Bangladesh to invest in power and energy sector

Jun 10, 2011 12:00 AM

The government has estimated an expenditure of Tk 16,511 crore in power and energy sector in the next fiscal year which was Tk 15,237 crore in the outgoing fiscal.
The total expenditure for power and energy sector includes an allocation of Tk 8,311 crore – development and non-development budget combined -- in the sector for the next financial year. The government has given priority to setting up a few peak-in power plants, transmission lines, infrastructure for power exchange with India and establishment of coal-fired power plants under joint venture with India.

Finance minister Abul Maal Abdul Muhith in his budget speech in parliament said that the allocation was 5.1 % of the total volume of the budget and also 15 % higher than the revised budget for the outgoing fiscal year.
Following the previous budget, this year the finance division has published an updated version of the Power and Energy Sector Road Map. According to the road map, the government has estimated a spending of Tk 8,200 crore as subsidy in the power and energy sector.

Subsidy in the power sector has been estimated at Tk 5,200 crore increasing the budget by 523 % from the FY 2009-10. The amount will be spent mainly to buy expensive power from rental plants in the private sector.
According to the road map, average power generation and buying cost of the Power Development Board for one unit (kilowatt-hour) of power has been increased to Tk 4.05 in 2010-11 from Tk 2.62 in the fiscal 2009-10 due to purchase of power from rental plants.

The government has also proposed to increase power price on the basis of the estimated cost of power supply and to bring down the subsidy in the power sector. It has also estimated Tk 3,000 crore as subsidy in the energy sector for the next fiscal which is 333.33 % higher than that of the FY 2009-10. The amount will be spent on supplying fuel-oil at lower price to rental power plants.
In the power sector, the government has proposed to allocate Tk 7,152.63 crore as the development budget for FY 2011-12 which is 340 % higher than that of FY 2009-10.

The government has proposed to allocate Tk 1,114 crore as development budget for the energy sector for the next fiscal which is 18.5 % less than that of the first revised budget of the Awami League-led government. In his budget speech, the finance minister claimed that the government had been able to supply additional 1,556 MW of power to the national grid and expressed his hope that an additional 1,769 MW would be supplied by December, 2011 and 2,157 MW by December, 2012.
In order to ensure fuel supply to the power plants, the government has emphasised in the road map on importing fuel-oil, liquefied natural gas and coal, a significant increase in the amount of gas extraction by the international oil companies operating in the country and extracting coal by open-pit method from the coal deposits in the northern districts.

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