Energy Subsidies in Bangladesh

The Government of Bangladesh has committed to ensuring access to affordable and reliable electricity for all citizens by 2021. This report addresses the key priority issues for reform in the energy sector along with an agenda for its progressive implementation. It starts with an overview of energy subsidies in Bangladesh, before surveying the country’s energy sector development plans, with an emphasis on the electricity sector. Finally, the report discusses the important role that energy pricing policy will play in achieving the government’s objectives.

The Government of Bangladesh spends a major share of its budget providing direct subsidies for fossil fuels and electricity, the costs of which have been escalating rapidly in recent years.

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.

Energy subsidies receive a large share of government expenditure in Bangladesh.

The Bangladesh government lifts fuel prices by a maximum of 19% per litre to reduce the subsidy on imports of petroleum products, according to Bangladeshi newspaper The Daily Star. Prices of diesel, petrol, octane and kerosene will rise by BDT 5 (US$ 0.07). Bangladesh increased fuel prices for the second time in more than four months in a move that economists fear will fuel inflation.

A summary of major events in April and May 2011.

There are signs aplenty in rural Asia of the profligate use of energy - electrical and fossil fuel - but little evidence that such use is being assessed against its true costs. This is because supplying cheap power (and in some cases free power) is a valuable political lever. In rural Asia, the value of such 'support' can be judged by the scale of popular opposition to its withdrawal.