Energy security is what Bangladesh has long been striving to achieve for its steady and sustainable economic growth. For this the country needs to transition from dependence on imported fossil fuels to the renewables.
thanks to a special thrust Bangladesh has now an installed capacity to generate nearly 29,000 MW of electricity, almost double the amount it actually produces.
it’s an irony that the country has the luxury of keeping a substantial capacity idle while the factories, households, irrigation pumps and transports suffer frequent power setbacks.
the shortage does not tell the entire story. Bangladesh has long been paying a handsome amount in the US dollars in the form of capacity payments to independent power producers and quick rental plants which use imported and costly fossil fuels.
the government pays a huge amount of subsidies to the power sector and much of its goes to the idle power plants.
in the national budget for FY2026-27 the new government of Prime Minister Tarique Rahman has proposed to raise the electricity subsidies to Tk37,000 crore, up from Tk3600 crore the previous year. The subsidy will primarily cover the capacity payments to fossil fuel-based quick rental power plants. Paying for the entities without any productive use is a luxury Bangladesh can no longer afford. Green energy can offer a solution to the problem.
the budget has offered incentives in the form of duty and tax cuts to promote production and use of solar energy in particular in the bid to ease dependence on imported fossil fuels in a global energy market of uncertainty and volatility. Currently, renewable energy makes up around 6.3% of the country’s total installed power generation capacity of 28,919 MW. Solar energy leads the mix with over 83%, followed by over 12% contributed by hydro power and 3.4% coming from wind.
the government has a plan to raise the contribution of renewable energy to at least 20% by 2030 and up to 40% by 2041 to reduce reliance on imported fuels such as gas, oil, petrol, diesel and octane. Has the proposed national budget provided enough funds to the renewables? Not enough, experts have found.
the budget has an allocation of Tk17,345 crore to the power, energy and mineral resources ministry. Unfortunately, only 2% of it has been set aside for the renewables – mainly solar -, while 98% of it goes for fossil fuels. The total allocation for the sector also sees a 23% reduction compared to the previous year.
there are, however, some positive aspects.
the budget proposals include zero income tax on commercial solar use and zero import duties on import of key solar equipment.
the budget has provision for tax and duty exemptions.
import duties, regulatory duties and advance tax on essential solar power components have been made 0% and this will remain effective until 2030.
additionally, commercial solar energy is likely to get 0% income tax bene?ts.
also, imports of raw materials used for manufacturing lillium-ion, sodium-ion and associated battery packs are under consideration for such duty and tax incentives until 2030.
these are welcome steps. But much more needs to be done.
the incentives, according to some experts, bene?t a small group of producers and companies.
the incentives should be extended to encourage farmers to transition from fuel-run irrigation pumps to solar-powered pumps.
the country has an estimated 12 lakh dieselpowered irrigation pumps.
experts want the government to take steps to free the farmers from the heavy reliance on diesel, which is again an imported fuel. The use of solar energy in the operation of irrigation pump can save dollars now being spent on import of fossil fuels.
it can prove a great relief for the farmers.
another recommendation from energy experts has been the establishment of a dedicated fund of Tk25,000 crore to help bridge the gaps in ?nancing the green energy transition.