In a move aimed at curbing inflationary pressure, the interim government has decided not to increase electricity prices in the fiscal year 2025–26 budget, while simultaneously targeting a 10 per cent reduction in power generation costs to ease the burden of subsidies.

Finance Adviser Dr Salehuddin Ahmed, who announced the national budget on Monday, said that maintaining affordable and stable electricity tariffsremains a key priority for the government.

“In the context of existing high inflation, we have decided in principle not to increase the price of electricity for the time being,” he said during his budget speech broadcast live on Bangladesh Television.

The total proposed expenditure for FY 2025–26 stands at Tk 790,000 crore, equivalent to 12.7 per cent of GDP. Of this, Tk 2,30,000 crore has been allocated for the Annual Development Programme (ADP), with a portion dedicated to energy sector reforms and infrastructure upgrades.

Reducing dependency on subsidies

To gradually reduce the fiscal strain caused by electricity subsidies, the government has outlined a strategy focused on cost-cutting and efficiency improvements:

- A 10 per cent reduction in overall electricity generation cost is targeted through operational reforms.

- A review of Power Purchase Agreements (PPAs) is underway to identify inefficiencies and renegotiate terms where necessary.

- The government has launched initiatives to conduct energy audits across production facilities to promote optimal usage and lower expenses.

These measures are expected to reduce the need for state subsidies over time, without placing additional financial burdens on consumers.

Boosting domestic gas supply to power sector

Salehuddin also highlighted progress in strengthening domestic gas supply for power generation, a critical factor in lowering production costs. “Plans have been made to supply 648 million cubic feet of gas from domestic sources this year, with an additional 1,500 million cubic feet expected by 2028 through expanded local extraction.”

This increased availability of natural gas—cheaper and cleaner than imported liquid fuels—is seen as vital to achieving both economic and environmental goals.

Energy affordability and economic stability

The Finance Adviser emphasised the importance of stable and affordable energy in supporting livelihoods and sustaining economic activity. “Improving citizens` living standards goes hand in hand with ensuring adequate and affordable energy supply to keep the economy running,” he said.