DHAKA: The government is set to cut subsidy by 5.5 percent in fiscal 2015-16 from the current year, as it looks to reduce fuel subsidy amid depressed global oil prices.
Some Tk 24,609 crore has been earmarked for subsidy in the draft in contrast to Tk 26,053 crore in the current fiscal year’s original budget, which was later revised up to Tk 27,400 crore. But the share of power subsidy looks set to rise, as more electricity has to be purchased from quick rental plants.
In the draft outlay, Tk 8,000 crore has been allocated for power subsidy, whereas in the original budget for this fiscal year it was for Tk 7,000 crore.
However, in the revised budget it is likely to cross Tk 9,000 crore: some gas-based power plants in the public sector were shut down due to mechanical faults, forcing the government to purchase electricity from the costly rental power plants.
Furthermore, the government’s plans to hike electricity prices fell through, necessitating more subsidies for the power sector. In the next fiscal year, if price adjustments cannot be made and the low-cost government plants fail to come into production, the power subsidy may need to increase further.
Fuel subsidy will get the biggest chop in the upcoming budget owing to the oil price slide in the international market.
