A strategic approach is needed to manage the allocation for the energy sector in the proposed national budget for the upcoming fiscal year, said the think-tank South Asian Network on Economic Modeling (SANEM).
"The energy and power sector secured only 3.8% of the total budget. A strategic approach is needed focusing on increasing the share of renewable energy projects, exploring domestic natural gas, managing the impact of currency devaluation, and addressing the subsidy burden through efficient policy measures," SANEM said in a press release expressing its observations on the proposed budget on Tuesday (25 June).
"Over the years, budget allocations for the power and energy sector have seen significant fluctuations, reaching a peak in the fiscal year 2018-19. After the peak, the sector saw a 10.91% and 31.06% decrease in allocation, respectively, for the following two fiscal years (2019-20 and 2020-21). Starting from the fiscal year 2020-21, the allocation is gradually increasing in absolute value but not to a notable extent," it added.
Given the renewable energy targets in several government plans, the proposed budget securing a special allocation of only Tk100 crore to boost the development and utilisation of renewable energy is nowhere near sufficient, SANEM said.
Furthermore, the Sustainable Renewable Development Authority (SREDA) got a lower allocation than the previous year, which raises questions about the function and significance of SREDA, the think-tank said.
SANEM said building new LNG infrastructure is also questionable as the international market is volatile which has already affected Bangladesh's economy.
Additionally, since the budget share for the energy sector within the total power and energy sector budget has been decreasing, SANEM recommends
increasing this allocation substantially.
Citing the revised Annual Development Programme, SANEM said there has been a continuous decline in the budget allocation for the Power and Energy Sector and the Energy and Mineral Resources Division (EMRD) since FY 2021-22 which necessitates a reassessment.
The proportion of ADP and subsidy for the Power Division and EMRD having a specific focus on renewable energy could contribute to the energy security of the whole power and energy sector of the country, it further said.
