Home Bank & Finance Bangladesh gives $0.97b subsidy in electricity
Bank & Finance - Power & Energy - January 29, 2023

Bangladesh gives $0.97b subsidy in electricity

US $0.44b in gas

Zarif Mahmud: The International Energy Association (IEA) says that many countries in the world subsidize gas and electricity. In an analysis last October, the organization showed that Bangladesh is in the 13th position in terms of subsidizing the electricity sector. And the position of Bangladesh is 10th due to subsidy on gas.
But Prime Minister Sheikh Hasian recently said in the JatiyaSangsad that no country in the world is allowing subsidy in power and gas at the moment.
Due to the effect of the Russia-Ukraine war, the price of fuel oil was on the rise in the world market from the beginning of last year.
Liquefied natural gas (LNG) prices also skyrocketed. Added to this is the dollar crisis in the country. Forced by this, the government followed the path of austerity policy by reducing the import of oil and gas. Power generation is reduced to save energy.
On the other hand, in order to reduce the subsidy pressure in the electricity sector, the price of electricity at the bulk (wholesale) and consumer level has been increased. Another round of price hike is underway. Gas prices have also been increased in the industrial and power sectors.
According to the Paris-based organization IEA, Iran has given the most subsidies in the world till October last year in the electricity sector. At that time, the country gave $12.48 billion in subsidies to this sector. Russia, which is in the next position, provides subsidies of $7.81 billion. And the neighboring country India is in the third position. The country provided $6.58 billion in subsidies to this sector till October last year.
Saudi Arabia in the fourth position gave $4.59 billion, China in the fifth position $3.77 billion and Egypt in the sixth position gave $2.61 billion in subsidies till October last year.
Ukraine, Kuwait, Mexico, Iraq, Algeria and Uzbekistan followed in the case of giving subsidies to the power sector last year. These six countries also gave more than one billion dollars in subsidies to the power sector till October. And Bangladesh, which is in the 13th position, has given a subsidy of $0.97 billion dollars to the power sector. Argentina, Kazakhstan, Libya, Angola, Qatar, Turkmenistan and Azerbaijan in the top 20 provide less than a billion dollars in subsidies to the power sector.
Meanwhile, according to IEA data, Iran is also the top in subsidizing gas until October 2022. The country has given subsidies of $12.18 billion till that time. Russia, which is in the second position, has given subsidies of $6.83 billion and the United Arab Emirates, which is in the third position, has given subsidies of $5.40 billion. And Saudi Arabia gives $3.85 billion and Uzbekistan $2.16 billion in subsidies. Besides, Algeria, Turkmenistan and Pakistan give subsidies of more than one billion dollars to the gas sector.
Argentina, Bangladesh, Venezuela, Azerbaijan, Kuwait, Libya, Kazakhstan and India have subsidized less than a billion dollars in gas to the gas sector. Among them, Bangladesh, which is in the 10th position, has given subsidies of $0.44 billion.
According to sources, the average bulk price of electricity was increased by 19.92 percent last December and five percent at the customer level in January to reduce the subsidy. The wholesale price of electricity has been increased from Tk 5.800 to Tk 6.20. And at the consumer level, the price of electricity has increased from Tk 7.13 to Tk 7.49. A further 8 per cent bulk and 5 per cent consumer level power price hike is in process.
On the other hand, from February, the price of gas supplied to the power sector will increase by Tk 14, industrial (all types) by Tk 30, captive by Tk 30 and commercial by Tk 30.50. According to this, the prices are going to increase by 26.64 percent in commercial, 87.50 percent in captive, 150.42 percent in large industry, 154.67 percent in medium industry, 178.29 percent in small and cottage industries and 178.88 percent in electricity sector.
Currently, the price of gas used in power generation is Tk 5.2 per cubic meter, Tk 11.98 for large industries, Tk 11.78 for medium industries, Tk 10.78 for small and cottage industries, Tk 16 for captive and Tk 26.64 for commercial. However, all types of gas services are provided to the industrial sector at the declared price.
When asked, State Minister for Power, Energy and Mineral Resources Nasrul Hamid said that the price of electricity and gas in industry has been increased to increase the supply in view of the demand of businessmen. There are plans to purchase two additional cargoes of LNG per month. In this, maximum efforts will be made to supply gas as per demand for electricity and industry.
Mohammad Hatem, Executive President of Bangladesh KnitwearManufacturers and Exporters Association, BKMEA, said in this context, electricity prices have been increased by five percent a few days ago, but uninterrupted electricity is not available. Gas prices have been increased at an unusual rate. But no industry has the capacity to buy gas at the rate of Tk 30 per unit. He demanded to reduce the price.

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