No hike in power prices as govt targets 10% cost reduction

The government has decided to cut electricity production costs by approximately 10 percent in a bid to ease the subsidy burden on the power sector, Finance Adviser Dr Salehuddin Ahmed announced in his budget speech today.

He said the government has decided in principle not to increase power tariffs at the moment, considering the prevailing high inflationary pressure.

"Ensuring a reliable energy supply and keeping prices affordable are essential for sustaining the economy and supporting the improvement of citizens' livelihoods," he said.

To support this move, the tax deduction at source (TDS) during electricity purchase payments has been reduced to 4 percent from the existing 6 percent, he added.

The finance adviser said power purchase agreements signed by the ousted government are currently under review. "We are also initiating 'energy audits' to reduce power production costs," he said.

In the gas sector, he said the government plans to supply an additional 648 million cubic feet of gas per day (mmcfd) from domestic fields within this year, which may increase to 1,500 mmcfd by 2028.

The budget speech also mentioned a VAT exemption on the import of Liquefied Natural Gas (LNG).

"To keep petroleum product prices stable, we are proposing to reduce the duty rates on the import of both crude and refined fuel, and to withdraw the tariff value on these products," the finance adviser said.

According to the speech, the government has set a target to generate 30 percent of the country's electricity from renewable sources by 2040.

"We are updating the Renewable Energy Policy 2008 to make it more relevant to current times, which is now in its final stage," he said, adding that around 3,400 megawatts of electricity will be added to the national grid from clean sources by 2028 -- including from the Rooppur Nuclear Power Plant.

He noted that construction work on the nuclear power plant is progressing rapidly.

The finance adviser also said that initiatives have been taken to expand the country's lone fuel refinery by establishing the second unit of Eastern Refinery Limited, which will have a capacity of 3 million metric tonnes.