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DHAKA, June 04, 2025 (BSS) - The government has undertaken a plan to reduce the overall cost of power generation by 10 percent, according to the proposed national budget. 

It said the important issue is to ensure adequate supply of energy across the country and at the same time keeping it as affordable as possible to improve the quality of life of citizens and keep the economy running.

Finance Adviser Dr Salehuddin Ahmed, in his budget speech on Monday, proposed to allocate Tk. 22,520 crore aiming at ensuring energy security and modernizing distribution system and generating 3,400 MW of electricity from clean sources by 2028.

He said a decision was taken that 30 percent of the country's total electricity will be generated from renewable sources by 2040. 

In the budget allocation, he proposed to allocate Tk. 20,342 crore for power division and Tk. 2,178 crore in the energy division in the fiscal 2025-26 (FY26). 

In the budget speech, the adviser said the government has been currently giving subsidy to the power sector about 1.0 percent of the country's gross domestic product (GDP), which is very high, adding, "To reduce this gradually, a plan has been taken to reduce the overall cost of power generation by 10 percent. If this plan can be implemented, it is estimated that the cost of electricity subsidy will be saved more than Tk. 11,000 crore." 

The interim government also formed a separate committee to review tariff structures of the purchase agreements, re-negotiate them and make recommendations.

"We are reviewing the power purchase agreements. We have taken initiative to carryout energy audits to reduce cost of power generation. In principle, we have decided not to increase the price of electricity for the time being in the context of the prevailing high inflation," Ahmed said. 

Besides, the government has also undertaken a plan to supply 648 million cubic feet of gas from domestic sources within this year and to extract an additional 1500 million cubic feet gas from local wells by 2028.

The government emphasized on increasing capacity of local gas exploration company BAPEX and necessary funds was allocated for its activities.

As part of modernizing the power distribution system, work is underway to place distribution lines and substations underground in metropolitan areas. 

The initiative will make the power distribution system more stable and efficient. 

Furthermore, an agreement under sub-regional cooperation was signed with Nepal on 3 October 2024. Under the agreement, 40 MW of hydropower will be imported at an affordable price to meet the electricity demand during summer. 

The government also hoped that 2,400 MW Rooppur Nuclear Power Plant will supply electricity to the national grid by December this year.

Moreover, an Integrated Power Sector Master Plan has already been prepared, and under this plan, a target was set to generate 3,400 MW of electricity from clean sources by 2028.

"To ensure energy security in the country, the government has taken initiatives to increase oil and gas exploration and production through its own effort," the adviser said. 

He said the state run BAPEX has planned to carry out a 270 km geological survey, a 700km 2-D seismic survey, and a 700 square km 3-D seismic survey between FY2025-26 and FY2027-28. 

Following the medium term, the BAPEX has planned to drill 69 wells and complete the workover of 31 wells using its own rigs. At the same time, steps are being taken to develop cost-effective and sustainable infrastructure to help control energy prices.

BSS/SPL/SAS/GA/1808 hrs