A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN BANGLADESH

The document examines the scale and impact of energy subsidies in Bangladesh, noting that they consume a significant portion of the national budget while primarily benefiting wealthier citizens. It analyzes subsidies for petroleum, natural gas, electricity, and coal, arguing that these measures distort the economy and discourage energy diversification. The guide suggests transitioning toward targeted social assistance, such as cash transfers, and implementing gradual, transparent price adjustments to mitigate the impact on the poor during reform.

• Energy subsidies in Bangladesh represent a massive fiscal burden, accounting for nearly 90% of all government subsidies. For the 2012 fiscal year, total energy subsidies were estimated at over BDT 282 billion (US$ 3.4 billion), which is more than 4% of the GDP.
• The distribution of energy subsidies is highly inequitable, with the rich and upper-middle classes receiving the majority of benefits. These groups consume nearly 88% of diesel, 88% of petrol, and 79% of natural gas and LPG, while the poor have minimal consumption of purchased fossil fuels.
• Subsidies for petroleum products are the largest component of energy spending, with diesel receiving the highest subsidy at an estimated BDT 116.9 billion (US$ 1.4 billion) for 2012, primarily to support energy-intensive irrigation in the agriculture sector.
• Energy subsidies create economic vulnerabilities and environmental risks. They make the fiscal position sensitive to global price volatility, encourage the smuggling of fuels to neighboring countries, and act as a disincentive for adopting energy-efficient technologies like solar lanterns and LED lights.
• Successful subsidy reform requires a comprehensive strategy including targeted social safety nets to protect the poor. Examples include Indonesia's Cash Transfer Assistance Program (BLT) and Mexico's Oportunidades program, which use cash transfers to offset rising energy costs.

APA

International Institute for Sustainable Development (2012). A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN BANGLADESH. https://www.iisd.org/gsi/sites/default/files/ffs_bangladesh_czguide.pdf

Chicago

International Institute for Sustainable Development. A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN BANGLADESH. 2012. https://www.iisd.org/gsi/sites/default/files/ffs_bangladesh_czguide.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN BANGLADESH |date=April 2012 |url=https://www.iisd.org/gsi/sites/default/files/ffs_bangladesh_czguide.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2012citizens, author = {{International Institute for Sustainable Development}}, title = {{A CITIZENS’ GUIDE TO ENERGY SUBSIDIES IN BANGLADESH}}, institution = {International Institute for Sustainable Development}, year = {2012}, month = apr, url = {https://www.iisd.org/gsi/sites/default/files/ffs_bangladesh_czguide.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }