The government has proposed an increased allocation for the power and energy sector in the upcoming 2026–27 fiscal year, accounting for 1.85% of the total national budget of Tk 9,38,000 crore.
A total of Tk 17,345 crore has been proposed for the sector, which is Tk 393 crore lower than the revised allocation of Tk 16,952 crore in the current fiscal year.
Under the proposal, the Power Division will receive Tk 14,996 crore, including Tk 57 crore for operating expenditure and Tk 14,939 crore for development spending.
The Energy and Mineral Resources Division has been allocated Tk 2,349 crore, with Tk 95 crore for operating costs and Tk 2,254 crore for development expenditure. The revised allocation for the division in the current fiscal year was Tk 1,366 crore, marking a 2.32% increase in the new proposal.
In the budget speech, the finance minister said the previous government’s “unplanned” power and energy policies, along with corruption, mismanagement and irregularities, drove up electricity generation costs. He also alleged large-scale irregularities in the form of capacity charge-related payments and financial malpractice in the sector.
He said controversial terms in several mega projects signed under the previous administration have imposed an additional burden of power import and purchase costs on the current government. Annual subsidies in the sector have now exceeded Tk 40,000 crore.
Although installed generation capacity stands at 28,919 megawatts, including imports and on-grid renewables, the minister said uninterrupted and quality electricity supply remains unachieved.
Since taking office, the government has prioritized the power sector and adopted short-, medium- and long-term plans covering generation, transmission and distribution, he said.
Key initiatives include strengthening anti-corruption measures, ensuring transparency and accountability, identifying and acting against those involved in irregularities, and intensifying monitoring. The government also plans to shut down inefficient plants, modernize where needed, and implement a “least-cost generation” strategy.
Other measures include reviewing capacity charges and power purchase agreements, modernizing transmission and distribution networks, reducing system losses, and improving reliability through smart grid development.
The government aims to generate 20% of electricity from renewable sources by 2030, expand total generation capacity to 35,000 megawatts, and extend transmission lines to 15,000 circuit kilometers.
It also plans to add 1,200 megawatts from the first unit of the 2,400 MW Rooppur Nuclear Power Plant to the national grid by January 2027. Officials said the initiatives are expected to ensure more affordable, uninterrupted and environmentally sustainable power supply.
The minister further said long-standing policy failures, institutional irregularities and import dependency under a “fascist government” had pushed the energy sector into crisis, with excessive reliance on LNG and fuel oil imports while neglecting domestic gas exploration and refinery expansion.
He said recent geopolitical tensions in the Middle East pushed up global spot prices of diesel and LNG, forcing higher subsidies and minor fuel price adjustments, while gas prices remained unchanged.
The government has since stepped-up domestic gas exploration, expanded refining capacity, diversified import sources and prioritized strategic fuel storage to strengthen energy security, he added.