The interim government has revised the electricity sector subsidy for the 2024-25 fiscal year to BDT 62,000 crore, up from the previously allocated BDT 40,000 crore, marking a 55% increase from the initial budget and a 77% rise compared to the previous fiscal year’s BDT 35,000 crore. The rise in subsidy is largely attributed to accumulated arrears left by the previous government. Despite cost-cutting measures, such as reducing coal-based electricity production costs, overall expenses in the sector have not decreased due to reliance on expensive oil-based power plants. The government is working on reducing costs through tariff negotiations and reviewing private power plant contracts. However, experts argue that without structural reforms, corruption control, and proper tariff adjustments, the rising subsidy burden will persist. The government aims to clear the accumulated arrears within three years, but concerns remain over the long-term sustainability of subsidies.
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