A large amount of subsidy earmarked for petroleum fuel oil may remain unused because of the sharp decline in global oil prices, officials have said.
Besides, the month-long political unrest has also reduced consumption, as the indefinite blockade and the intermittent hartals continue to disrupt vehicular movement.
In the last seven months, only Tk600 crore have been used from the Tk2,400 crore subsidy allocated for the sector. During the same period last fiscal year, the amount of subsidy given on fuel oil was Tk2,478 crore.
On the contrary, power subsidy is rapidly running out, as 70% of the total allocation has already been used during the first seven months of the ongoing fiscal year.
Such quick spending of the subsidy has become an issue of concern at the Finance Division.
“We are worried about the spending of the power subsidy. The Power Division has failed to raise electricity prices to the expected level,” said an official.
Earlier this month, the technical evaluation committee of the Bangladesh Energy Regulatory Commission rejected power price hike proposals from two state-run entities on the ground, that both have been making profits.
The official said: “Given the rate of spending, it will not be possible to keep the power subsidy within the limit of Tk7,000 crore for this fiscal year.”
The International Monetary Fund (IMF) has asked the government to keep it within Tk7,000 crore.
This is one of the major conditions set by the global lender for releasing the Extended Credit Facility tranches.
Former Adviser to Caretaker Government AB Mirza Azizul Islam told Dhaka Tribune yesterday the government should redirect subsidy funds to more deserving sectors.
He also said more allocation should be given to the export sector, instead of the import of petroleum from the international market.
Meanwhile, the fifth review mission of IMF is likely to visit between February 25 and March 10 before releasing the last two tranches of the ECF.
According to the latest data from the Finance Division, the amount of power subsidy paid during the first seven months is Tk3,804 crore.
As per the data, from the total allocation of Tk2,850 crore, Tk2,626 crore worth of incentives had been given to export and jute goods during the July-January period.
Of this amount, export received Tk2,213 crore, while the jute goods sector received Tk413 crore.
From the total allocation of Tk9,000 crore meant for fertiliser traders and farmers, the Agricultural Ministry received Tk2,804 crore subsidy during the seven months.
In the July-January period, around Tk9,834 crore of subsidies and incentives was spent for the sectors including oil, agriculture, power, jute goods, and export.
The total budget allocation for subsidy is Tk26,453 crore in the fiscal year, compared to Tk32,354 crore in the previous fiscal year.
In a memorandum of understanding signed with the IMF for the ECF fund, the government pledged to continue with its efforts to contain energy subsidy.
