Bangladesh electricity crisis persists on fuel shortages

The Bangladesh electricity crisis persists despite there being sufficient capacity, due to the fossil fuel crisis that squeezed imports and which resulted from the U.S. dollar crunch.

The country faced acute load-shedding for at least a couple of weeks since late May due to a shortage of primary fuels to run the power plants, which include natural gas, furnace oil, coal and diesel.

Opposition political parties protested the load shedding and the government had to shut all primary schools so that children stayed at home during the power outages and in scorching heat.

Talking to media, the state minister of power, energy and mineral resources, Nasrul Hamid, admitted that the load-shedding situation was caused from the primary fuel crisis and had reached an “unbearable” level.

He expressed sincere concerns to his countrymen for their untold suffering.

“We have ready power plants in hand to ensure uninterrupted electricity supply but now not being able to operate them sufficiently due to fuel crisis,” he said.

“We are not being able to provide sufficient volume of coal, gas and oil,” he added.

The South Asian country’s prime minister Sheikh Hasina, who is also in charge of the energy ministry, also intervened on June 7 to appease aggrieved Bangladeshi people, saying more electricity will be added to the national grid within the next 10-15 days to end the power crisis.

“We have been compelled to make load-shedding. I can realize the sufferings of the people. We’ve been trying our best. Some 500 MW electricity will be added within the day one or two. Yet more electricity will be added within 10-15 days. Then there’ll be no suffering,” she stressed.

The prime minister said that unfortunately this time people are enduring abnormally high temperatures. “We can’t think that the temperature would go up to 41 degrees,” she said.

Lack of rain aggravated the suffering, she said.

“We’re sitting in meetings time and again to find the ways out and trying to ease this suffering,” she said.

The much-expected rain, however, started showering Bangladesh from June 8, which reduced countrywide electricity demand by around 2,500 MW to ease nationwide electricity outages, according to a spokesperson of the state-run Bangladesh Power Development Board (BPDB) Shamim Hossain.

But if the rain stops Bangladesh is at risk of seeing load-shedding again as many power plants are still ill-equipped to run at full capacity only due to the fuel crisis, sources feared.

The country’s overall electricity generation is now hovering around 12,000 MW, which is almost the same as for a few weeks during the load-shedding period, according to official data of the BPDB.

“Many power-plant owners are unable to import furnace oil because of six-month-plus receivables and shortage of U.S. dollars,”the president of the Bangladesh Independent Power Producers Association (BIPPA) Faisal Khan told Gas Outlook.

The financial condition of some companies is very bad, he said, while there was reportedly no guarantee of footing their pending bills from the government exchequer, he said.

Bangladesh’s overall power-generation capacity from oil-fired power plants is around 7,482 MW, of which 6,441 MW is furnace oil-fired and 1,041 MW is diesel-fired power plants, which accounts for around 31% of overall installed capacity of 24,143 MW, according to BPDB.

The private sector owns around 80% of the total oil-fired power plants in the country.

Bangladesh’s total power generation capacity is around 22,000-23,000 MW but actual utilization ranges around 13,000-16,000 GW.

According to BIPPA, a payment backlog to privately-owned independent power producers, or IPPs, amounted to around Tk 180 billion (US$ 1.70 billion) until March 2023, which is equivalent to six months’ dues.

The amount of dues would be higher if the payments for the months of April and May were taken into account, Khan said.

The IPPs have exhausted their credit limits with banks due to BPDB’s inability to make payments in time, he added.

Foreign confirmation banks have, too, exhausted country limit, he added.

“We are importing to the best of our abilities and U.S. dollar availability,” the BIPPA president said.

“We need bill payments from BPDB and U.S. dollar support from Bangladesh Bank,” he said.

Bangladesh imported around 259,200 mt of furnace oil in May 2023, nearly 26% lower than the expected consumption for last month, Khan said.

Bangladesh had forecast HSFO imports of around 350,000 mt in May.

Bangladesh imported around 375,000 mt of HSFO in June 2022, about 30% higher than June 2023’s projected import volumes, Khan said.

The research director of local think-tank Centre for Policy Dialogue (CPD) Khondaker Golam Moazzem opined that Bangladesh’s load-shedding will continue in the coming months or years, which will increase the suffering of households and businesses as well as hamper industrial and commercial activities.

Rising unpaid or delayed import bills against purchase of fossil fuels from the international market has created a big burden for the government, he said.

Moazzem was also critical of the government’s “sluggishness” in implementing renewable energy projects.

Although the renewable energy target is set at 40 per cent by 2041, the total installed renewable energy-based generation capacity is only 1,183.63 MW at present, which is only 4.30 per cent of the total installed capacity, he lamented.

Overdue payments balloon

Market insiders said Bangladesh’s overdue payments to energy-providers and power-plant owners, both local and foreign, have ballooned over US$2.76 billion.

If the late payment of interest is taken into account, the overall overdue payments would be higher until the past month, they said.

Of the payment arrears, the backlog to privately owned independent power producers was the highest — to the tune of around US$1.70 billion.

The Bangladesh Petroleum Corporation (BPC) owes around US$300 million to different oil refinery suppliers, as of May 16, 2023.

The overdue payments to U.S. oil major Chevron and Singapore’s KrisEnergy against gas purchases from their share in the output in Bangladesh’s gas fields amounted to around US$220 million.

Delayed payments to global LNG suppliers – both long-term and spot sellers – against purchases of the expensive fuel rose to around US$205 million.

The payment backlog to the country’s largest coal-fired Pyra 1244MW power plant and 1320 MW Rampal Power Plant amounted to around US$345 million in total.

The Payra power plant is resumed operations on June 25 after a total halt in operation for around 20 days since June 5 due to the coal crisis as suppliers stopped coal delivery due to non-payment.

Bangladesh-China Power Company, the owner of the Payra power plant, could not import sufficient quantities of coal to continue its operation due to a dearth of U.S. dollars, said its managing director AM Khurshedul Alam.

A coal purchase bill of around US$294 million remained unpaid, he added.

He, however, expected that the entire power plant will come online again in late June as the government recently gave around US$100 million to help import coal.

The Maitree 617MW coal-fired power plant, which is a joint venture power plant between Bangladesh and India, is also running at around half of its capacity, generating around 320 MW of electricity, according to the BPDB.

Since commissioning of the first unit of the 1,320MW Maitree Super Thermal Power Project in Rampal in September 2022 the plant has been facing a dollar crisis, which prompted the plant halt operation at least a couple of occasions, said a senior official of the BPDB.

Re-gasifying LNG

Bangladesh, however, has been re-gasifying the maximum volume of LNG from its two operational 3.75 million mt/year floating storage and re-gasification units (FSRUs), in the month after Cyclone Mocha, which hit Myanmar and Bangladesh on May 14, to try to meet growing power demand.

Bangladesh re-gasified as much as 980,000 Mcf/d from its two FSRUs combined and LNG re-gasification volume is currently hovering around 850,000 Mcf/d, according to the official data of Petrobangla.

Significant volumes of gas are being diverted to power plants and industries and to meet the growing demand, according to Petrobangla.

Bangladesh raised natural tariffs by up to 178.88% for industries and power plants in February 2023 when it resumed importing LNG from the spot market after a seven months’ hiatus apart from regular LNG imports from long-term suppliers.

Bangladesh has been facing an acute dollar crisis since the Russia-Ukraine war began in February 2022. The country’s foreign currency reserves dropped to around US$30 billion last week from a record US$48.6 billion in August 2021.