The government is contemplating to reduce subsidy to gas-oil and electricity price in the next national budget (FY 2014-15) as the International Monetary Fund (IMF) continues pressure to do so. If there is a subsidy cut the price of gas and subsequently the price of electricity will go up. The subsidy in the next budget in power sector is likely to be reduced to Tk 26,000 crore. as against the Tk 32,354 crore in the current budget, finance ministry officials said. Neither withdrawal of subsidy nor its increase can be a way of resolving the problem. Withdrawal of subsidy will increase cost of living and increase in price of electricity will cause price hike and create inflationary pressure on the economy. That is why it is necessary to keep the price of gas low,” said Mirza Azizul Islam, former Adviser to the Caretaker Government. It is necessary to find a permanent solution to this by installing mega power plants, he said .As per the donors’ condition, there was no alternative but to increase fuel price to get US$1 billion (100 crore), the fifth installment under the Extended Credit Fund (ECF) of the institution. To arrange for this money electricity price had to be raised at consumers’ level. In this connection, an IMF delegation visited Bangladesh last month. During their stay in Dhaka, the team had parleys with various institutions and government’s decision-makers to reduce subsidy in the power sector. To fulfill conditions laid down by ECF, another hike in the price of fuel oil and gas is likely to be implemented. The Energy Regulatory Commission has by now started discussion with the concerned people in this regard, sources said. Meanwhile, experts have criticized such reduction in subsidy by repeatedly increasing prices of gas and electricity and suggested finding out other ways and means of lowering production cost.IMF has suggested the government to work on the action plan with regard to raising electricity-fuel price and improves budget implementation risk management. Besides, the IMF said, the subsidy the Bangladesh Petroleum Corporation enjoys should be reduced. It also recommended appointment of auditors in the corporation.IMF also suggested hard term loan and overall improvement in performances of nationalised banks.During its Dhaka visit in October last year, the IMF delegation proposed complete withdrawal of subsidy from the budget. Finance Minister AMA Muhith also agreed to this prescription. However, such withdrawal will be done in phases in the next few years, the minister told the IMF team.
