The Centre for Policy Dialogue (CPD) expressed grave concerns Thursday about Bangladesh’s planned national budget for FY2025–26, stating that the country’s clean energy transition and long-term sustainability are at risk due to its significant reliance on fossil fuels.

The observations were recorded during a discussion named ‘Power and Energy Sector in the National Budget for FY2025-26: Reflections on the Priorities for Energy Transition’, which took place at BRAC Centre Inn in Mohakhali, Dhaka, according to reports from UNB.

Energy Adviser Muhammad Fouzul Kabir Khan participated virtually as the chief guest.

The panel featured CAB’s Professor Dr M Shamsul Alam, Professor Badrul Imam from Dhaka University, BGMEA Vice President Barrister Vidiya Amrit Khan, energy specialist Monower Mostafa, and BKMEA Vice President Md Akhter Hossain Apurbo.

The latest analysis from CPD cautioned that the energy budget jeopardizes the government’s Three Zeros commitment – Zero Poverty, Zero Emission, and Zero Unemployment, with particular emphasis on the Zero Emission objective.

It pointed out that without immediate reforms, Bangladesh risks lagging even further in its energy transition.

The budget, which was presented on June 2 and ratified on June 22, is named “Building an Equitable and Sustainable Economic System.” However, CPD argued that it contradicts this vision by favoring fossil fuels over renewable energy sources.

The research conducted by Dr. Khondaker Golam Moazzem and his team has uncovered several significant challenges:

Ongoing Financial Deficits: The BPDB continues to incur losses despite receiving subsidies and making tariff adjustments, while the profits of BPC and RPGCL frequently come at the cost of consumers.

Increasing Fiscal Pressure: Subsidies for the power sector now represent 41% of the national total, with LNG import subsidies escalating to Tk 9,000 crore for FY26.

Excessive Reliance on LNG: Domestic gas exploration remains stagnant, and funds from the Gas Development Fund are being redirected towards LNG imports.

Discrepancy Between Capacity and Supply: Although capacity is increasing, outages continue due to flawed demand forecasts and restrictions on fuel imports.

Inadequate Pricing Structure: The market-driven fuel pricing system introduced in March 2024 lacks clarity and is susceptible to taxation and fluctuations in exchange rates.

Slow Progress in Renewable Energy: The BPDB has struggled to attract bidders for solar initiatives, and the cancellation of 37 Letters of Intent has negatively impacted investor confidence.

Expensive Debt: The government is depending on costly short-term loans to settle obligations, raising concerns about sustainability.

Policy Deficiencies: Important policies such as the Integrated Energy and Power Master Plan (IEPMP) are currently under review, leading to delays in alignment.

Departure from Transition Objectives: The budget’s focus on coal extraction and LNG imports indicates a regression from the commitment to Zero Emissions.

CPD’s Recommendations

To align with transition objectives, CPD proposed:
Eliminating tax exemptions for fossil fuel power initiatives.
Implementing carbon taxes and duties on imports of fossil fuel plants.
Abolishing all subsidies for fossil fuels and LNG.
Focusing on domestic gas exploration through the Gas Development Fund.
Gradually retiring inefficient power facilities.
Renegotiating unsolicited Independent Power Producer contracts.
Enhancing renewable energy within the ADP while reducing import duties and VAT.
Establishing a Renewable Energy Subsidy Fund.
Investing in smart grid technology to facilitate renewable energy integration.
Pursuing low-interest financing from Multilateral Development Banks instead of short-term loans.
Reassessing energy policies with the 2040 renewable energy target in consideration.
CPD emphasized that the forthcoming fiscal year will serve as a critical evaluation of the government’s commitment to its climate and energy transition promises.