The power tariff in Bangladesh increased by around 90% over the past 11 years. Yet, the government subsidies to the power sector were rising due to higher generation costs of power. The government has to allocate BDT 9000 crore in the budget for the current fiscal year to provide the subsidy. Moreover, the country has to pay a subsidy of BDT 5000-6000 crore annually due to import of LNG. The deficit in gas supply has widened and the country is steadily moving towards exclusive reliance on imported fuel. Consequently, the cost of power generation would go up even more, which may also force the government to raise the retail prices or subsidy allocation.
Failure in increasing the own fuel contribution to the country’s fuel mix would push Bangladesh increasingly towards the imported fuel. It would make energy security vulnerable as the prices would depend on the volatile global energy market.