domestic sources this year, and plans are underway to extract an additional 1,500 million cubic feet by 2028.
Power Sector Sees Reduced Allocation
The proposed allocation for the power sector in FY 2025–26 is Tk 20,342 crore, down from Tk 29,177 crore in the original budget for FY 2024–25, which was later revised to Tk 21,651 crore. The allocation in FY 2023–24 was Tk 33,825 crore, later revised to Tk 27,175 crore.
The development budget for the power sector now stands at Tk 20,284 crore, while operating expenditure has been set at Tk 58 crore — an increase of Tk 13 crore from the previous year’s revised operating budget.
To reduce the financial burden, the government plans to cut overall power generation costs by 10% and is currently reviewing power purchase agreements and conducting energy audits. These measures aim to gradually reduce the sector’s reliance on subsidies.
Energy Sector Allocation Doubled
In contrast to the cuts in the power sector, the energy and mineral resources sector will receive Tk 2,178 crore in FY 2025–26 — more than double the revised allocation of Tk 1,154 crore for FY 2024–25. The original allocation for the outgoing fiscal year was Tk 1,187 crore.
This marks a significant reversal of recent trends. In FY 2023–24, the sector received Tk 994 crore, later revised to Tk 1,143 crore. In FY 2022–23, the allocation stood at Tk 1,775 crore but was halved the following year.
Finance Adviser Dr. Ahmed said the government has undertaken new initiatives to increase oil and gas exploration and production through domestic efforts. Bapex is set to complete a nationwide survey by FY 2027–28 and has been tasked with drilling 69 new wells and conducting workovers on 31 existing wells.
Shift in Priorities
Energy experts have long urged the government to prioritize the energy sector to ensure uninterrupted industrial production and reduce dependency on imported fuel. However, the previous Awami League government placed greater emphasis on power generation infrastructure, often sidelining the issue of primary fuel supply.
As a result, although numerous large-scale power plants have been constructed in recent years, many remain underutilized due to insufficient energy supply.
The interim government’s proposed budget reflects a notable course correction, aiming to resolve these bottlenecks by focusing on domestic energy development and efficient resource management.