Entrepreneurs, experts seek increased allocation for energy to solve gas crisis

Entrepreneurs and experts have called for increased budgetary allocation for energy to meet the growing demand of the country's export-oriented industries, which insiders say currently run at around 50% capacity due to insufficient gas supplies, ultimately affecting the economy.

To stabilise the economy, which is currently facing multifaceted challenges, including dwindling foreign exchange reserves and depreciation of taka – they called for ensuring an uninterrupted supply of fuel to production-oriented industries at any cost.

This year's budget, scheduled to be placed in parliament tomorrow, is expected to allocate Tk38,799 crore for fiscal 2024-25 for the power and energy sectors, with just Tk4,463 crore for energy.

M Tamim, an energy expert and a professor of petroleum and mineral resources engineering at Buet, told The Business Standard, "Usually, on average, Tk25,000-26,000 crore was given to the Power Division in past years, whereas only Tk2,000-3,000 crore was given to the Energy Division."

He emphasised that since the country earns foreign exchange by exporting products abroad, it needs to ensure a smooth energy supply to export-oriented manufacturing industries.

In this context, he stated, "Tk10,000-20,000 crore is really not a big amount to meet the needs of the Energy Division. It seems to me that at least Tk10,000 crore should be allocated this year."

In the FY23 budget, the allocation for the Energy Division was Tk1,798 crore. However, the fund was reduced by 49% to Tk911 crore for fiscal 2023-24.

In contrast, in FY24, the allocation for the Power Division was Tk33,775 crore, which is almost 40% more than in the previous fiscal year.

Professor M Tamim said, "We have to increase the budget for energy because this year we have a massive energy crisis, but the government has always given priority to the Power Division."

He suggested reducing the allocation for the Power Division, except for unfinished projects involving transmission and distribution lines. He mentioned that the country currently has enough generation capacity, so there is no need for new plants.

Bangladesh Knitwear Manufacturers and Exporters Association Executive President Mohammad Hatem told TBS, "Due to the gas shortage, knit mills have almost come to a standstill. The situation has taken a turn for the worse. If this continues, the knitting industry will be ruined."

"Export earnings in this sector have already declined drastically. We want the government to increase the allocation to the energy sector in the upcoming budget," he added.

In a statement issued today, the Bangladesh Textile Mills Association said it had been able to utilise only 40-50% of production capacity for the last few months due to the gas crisis.

According to Petrobangla's latest estimates, the country's 29 gas fields have total proven reserves of 28.79 trillion cubic feet (tcf). Of this, 20.33tcf was extracted until June 2023. Currently, gas reserves stand at 8.46tcf.

According to the Gas Sector Master Plan-2017 prepared by the Danish energy consultancy group Ramboll, the country's daily gas demand at the time was 3,736 million cubic feet, which is predicted to increase to 8,346 million cubic feet by 2041.