Budget FY 24: Power sector subsidy likely to be Tk 32,000cr
Staff Reporter :
The power sector subsidy is likely to be at Tk 32,000 crore for the next budget in place of the original allocation of Tk 17,000 crore in FY23, which is 88 higher than that of the previous fiscal.
Finance ministry sources said the overall subsidy for the in FY24 would be around TK 1.10 lakh crore of which the the power sector will get nearly 30 percent of total allocation.
Economists are of the opinion that the government’s subsidy in the power sector is due to the heavy capacity charges being paid to plant owners even without consuming electricity.
The private power producers would mostly benefit from the enhanced subsidy as the major portion of the fund would be spent on capacity charge in the ineffective power sector.
Under the capacity charge rule, the government has to pay the private electricity generation companies whether or not their power is used, they added.
However, Bangladesh has been suffering from about 50 per cent power overcapacity as the demand ranges between 14,500 MW and 15,000MW against the 24,143MW generation capacity.
Regarding the subsidy on fuel oil, the State Minister for Power, Energy and Mineral Resources Nasrul Hamid on Wednesday said that the government does not directly give any subsidy to fuel oil.
Bangladesh Petroleum Corporation has not received any subsidy from the government in this financial year either and the company is making over its losses from its previous profits, he added.
Additionally, officials of Ministry of Power, Energy and Mineral Resources said that Tk 41, 371 crore is being proposed for power and energy sector in the coming budget. Modernization of transmission and distribution system in the power sector will be given importance in the budget.
The IMF has asked the government to rationalize the power sector subsidy as part of its three-year-long $4.7 billion loan package. It has already disbursed the $476 million first tranche of the credit while the next installment is due in November.
The total allocation for subsidies in agriculture, food, and power will be raised considerably in the upcoming budget of FY24, with an aim to ease inflationary pressure on people. The total subsidy allocation will be over Tk 1.10 lakh crore in the next fiscal year, according to finance ministry.
In the budget for this fiscal year, it was Tk 81,000 crore, which is likely to be revised to Tk 94,000 crore.
Finance Division sources said that the subsidy in fertilizer will be around Tk 24,000 crore in the next budget, up from Tk 16,000 crore in the original budget for the current fiscal year. Likewise, subsidy on food will be increased by Tk 800 crore to Tk 6,766 crore in FY24.
Meanwhile, Finance Minister AHM Mustafa Kamal will placing a national budget of over Tk7.61 lakh crore for the next fiscal year (FY24) at the Jatiya Sangsad today.
To meet the expenses, government eyeing to collect Tk five lakh crore as revenue for next the budget depending heavily on indirect tax.
The budget deficit for the next financial year of 2023-24 has been estimated at Tk 2.61 lakh crore.
Meeting the deficit financing for the coming financial year, the government has planned to borrow some Tk1.50 lakh crore from domestic sources including nearly Tk1.32 lakh crore from the banking system.
Another, Tk 1.10 lakh crore will be borrowed from foreign sources.
