BANGLADESH– 27-28 November 2012 – To help share experiences on the successes and challenges with fossil-fuel subsidy reform in Bangladesh, the IISD-GSI, in partnership with the Bangladesh Institute of Development Studies (BIDS), held two-days of events in Dhaka.

On 27th November a roundtable meeting was held with key government agencies and power sector stakeholders to discuss energy price reform. Forum discussions recognized subsidy policies were part of a broader debate linked to the reform of Bangladesh’s electricity market. Successful reform of fossil-fuel subsidies would require a number of actions: further research to better understand the economic impact of raising energy prices; the extent to which energy prices could feasibly be increased given Bangladesh’s national circumstances; and the effective management of any negative effects resulting from reform, especially for poor or vulnerable groups.

On 28th November a public seminar was held to launch A Citizens Guide to Energy Subsidies in Bangladesh, published by the IISD-GSI and BIDS. The morning of the seminar was attended by Bangladesh’s Minister of Finance and the Honorable Advisor to the Prime Minister (Ministry of Power, Energy & Mineral Resources). The Bangladesh government recognized the need to reform fossil-fuel pricing mechanisms, while also emphasizing that political considerations were important when deciding on when to undertake reform. The government stressed the benefits of fossil fuel subsidies in meeting a number of economic and social objectives concerning economic growth and reducing the cost of living for poorer parts of society.  

In the afternoon’s technical session BIDS introduced the Citizens Guide for Bangladesh and gave an overview of its key findings. The Bangladesh Power Development Board presented on Bangladesh’s current energy mix and future plans to develop the energy sector. Bangladesh’s tariff system for electricity has involved a 100% increase to bulk tariffs since 2011.Subsidies to the Power Development Board, including those to liquid fuels for power generation; coal and natural gas were featured in the presentation.

A question and answer session was held following the presentations with a range of questions from the audience – which included a mix of civil society, government and academic experts.

Media reporting on the event focused on a number of key issues, including: the government plans to raise energy prices in line with international prices; the government feels subsidized energy prices had helped support economic growth benefiting many poor citizens; rich and upper middle-income groups among the households were the biggest beneficiaries of subsidies in the energy and power sectors; and that the amount of subsidy has been increasing for the last few years due to increasing demand for imported fuel oil and power purchase from rental plants.

Presentations:

Energy Subsidies in Bangladesh: Challenges and Opportunities Fossil-Fuel Subsidies in SE Asia (PDF 981 KB), Dr. Mustafa K. Mujeri, Siban Shahana, Tahreen Tahrima Chowdhury, Bangladesh Institute for Development Studies (BIDs)

Power Sector Development: Subsidy issues (PDF 851 KB), Delivered by Jarifa Khatun on behalf of Mr. Mizanur Rahman, System Planning, Bangladesh Power Development Board