Dhaka
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Gas production in Bangladesh has been declining for several consecutive years. Meanwhile, the conflict in the Middle East has made liquefied natural gas (LNG) imports more difficult and pushed up prices in the international market. Due to the gas shortage, some power plants are being operated at reduced capacity or kept offline. As a result, load shedding of up to 3,500 megawatts a day has become necessary.
At the same time, the government’s outstanding dues to private power plants have risen to around Tk 440 billion. The pressure of subsidies in the power sector is also increasing. Importing fuel at higher prices with limited financial resources has put additional pressure on the country’s foreign exchange reserves.
Sector analysts and business leaders say that although the crisis is complex, it can be addressed. Alongside short-, medium- and long-term plans, urgent measures should be taken to increase power generation. They have also suggested temporarily spending more, if necessary, to keep electricity supplies stable. This could reduce economic losses and indirectly help increase government revenue.
Experts have suggested forming a task force comprising professionals and specialists to address the crisis in the gas, power and energy sectors.
As temperatures are expected to start falling from November, electricity demand is also likely to decline. Business leaders therefore consider September and October to be the most critical months. They have recommended increasing generation from oil-fired power plants during this period to reduce pressure on gas supplies.
Mohammad Rezaul Karim, chairman of the Bangladesh Power Development Board (PDB), said a plan has been taken to generate around 4,000 megawatts of electricity from oil-fired power plants. The government has allocated Tk 60 billion to increase generation. Power plants are being instructed to ensure regular payment of bills so that arrangements can be made for importing fuel oil.
Energy expert M. Tamim said LNG prices are currently very high and imports have also become difficult. Therefore, limited gas supplies should be used on a priority basis while generation from oil- and coal-fired power plants should be increased.
Import dependence is one of the major reasons behind the gas shortage. According to Petrobangla and RPGCL sources, Bangladesh received 71 LNG cargoes during the first eight months of last year, compared with 68 cargoes during the same period this year. In July and August, 15 cargoes arrived, compared with 21 during the same period last year.
In addition, an LNG terminal was damaged in a fire on July 21, forcing it to suspend gas supplies for 16 days. Although partial supplies later resumed, the flow did not increase significantly due to insufficient LNG cargo arrivals.
People familiar with the sector say temperatures will not fall significantly in September and October, meaning electricity demand will remain high. To manage the situation, at least 20 LNG cargoes need to be imported during these two months, they said.
The conflict in the Middle East has reduced LNG supplies in the global market. Prices have risen particularly because of lower supplies from Qatar.
Bangladesh’s daily gas demand is around 3.8 billion cubic feet. Under normal circumstances, the situation was managed with supplies of up to around 2.7 billion cubic feet a day. But with supplies declining further in recent times, the crisis has intensified across industries, power generation and other sectors.
Petrobangla officials said there is a plan to import 10 LNG cargoes in September, of which eight have already been secured. Four are being procured under long- and short-term contracts, while another four are being purchased through tenders from the spot market.
The price of LNG purchased from the spot market is ranging from around $22 to as high as $24.62 per unit. Tenders were also invited for two more cargoes, but one bidder quoted a price of $26, while no bid was received for the other. Fresh tenders have subsequently been invited for the two cargoes.
According to analysts, addressing the current crisis will require ensuring urgent supplies of LNG, fuel oil and coal on the one hand, while increasing domestic gas exploration and production in the long term on the other. At the same time, an integrated approach is needed in planning and managing the energy sector.
