Bangladesh plans to phase out ‘unjustified’ subsides for power, gas

Sheikh Hasina has ordered officials to gradually reduce budget-financed subsidies for power and gas, describing the incentive for the energy sector as “unjustified”.

The prime minister’s order came during a discussion on the cost of a power project and the use of electricity in a meeting of the Executive Committee of the National Economic Council on Tuesday, Planning Minister MA Mannan said.

“How long will we provide subsidies? We must stop subsidies, which are unjustified. Subsidies are not charity,” he quoted the prime minister as saying in the meeting held via videoconferencing from the Ganabhaban.

The planning minister concurred that withdrawing the subsidies in one go will put pressure on citizens. “We all will struggle if we do it at a time. So, we need to move away from the subsidies slowly and gradually. We'll need to find ways to do it.”

But, Mannan added, the government will retain subsidies for the agriculture sector to ensure food security. “Giving subsidies for food is one thing, while it is a different matter to give subsidies to run the AC (air-conditioner) at my home.”

State Minister for Planning Shamsul Alam said the government considers farm subsidies as an investment.

He also said Hasina pointed out gas and electricity are used by the rich as well, so the subsidies for them should be cut.

In the 2020-21 fiscal year, the power sector received Tk 111.85 billion in subsidies from the government, according to the Bangladesh Power Development Board.

Hasina at a programme in November last year said the fuel sector got Tk 230 billion worth of subsidies in a year.