The Power Division has sought a huge sum of Tk 594.5 billion as subsidy in the new budget on account of power purchase from private-sector plants and power import.
Officials say the Power Division has sought the fund allocation for fiscal year (FY) 2026-27 in a requisition letter that cites rising fuel costs, higher gas prices and increased dependence on imported energy as cost-hikers.
In the official letter, the division under the Ministry of Power, Energy, and Mineral Resources (MPEMR) has said the Bangladesh Power Development Board (BPDB) would require the financial assistance during the period from July 2026 to June 2027 in order to maintain uninterrupted power supply across the country.
The subsidy requirement has increased following an uphill 208-percent hike in gas prices for the power sector, depreciation of the taka against the US dollar, rising fuel-oil costs and higher expenditure on imported electricity and liquid-fuel-based generation, they add.
The proposal mentions that "BPDB continues to incur substantial losses as electricity is purchased from private independent power producers (IPPs), public-sector plants and cross-border suppliers at costs significantly higher than regulated consumer tariffs".
According to the Power Division's estimates, payments to independent power producers will account for the largest share of the support requirement at Tk 450.40 billion, followed by imported electricity, including supplies from India and Nepal, and state-owned generation companies.
The letter also refers to the Bangladesh Energy Regulatory Commission decision to raise the price of heavy fuel oil (HFO) supplied by Bangladesh Petroleum Corporation to Tk 113.54 per litre, further increasing generation costs.
A high official says the power-development board is facing growing financial pressure due to outstanding liabilities to power producers and fuel suppliers, making it difficult to ensure timely fuel import and maintain stable electricity generation.
"The proposed allocation, if approved, will add another significant subsidy burden to the national exchequer at a time when the government is pursuing fiscal consolidation and seeking to reduce pressure on public finances," says another official.
According to the letter, in consideration of the financial losses being incurred by BPDB due to purchasing electricity at higher costs from private-sector electricity-generation companies, rental-based power producers, public companies, as well as imported electricity from India (including the Adani power supply) and Nepal, and selling it to bulk consumers, partial financial assistance has been provided to the board from government's revenue budget.
The price of gas in the power sector has increased by 208 per cent, the value of the taka has depreciated significantly against the US Dollar, the use of liquid fuel has increased due to gas shortages, and fuel-oil prices have risen sharply as a result of the conflict in the Middle East, the letter further cites as reasons for seeking the bailout.
In addition, it says, Bangladesh Energy Regulatory Commission (BERC) has increased the price of furnace oil (HFO) supplied by BPC to Tk. 113.54 per litre, which may further increase BPDB's fuel expenditure.
"Rising electricity demand coupled with massive outstanding dues to power companies has left the BPDB struggling to secure timely coal and-fuel oil imports. The board informs that immediate financial assistance is now critical to avert widespread disruptions and maintain an uninterrupted national power supply," the power ministry's wing says in the letter.
A Finance Division official says, "We have received the proposal which is expected to be examined as part of preparations for the FY27 national budget."
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