Govt to cut power subsidies under 3yr IMF-backed plan18 Jul 2025 21:26
Officials said the government is ramping up imports of liquified natural gas (LNG) to meet growing demand and increase power generation from gas-based plants, which remain cheaper than other energy sources except coal. Increasing coal-based power production is also under consideration, they said.
The government is also reviewing power purchase agreements with high-cost Independent Power Producers (IPPs), aiming to renegotiate the prices.
After a meeting of the advisory council last Tuesday, Finance Adviser Salehuddin Ahmed told reporters that legal consultants would be appointed to review those deals.
Meanwhile, the IMF has made subsidy rationalisation in the power sector a key condition for the release of future tranches of its $5.5 billion loan programme.
As part of the agreement, the Ministry of Power, Energy and Mineral Resources must adopt and publicly share a three-year roadmap to reduce the gap between generation costs and electricity selling prices to a fiscally sustainable level.
The plan must outline tariff reforms and safeguards for vulnerable groups, according to recently released IMF documents.
In response, the government told the IMF it has already begun curbing generation costs by phasing out high-cost, fuel oil-based plants and boosting gas-based production.
It also said subsidies are expected to stay within the agreed Tk 37,400 crore cap for FY2024-25. Should costs rise beyond this ceiling, electricity tariffs may be adjusted, but only after all other cost-cutting measures have been exhausted.
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