Budget boosts solar, EVs but fossil fuel concerns remain: Sanem
Sanem highlighted a gap between Bangladesh's renewable energy targets and budget allocations.
The FY2026-27 budget provides the strongest fiscal support yet for solar energy and electric vehicles, but continued backing for fossil fuel projects could undermine the country's long-term energy transition goals, according to the South Asian Network on Economic Modeling (Sanem).
The government has identified energy security as one of its ten strategic priorities. However, the allocation for the Ministry of Power, Energy and Mineral Resources has fallen to Tk17,345 crore, or 1.85% of the total budget, from 2.15% in the revised FY26 budget, Sanem said in a statement issued today (25 June).
The think tank welcomed several measures aimed at promoting clean energy, including a zero-tax regime for the solar sector until 2035, tax rebates for solar electricity consumers, and duty exemptions on key solar components until 2031. It also praised significant tax cuts on electric vehicles and the removal of all duties on charging equipment, calling them a major step toward cleaner transportation.
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Despite these incentives, Sanem noted a mismatch between policy ambitions and budgetary commitments. While Bangladesh aims to generate 20% of its electricity from renewable sources by 2030, only 2.53% of the power division's expenditure has been allocated to renewable energy projects.
The organisation also said recent tax incentives mainly benefit VAT-compliant self-consumption solar producers and projects operating under the RESCO model, leaving many importers, EPC firms and self-financed users outside the support framework.
Sanem criticised continued public support for fossil fuels through new coal projects, expanded coal extraction targets and investment in the Second Eastern Refinery.
To strengthen energy security, it recommended to accelerate domestic gas exploration, increase renewable energy allocations, redirect part of fossil fuel subsidies to clean energy, extend battery manufacturing incentives beyond 2028, and introduce dedicated support for wind power development.
