State of the Power Sector in FY2020–21 and Allocative Priorities in the National Budget of FY2021–22

For the power and energy sector, the national budget carries special importance in terms of policy issues, and sectoral allocation priority. It also reflects various commitments of the government on different national and international platforms regarding the shift in the fuel mix. The government as per their commitment has shelved coal fuel-based power generation however attention to renewable energy-based power generation is missing. Private investors are discouraged due to the inadequate fiscal incentive structure. The budgetary allocation in RE is also missing to encourage the investors. In terms of policy formulation, the national budget lacks focus on efficiency in budget allocation during the pre and post-pandemic period as the burden of the subsidy for fossil fuel-based power generation is remaining as a concern. In addition, the quantity-based development projects lack proper planning as having a higher number of projects with lower allocation in T&D leads to the deferment of the projects. Progress of the development projects is also in a murky state as the progress projects under power and EMRD division are not satisfactory. Financial mismanagement in the power sector like increased allocation of the power plants that are being developed, unutilised and underutilised generation capacity, and an extension of rentals and quick rentals need to be addressed and reformed.

Authors: Khondaker Golam Moazzem, A S M Shamim Alam Shibly and Helen Mashiyat Preoty

Publication period: August 2022