PM wants action plan to phase out energy subsidies
The government is looking for ways to stop providing subsidies, especially in the gas and electricity sector
Prime Minister Sheikh Hasina has called for a phasing out of government subsidies in the gas and power sector. She has asked officials to prepare an action plan in this regard.
"Subsidies are not justified. Therefore, we have to get rid of them," Planning Minister MA Mannan quoted the premier as telling the Executive Committee of the National Economic Council (Ecnec) meeting on Tuesday.
The minister said the government subsidy issue came to the fore around the matter of the approval of a power project at the meeting, where power tariffs, monitoring, domestic and commercial use of electricity were discussed.
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"We are now subsidising electricity. But we need to find a way of coming out of it," the planning minister said as he briefed journalists about the outcome of the meeting.
According to the Finance Division, the current 2021-22 fiscal year budget has Tk8,500 crore allocated as government-financed support, while the incentive demand is around Tk20,000 crore. Similarly, subsidy for liquefied natural gas (LNG) stands at Tk4,000 crore this year, while demand is around Tk25,000 crore.
The current year budget has Tk9,500 crore kept aside to subsidise fertiliser, though demand hovers around Tk28,000 crore.
Emerging from the Ecnec meeting, State Minister for Planning Shamsul Alam said there was no discussion about government incentives for agriculture. He, however, stressed that subsidies continue for selective sectors such as farming.
Echoing the planning minister on government support to gas and power, he said, "We will have to consider withdrawing those subsidies in phases as the poor are not getting much benefit from them. Instead, people in upscale Dhaka such as Gulshan, Banani and Baridhara – who have different uses of the utilities – are getting the advantages."
Zahid Hussain, former lead economist at the World Bank Dhaka office, too advocated a continuation of subsidies for crucial sectors like agriculture, plus a fine local-foreign price adjustment of gas and fuel.
He said the government's current blanket subsidy covers a wide span, ranging from bank loans to exports to 30-year-old industries. "The government needs to reassess its subsidies to determine which sectors will contribute to the economy in the end, as also subsidies that would be like carrying coal to Newcastle."
Ten projects get Ecnec approval
The Ecnec meeting approved ten projects on Tuesday with an estimated total of Tk8,804 crore. Of the projects, the Bangladesh Telecommunications Company Limited (BTCL) network expansion project at Tk1,059 crore got the Ecnec go-ahead.
The planning minister said the premier, while approving the project, instructed the authorities to strengthen the 4G network alongside introducing the 5G. Prime Minister Sheikh Hasina called for establishing a strong telecommunication network by launching Bangabandhu satellite-2.
The Ecnec meeting also approved a waste management project at 15 public hospitals. The prime minister asked for readying manpower for waste management alongside a purchase of equipment.
She directed the authorities to compel private hospitals to dispose of medical waste properly. The Ecnec meeting also approved a Tk272 crore swimming training project for children.
