Power and energy allocation raised to Tk 17,345cr
The government has proposed increasing allocation for the power and energy sector to Tk 17,345 crore in the FY2026-27 budget, alongside long-term plans to expand generation capacity to 35,000 MW by 2030.
The government has proposed Tk 17,345 crore for the power and energy sector in the FY2026-27 national budget, up from Tk 16,952 crore in the revised budget of the previous fiscal year.
Presenting the budget in Parliament on Thursday, Finance Minister Amir Khosru Mahmud Chowdhury said the allocation reflects the sector’s importance amid rising global energy market volatility and domestic cost pressures.
He said recent geopolitical tensions, particularly in the Middle East, have sharply increased global fuel, LNG and fertiliser prices, putting pressure on subsidies, inflation and foreign exchange reserves.
The finance minister also criticised past policy failures in the sector, citing inefficiency, irregularities and capacity payments for idle power plants, which he said had pushed electricity costs and subsidies to unsustainable levels.
The government has set a target to raise electricity generation capacity to 35,000 MW by 2030, with at least 20 percent of supply expected to come from renewable energy. Transmission lines are planned to be expanded to 25,000 circuit kilometres.
He said reforms are underway to improve governance in the sector, including shutting down inefficient plants, revising controversial power purchase agreements and reducing system losses.
On the energy side, the government plans to boost domestic gas exploration through seismic surveys, drilling of 69 new wells and workover of 31 existing wells over the next three years under BAPEX.
In the budget speech, the finance minister said the previous government’s “unplanned” power and energy policies, along with corruption, mismanagement and irregularities, drove up electricity generation costs. He also alleged large-scale irregularities in the form of capacity charge-related payments and financial malpractice in the sector.
He said controversial terms in several mega projects signed under the previous administration have imposed an additional burden of power import and purchase costs on the current government. Annual subsidies in the sector have now exceeded Tk 40,000 crore.
Although installed generation capacity stands at 28,919 megawatts, including imports and on-grid renewables, the minister said uninterrupted and quality electricity supply remains unachieved.
Since taking office, the government has prioritized the power sector and adopted short-, medium- and long-term plans covering generation, transmission and distribution, he said.
Key initiatives include strengthening anti-corruption measures, ensuring transparency and accountability, identifying and acting against those involved in irregularities, and intensifying monitoring.
The government also plans to shut down inefficient plants, modernize where needed, and implement a “least-cost generation” strategy.
Other measures include reviewing capacity charges and power purchase agreements, modernizing transmission and distribution networks, reducing system losses, and improving reliability through smart grid development.
The government aims to generate 20 per cent of electricity from renewable sources by 2030, expand total generation capacity to 35,000 megawatts, and extend transmission lines to 15,000 circuit kilometers.
It also plans to add 1,200 megawatts from the first unit of the 2,400 MW Rooppur Nuclear Power Plant to the national grid by January 2027. Officials said the initiatives are expected to ensure more affordable, uninterrupted and environmentally sustainable power supply.
The minister further said long-standing policy failures, institutional irregularities and import dependency under a “fascist government” had pushed the energy sector into crisis, with excessive reliance on LNG and fuel oil imports while neglecting domestic gas exploration and refinery expansion.
He said recent geopolitical tensions in the Middle East pushed up global spot prices of diesel and LNG, forcing higher subsidies and minor fuel price adjustments, while gas prices remained unchanged.
The government has since stepped-up domestic gas exploration, expanded refining capacity, diversified import sources and prioritized strategic fuel storage to strengthen energy security, he added.
