Government’s capacity to subsidise energy is declining: Zahed

Prime Minister’s Information and Broadcasting Adviser Dr Zahed Ur Rahman has acknowledged that rising energy prices are putting pressure on ordinary people, saying that subsidising imported fuel requires spending foreign currency, placing additional pressure on the country’s foreign exchange reserves.

He said the government had allocated Tk 48,000 crore in subsidies for the power and energy sectors in the current fiscal year. However, within the first two and a half months of the fiscal year, it had already disbursed half of that amount, or Tk 24,000 crore.

“The government’s ability to provide subsidies is declining continuously. We must keep this in mind”, Zahed said.

Noting that the government was currently paying more than $30 per unit to purchase liquefied natural gas (LNG), he said the highest price paid for LNG between 2021 and 2025 was $14 per unit.

“We are buying LNG at more than double the price,” he said.

Zahed Ur Rahman said providing additional subsidies would require the government to increase borrowing.

Whether the government borrowed from the banking system or injected new money into the economy, both options carried the risk of fuelling inflation, he said.

He added that the government had to consider the country's economic capacity, global market conditions and broader economic pressures when determining energy prices.

“In a ruined economy, the government is bound to decide where to spend what. Some have to bear the effects of this,” he added.