Finance Minister AMA Muhith in his budget speech announced a total allocation of Tk21,118 crore for the power and energy sector, a 45% increase from the revised budget of Tk14,561cr of the outgoing fiscal year.
The allocation, including development and non-development sectors for FY 2017-18, is 5.28% of the total budget outlay.
Finance Minister AMA Muhith placed a Tk 400,266 crore budget for FY17-18 in parliament on Thursday.
The budgetary allocation for the Power, Energy and Mineral Resources Ministry in the outgoing fiscal was Tk15,036 crore, but was later revised down to Tk14,561 crore.
Although Tk475 crore allocated this year to the power and energy sector remains unspent, the government has increased its allocation to the sector in the proposed FY2017-18 budget.
Of the total amount, Power Division will get Tk18,894 crore (non-development Tk49 crore and development Tk18,845 crore) while the Energy and Mineral Resources Division will receive Tk2,224 crore (non-development 113 crore and development 2,111 crore).
For FY2017-18, the subsidy allocation for Bangladesh Power Development Board (PDB) was proposed at Tk 6,000 crore.
In his budget speech, AMA Muhith said in 2009, power generation capacity in Bangladesh was only 4,942MW but it had now reached 15,379MW.
“At the same time, system loss has been reduced to 9.3% from 15.6%,” he said.
The finance minister said 33 power plants with a capacity of 11,214MW were under construction and the government plans to install 42 more plants with a capacity of 11,124MW.
He also said under a long term master plan, the government will continue its efforts to install coal based power plants in Rampal, Matarbari and Payra while encouraging installation of power plants in the private sector.
“Furthermore, we have taken initiatives to install four power plants in Moheshkhali with financial support of Malaysia, South Korea and Singapore.”
The government continues to pursue import of power from Nepal, Bhutan, Myanmar and the North-Eastern part of India under sub-regional cooperation.
“I have already mentioned that dependence on rental power plants will be gradually reduced from 2018 onwards when a comfortable power supply situation can be ensured,” the minister said.
Gas will be purchased at international prices when its import begins in 2018. The current rate of taxes on gas will have to be rationalised then.
The minister said the unit price of gas will undoubtedly increase after that, but it will be adjusted by following the subsidising policies.
“In order to meet the growing demand of energy in the country, necessary steps are being taken to import LNG within the shortest possible time.”
In order to encourage LNG (Liquid Natural Gas), it has been given duty tax exemption.
Bapex plans to dig 108 wells by 2021 and with the completion of digging and commencement of gas production from them as planned, the gas supply situation will improve.
The finance minister proposed extending the existing VAT exemption facility up to June 30, 2019 for the local LPG cylinder manufacturers.
He also proposed zero rate on import of photovoltaic cells.
“But I propose to increase the duty rate on the importation of complete solar module/panel from 5% to 10% in this budget, Muhith said.
The government has permitted 50 industries to set up LPG bottling plants in the country. The machinery and equipment required to set up these industries have been given duty exemption facility above 1%. Besides, the raw materials required to produce LPG cylinders have been given special tax expenditure-reducing the duty from 10% to 5%.