Power Division seeks Tk 201b subsidy boost

The Power Division has sought an additional Tk 201.36 billion in subsidies for the remaining months of FY2026 to keep newly added power plants running and ensure uninterrupted electricity supply during the upcoming irrigation and summer peak season.
In a proposal sent to the Finance Division, the Ministry of Power, Energy and Mineral Resources highlighted an urgent need for funds to clear dues of newly added generation units and to cushion the impact of soaring primary energy costs.
The latest requisition signals deepening fiscal strain, raising concerns about its potential impact on the country's macroeconomic stability, officials and experts said.
The additional subsidy requirement stems largely from the inclusion of three major base-load plants into the system: the Sreepur 160MW HFO-fired plant, the Patuakhali 1,320MW coal-fired plant, and the Matarbari 2×600MW ultra-supercritical coal plant.
Officials said the Bangladesh Power Development Board (BPDB) is grappling with a widening financial deficit due to a persistent mismatch between high generation costs and regulated retail tariffs.
The situation has worsened following a sharp increase in gas prices for power generation, up by 208 per cent since February 2023, from Tk 5.02 to Tk 15.50 per cubic metre.
The depreciation of the taka against the US dollar has further escalated costs, particularly for imported electricity from India, including the Adani power plant, and Nepal.
"The sharp fall of the local currency against the dollar, coupled with rising demand beyond budgeted levels, has created a significant financing gap for BPDB," the proposal noted.
The Power Division has projected a cumulative subsidy requirement of Tk 201.36 billion for March-December 2026, broken down across three major cost heads - new plants, power imports, and BPDB/government-run plants.
Peak demand in September alone may require more than Tk 21.59 billion, reflecting seasonal pressure on generation and imports.
The ministry warned that failure to release funds on time could disrupt fuel supply chains, particularly coal and furnace oil procurement, and delay payments to Independent Power Producers (IPPs) and cross-border suppliers.
Such disruptions could reduce generation capacity and trigger load-shedding during the summer peak, officials cautioned.
Sources at the Finance Division said the proposal is being "actively considered", but noted that the sheer size of the subsidy of over Tk 201 billion would place significant pressure on the national budget at a time when the government is already navigating fiscal tightening measures.

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