The Centre for Policy Dialogue (CPD) has said that the proposed national budget for FY2026-27 contains several positive measures to promote renewable energy, but continues to provide unfair fiscal advantages to fossil fuels, which could hinder Bangladesh’s long-term energy transition goals.
The observation was presented by CPD Senior Research Associate Helen Mashiyat Preoty during a discussion paper titled “Proposed National Budget for FY2026-27: What is there on the Power and Energy Sector?” at the organisation’s Dhanmondi office on Wednesday. The seminar was chaired by CPD Research Director Khondaker Golam Moazzem.
According to CPD, the Ministry of Power, Energy and Mineral Resources has been allocated Tk17,345 crore in the proposed budget, marking a 2.3 per cent increase compared to the revised FY2025-26 budget. However, the sector’s share in the overall national budget has steadily declined from 6.87 per cent in FY2015-16 to just 1.85 per cent in FY2026-27.
The Power Division received Tk14,996 crore, a 3.9 per cent decrease, while the Energy and Mineral Resources Division saw a sharp rise of 72 per cent to Tk2,349 crore, largely driven by development spending.
CPD acknowledged new incentives for renewable energy, including zero tax on solar power until 2035 and reduced duties on solar equipment and lithium-ion batteries. However, it said these benefits remain conditional and largely benefit select companies, limiting broader consumer access.
At the same time, LNG imports continue to enjoy full VAT exemption, while coal imports also receive duty concessions. CPD argued that such measures keep fossil fuels artificially competitive.
The think tank further noted that 98 per cent of generation-related development spending still goes to fossil fuel projects, while renewable energy receives only 2 per cent. It warned that this imbalance makes achieving the 20 per cent renewable energy target by 2030 increasingly difficult.
CPD called for removing VAT exemptions on LNG, expanding renewable energy investment, and ensuring wider access to solar benefits, especially for rural users and farmers.
