Power and energy allocation raised to Tk 17,345 crore in FY26-27 budget

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.

Diversification of LNG imports, expansion of floating LNG terminals and development of a land-based terminal at Matarbari are also part of the long-term strategy.

The government expects these measures to strengthen energy security and ensure more affordable and reliable electricity and fuel supply in the coming years.

TZ