BPDB says needs Tk 35,000cr as subsidy for FY 23-24

Bangladesh Power Development Board (BPDB) estimated that it needs Tk 30,000 to tk 35,000 crore as subsidy from the government for the fiscal year 20223-24 due to costly power generation.

"We are witnessing a volatile fuel market, following the Russia-Ukraine war, we are not getting a stable  fuel market...it is unpredictable, so this time we fix a range which would be in between Tk 30,000 to Tk 35,000 crore to continue smooth generation as our 30 per cent production has comes from the liquid fuel base plants," a senior official of BPDB told the Daily Observer on Wednesday.

The costly coal and LNG along with 34 per cent VAT on imported furnace oil make the production cost more volatile, officials said.

"We shared the issue with the Power Division that 34 per cent VAT on imported furnace oil and the heated international energy market may push the subsidy about 20 to 18 per cent more than the previous year," he said.

To reduce the tax burden, the Power Division several times requested the Finance Ministry to cut down the VAT and other duties on imported fuels as the cost affects the power tariff but they (Finance Ministry) did not respond.

BPDB data book said HFO-based power projects contribute around 30 per cent or 6,000 MW of generation capacity against the country's total production of around 22,000 MW.

Meanwhile, in order to deal with the demand for additional subsidies, the government has enhanced the prices of power and gas by 15 per cent and 137 per cent respectively recently.

 "Still we are giving Tk 6 on an average from our side for producing one unit of electricity, as our production cost is Tk 11 plus selling price is Tk 5 plus on an average," BPDB official said.

State Minister for Power, Energy and Mineral Resources Nasrul Hamid told the Jatiya Sangsad that the average cost of generating per unit of electricity for both public and private sectors is Tk 13 to Tk 14 (furnace oil based), Tk 25 to Tk 30 (diesel based) and Tk 2.5 to Tk 3 (gas based).

However, the government provided Tk 55,000 crore as subsidy to the power sector in the last 10 years. In 2021-22, the accumulated PDB loss was estimated to reach about Tk 80,000 crore.