Govt prioritises renewable energy, steps up domestic gas exploration, minister tells parliament

The government is prioritising private investment to achieve its target of generating 10,000 megawatts of solar power by 2030, while accelerating oil and gas exploration both onshore and offshore to ease the country's prolonged energy crisis, Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood said in parliament today (28 June).

Speaking during the general discussion on the proposed national budget for FY2026-27, the minister said the government expects to complete the international bidding process for new gas exploration blocks by November this year.

To attract investment in renewable energy, he said, the government has exempted duties on solar power equipment and batteries and extended tax holiday facilities until 2031.

The incentives are expected to encourage both local and foreign investment and accelerate the expansion of the renewable energy sector.

Besides solar power, the government will also encourage investment in wind energy and waste-to-energy projects, he added.

He said that although the share of renewable energy will continue to increase, gas- and oil-fired power plants must remain available as standby generation capacity to ensure an uninterrupted electricity supply, as solar generation depends on weather and seasonal conditions.

Highlighting efforts to boost domestic gas production, Mahmood said the government has invited international bids for exploration in new onshore and offshore blocks in the Bay of Bengal.

He alleged that the previous government had effectively failed to drill new gas wells over the past 17 years, contributing to the current gas shortage.

Alongside new exploration activities, the government will continue importing liquefied natural gas (LNG) to meet domestic demand, he said.

The minister also announced plans to modernise the national power grid through several projects aimed at transforming it into a smart grid.

In addition, the government is moving forward with plans to establish the country's second oil refinery under a public-private partnership (PPP), replacing the only existing refinery built during the Pakistan era.

He said the government is also planning to install a new Floating Storage and Regasification Unit (FSRU) to increase LNG import capacity.

Emphasising regional energy cooperation, Mahmood said Bangladesh could secure lower-cost electricity by increasing hydropower imports from Bhutan, Nepal and India. Expanding captive power generation in industries would also help reduce production costs, he added.

The minister said Tk17,345 crore has been allocated to the Ministry of Power, Energy and Mineral Resources in the proposed FY2026-27 budget, accounting for 1.85% of the national budget.

Nearly 99% of the allocation has been earmarked for development expenditure, reflecting the government's focus on infrastructure development and capacity enhancement.

He also claimed that the current government inherited substantial financial liabilities and complex contractual obligations in the power and energy sectors from its predecessor, including around Tk56,000 crore in outstanding dues and sovereign guarantee-backed power purchase agreements.

Rejecting criticism that the budget allocation for the power and energy sector was inadequate, Mahmood said that when tax exemptions, duty waivers and other fiscal incentives are taken into account, the sector is receiving the highest level of government support in the country's history.